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Gov. Phil Murphy. Photo by Kevin Sanders for New Jersey Globe

Murphy decries employee misclassification

Governor says practice costs workers billions

By Nikita Biryukov, July 09 2019 11:52 am

Gov. Phil Murphy on Tuesday joined building and construction trade officials to decry employee misclassification.

“This was a practice that was nothing short of rampant across the trades when our administration came into office, and it’s a practice that this administration wants to see stopped,” Murphy said at an event in Atlantic City Tuesday morning.

Misclassification involves incorrectly labeling employees as independent contractors. Doing so allows firms to skirt unemployment tax and disability contributions.

Murphy said the task force he convened to investigate the issue found 12,300 cases of misclassification cost workers more than $460 million in underreported wages and benefits and cost the state $14 million in unemployment and disability fees 2018.

“When you extrapolate that 1%, the data across the entire economy, the department estimates that misclassification cost workers more than $46 billion in wages and benefits in 2018 alone,” Murphy told union officials. “These are wages that make a difference, and you know this better than I do, in the lives of working families — to put food on the table, to save for a kid’s education or for retirement or to enjoy a family vacation down on the shore.”

Senate President Steve Sweeney and Murphy agree on this issue—the governor eschewed the feud between the two Tuesday, making a joke and saying he loved a Sweeney for Senate sign in the crowd Tuesday.

Last Month, Sweeney called on Murphy’s task force to release its findings on the issue amid a bitter budget fight that saw Murphy pitted against his legislative counterparts.

With the budget signed, that fight is over, but tensions have fallen little since the end of the legislative session.

On this issue, the two and Assembly Speaker Craig Coughlin, who also spoke at Tuesday’s event, are in agreement.

“If you are a contractor engaging in these practices, we are either A: going to bring you into compliance, or B: we’re going to put you out of business,” Murphy said. “By the way, I hope it’s the former. We want and need contractors to move our economy forward, but we will not hesitate to go to door B.”

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