Gov. Murphy Signs 4 NJ Bills To Address Worker Misclassifcation

NEW JERSEY — A legislative package of four bills will further the state's efforts to tamp down the practice of illegal and improper classification of employees as independent contractors.

Gov. Phil Murphy signed the bills into law on Thursday, each of them addressing a unique element of the misclassification practice. The practice takes advantage of workers by depriving them of the right to earn minimum wage and overtime, as well as workers' compensation, unemployment, earned sick leave, job-protected family leave, temporary disability and equal pay.

"Workers who are misclassified as independent contractors miss out on fair wages and benefits," said Murphy.

"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."

A highlight of the legislation package is A-5891, which creates the Office of Strategic Enforcement and Compliance within the Department of Labor. The DOL will then create a database to track payroll projects (A-1171), which is critical to "tracking and eliminating misclassification," the Governor's Office said.

The state will appropriate $1 million from the general fund to the new office.

Assembly sponsors of A-5891 Joseph Egan and Robert Karabinchak said in a joint statement that the newly established office will also "oversee the preliminary review of any business seeking State assistance to make sure they are complying with necessary regulations regarding employee compensation and contributions to unemployment and disability benefits funds."

Two other bills, A-5890 and A-5892, will simplify the process for identifying misclassified workers and implement stop-work orders at worksites where misclassification is identified.

The Murphy administration has targeted worker misclassification before, creating a Misclassification Task Force during his first year in office, which was tasked with determining the scope of the problem.

In 2018, a Department of Labor audit found more than 12,300 cases of workers being misclassified, resulting in more than $460 million in underreported gross wages and $14 million in lost state unemployment and temporary disability contributions, according to the Governor's Office.

The audit covered just 1 percent of businesses, suggesting that the real cost of misclassification could be even higher.

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