Gov. Phil Murphy signed a series of bills meant to tamp down on misclassification of employees as independent contractors Thursday.
“Workers who are misclassified as independent contractors miss out on fair wages and benefits,” he said. “These business practices are unfair, abusive, and illegal and they cannot be tolerated. Today’s action will give the state more tools to root-out and prevent misclassification. I am honored to sign these bills today on behalf of New Jersey’s workers.”
The new laws will create a new office within the Department of Labor to identify misclassification and order work stoppages where it’s found.
“Employee misclassification has been a growing issue in New Jersey and I’m pleased to see further legislation signed into law that combats this abhorrent practice,” said sponsor and Senate Labor Committee Chairman Fred Madden (D-Washington). “It may sound like a simple bureaucratic problem, but it is far more onerous: misclassification results in hard-working New Jerseyans being denied basic benefits such as overtime, medical leave, unemployment insurance, and safe workplaces, and their unscrupulous employers benefit.”
A 2018 Department of Labor found misclassification led to more than $460 million in underreported wages and $14 million in missed unemployment and disability payments.
The new bills would also make misclassifications to avoid insurance premium payments a violation of the Insurance Fraud Prevention Act.
“It is necessary to increase the Department of Labor’s enforcement powers. We have seen far too many violations of State wage, benefit and tax laws,” said Assemblyman Anthony Verrelli (D-Hopewell) , a sponsor of one of the bills. “This law will further the department’s responsibility to mitigate bad actors from misclassifying employees and lessen violations against laws previously enacted.”
The signings weren’t met with universal acclaim.
Anthony Anastasio, president of the pro-business group New Jersey Civil Justice Institute, said the measures would negatively impact employers.
“This legislation provides the New Jersey Department of Labor and Workforce Development with additional draconian enforcement powers to further the Murphy Administration’s pro-labor union special interest agenda, which includes forcing employee status upon workers who desire independence,” Anastasio said. “Many workers, including working mothers, rely on the flexibility of independent work arrangements to successfully integrate their careers and personal lives. Considering the widespread legal confusion surrounding worker classification, this legislation provides ideal conditions for more regulatory overreach in that area.”