New Jersey Gov. Phil Murphy Signs Laws to Combat Employee Misclassification
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New Jersey Gov. Phil Murphy signed a legislative package meant to protect workers and employers from unlawful misclassification.
The laws are intended to help stop the practice of illegally and improperly classifying employees as independent contractors.
“Workers who are misclassified as independent contractors miss out on fair wages and benefits,” Murphy said July 8. “These business practices are unfair, abusive and illegal, and they cannot be tolerated.”
The legislation sets up a new office within the Department of Labor and Workforce Development called the Office of Strategic Enforcement and Compliance. According to the governor’s office, some $1 million will be appropriated from the General Fund to support this new office.
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Also under the legislation, the Department of Labor and Workforce Development will create a statewide database of certified payroll information for public works projects.
“Creating a centralized office for the coordination of workforce and labor-related efforts will help ensure greater enforcement and compliance with New Jersey wage, benefit and tax laws,” said New Jersey General Assembly members Joseph Egan (D-Middlesex) and Robert Karabinchak (D-Edison) in a joint statement. “This office will 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.”
According to the governor’s office, a 2018 audit from the Department of Labor and Workforce Development’s Employer Accounts division found 12,315 cases of workers being misclassified, resulting in $462 million in underreported gross wages and $13.9 million in underreported contributions (such as unemployment and disability). The audit represented 1% of all registered New Jersey employers, suggesting the actual costs of misclassification are much higher.
Today, I signed a package of legislation that will strengthen our efforts to combat worker misclassification.⁰⁰We’re committed to ending misclassification and ensuring our working families get the wages and benefits they have earned.https://t.co/kU28sgueRg pic.twitter.com/BaFN56G6iw — Governor Phil Murphy (@GovMurphy) July 8, 2021
“Employee misclassification has been a growing issue in New Jersey,” said Sen. Fred Madden (D-Gloucester). “It may sound like a simple bureaucratic problem, but it is far more onerous. Misclassification results in hard-working New Jersey residents being denied basic benefits such as overtime, medical leave, unemployment insurance and safe workplaces, and their unscrupulous employers benefit.”
Addressing the issue of worker misclassification has been a priority during Murphy’s administration. In January 2020, Murphy signed a series of laws meant to combat worker misclassification.
Murphy signed an executive order in May 2018 creating a Misclassification Task Force to determine the scope of the problem and proposed steps to alleviate it. The task force represents a partnership between the administration and the New Jersey Legislature as well as labor and workforce leaders.
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