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Governor Murphy Signs Executive Order Establishing Task Force on Employee Misclassification
Trenton – “The exploitation of workers is not only unethical – it is illegal,” said Governor Phil Murphy. “In New Jersey, we promote fairness, fight against discrimination, and work to end unfair labor practices. I am proud to take this step forward to end a practice that creates an unfair advantage over companies that play by the rules and hurts our working families.”
“We must crack down on wage theft,” said Attorney General Gurbir Grewal. “More and more employers are misclassifying their workers as ‘independent contractors’ because they think it’s cheaper than doing things the right way. But this practice isn’t just illegal. It actually makes New Jersey’s communities poorer in the long run by denying workers the wages and benefits to which they are legally entitled, and that are essential to building a fair and prosperous economy. We are proud to join with other states in fighting this growing problem.”
“Protecting workers’ rights is an important function of government and that role cannot just be limited to private businesses, but to the State and who it hires,” said Senate President Steve Sweeney. “When someone is in effect working as employee, but deliberately misclassified as an independent contractor, that worker is losing benefits, wages and other compensation. That just isn’t acceptable. This Task Force should ensure that the State is compliant with best practices. I look forward to working with them on this important issue. Anyone working for the State of New Jersey should know that their job, compensation and responsibilities match their job classification. This is about fairness.”
“Misclassification adversely affects workers, taxpayers and employers who play by the rules,” said Labor Commissioner Robert Asaro-Angelo.” This illegal practice allows unscrupulous employers to ignore their responsibility for providing safe workplaces and keeps these workers from accessing employee assistance programs such as Family Leave Insurance.”
“Employee misclassification isn’t simply about semantics,” said Senator Troy Singleton. “When workers are misclassified as independent contractors by their employers, it not only diminishes their access to labor protections, but it also has real consequences on the State’s economy and tax revenues. The Task Force created by Governor Murphy in this Executive Order will play an important and necessary role in reviewing these issues.”
“Misclassifying workers undercuts the tenants of a fair workplace and strips away at basic workers’ rights,” said Assemblyman Wayne DeAngelo. “The Executive Order takes a needed first step in shedding light on this problem that has left too many workers underpaid and without job protections like paid sick leave and unemployment benefits.”
“Governor Murphy’s Executive Order on Employee Misclassification is long overdue. The results of this committee will level the playing field for contractors in New Jersey,” said Assemblyman Thomas Giblin. “Unfortunately, for too many years, some contractors have circumvented labor laws that provided protection for our valued employees. It has meant lower revenue for the State, and created unfair advantages in bidding on public projects. Educating our employers, workers and public citizens will help ensure a more fair and equitable process. Our Brothers and Sisters in the Labor Movement are most appreciative of Governor Murphy’s commitment to fairness.”
The Task Force will be charged with a number of responsibilities to combat employee misclassification, including:
- Examining and evaluating existing misclassification enforcement by executive departments and agencies;
- Developing best practices by departments and agencies to increase coordination of information and efficient enforcement;
- Developing recommendations to foster compliance with the law, including by educating employers, workers, and the public about misclassification; and
- Conducting a review of existing law and applicable procedures related to misclassification.
The Task Force is to consist of at least twelve members, including three representatives from the Department of Labor and Workforce Development, three representatives from the Department of the Treasury, and one representative each from the Department of Law and Public Safety, the Department of Agriculture, the Department of Banking and Insurance, the Department of Human Services, the Department of Transportation, and the Economic Development Authority.
Text of the Executive Order can be found below.
State of New Jersey
Executive Order No. 25
Governor Philip D. Murphy
WHEREAS, all workers in New Jersey should receive fair compensation and workplace protections based on the nature of the work they perform; and
WHEREAS, there are well-established legal standards that clearly differentiate between an “employee” and an “independent contractor,” a distinction that carries significant legal and practical ramifications; and
WHEREAS, the misclassification of employees as independent contractors deprives New Jersey workers of important legal rights and protections as well as certain employment-related benefits, including unemployment insurance, workers’ compensation, and disability benefits; and
WHEREAS, an employer who misclassifies an employee as an independent contractor potentially violates a number of State and federal laws, including labor, employment, tax, insurance and occupational safety laws; and
WHEREAS, misclassification further harms law-abiding businesses who follow the rules by enabling non-compliant employers to gain an unfair competitive advantage; and
WHEREAS, this practice harms the State’s economy in many ways, including the loss of State and federal payroll taxes, with some audits suggesting that misclassification deprives New Jersey of over $500 million in tax revenue every year; and
WHEREAS, another effect of misclassification is that independent contractors are not covered under the National Labor Relations Act, making it more difficult for them to organize and collectively bargain; and
WHEREAS, while New Jersey’s laws are intended to safeguard against employee misclassification, the effectiveness of these laws will be enhanced through the facilitation of coordinated and efficient enforcement efforts by State agencies and departments to ensure compliance;
NOW, THEREFORE, I, PHILIP D. MURPHY, Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby ORDER and DIRECT:
- There is hereby established the Task Force on Employee Misclassification (“Task Force”), which shall be responsible for providing advice and recommendations to the Governor’s Office and Executive Branch departments and agencies on strategies and actions to combat employee misclassification, including but not limited to the following:
a. Examining and evaluating existing misclassification enforcement by executive departments and agencies;
b. Developing best practices by departments and agencies to increase coordination of information and efficient enforcement;
c. Developing recommendations to foster compliance with the law, including by educating employers, workers, and the public about misclassification; and
d. Conducting a review of existing law and applicable procedures related to misclassification.
- The Task Force shall consist of not less than twelve (12) members, as follows: three representatives from the Department of Labor and Workforce Development; three representatives from the Department of the Treasury; and one representative each from the Department of Law and Public Safety, the Department of Agriculture, the Department of Banking and Insurance, the Department of Human Services, the Department of Transportation, and the Economic Development Authority. The Commissioner or head of each department shall select the department’s representative or representatives. All members shall serve at the pleasure of the appointing department and without compensation.
- The Governor may, as determined to be appropriate, appoint additional members to the Task Force, who shall serve at the pleasure of the Governor.
- The Task Force shall be authorized to call upon any department, office, division, or agency of this State to supply it with information or other assistance as the Task Force determines to be necessary to discharge its duties under this Order. Each Executive Branch department and agency is hereby required, to the extent not inconsistent with law, to cooperate fully with the Task Force within the limits of its statutory authority and to furnish the Task Force with such assistance on as timely a basis as is necessary to accomplish the purposes of this Order. The Task Force may consult with experts or other knowledgeable individuals in the public or private sector with respect to any aspect of its mission.
- The Task Force shall organize and meet as soon as practicable to begin performing the charges set forth in this Order.
- Nothing in this Order shall be construed to supersede any federal, State, or local law.
- For purposes of this Order, “Executive Branch departments and agencies” shall mean any of the principal departments in the Executive Branch of State government and any agency, authority, board, bureau, commission, division, institution, office, or other instrumentality within or created by any such department, and any independent State authority, commission, instrumentality, or agency over which the Governor exercises executive authority, as determined by the Attorney General.
- This Order shall take effect immediately.
GIVEN, under my hand and seal this 3rd day of May,
Two Thousand and Eighteen and of the Independence of the
United States the Two Hundred and Forty-Second.
/s/ Philip D. Murphy
/s/ Matthew J. Platkin
Chief Counsel to the Governor