Six measures approved Monday by the Assembly Labor Committee address the unlawful practice of improperly classifying workers as independent contractors, rather than as employees.
The legislation stems from recommendations made by the Governor’s Task Force on Employee Misclassification in July. According to the report, misclassification of employees by employers has increased 40 percent in the last ten years and has become a growing problem throughout the country.
Misclassification not only hurts workers and law-abiding businesses, it also hurts the State. Based on a 2000 U.S. Department of Labor and Workforce Development (DOLWD) study of misclassification in construction in New Jersey referenced in the report, the failure to properly classify construction employees resulted in state income taxes not being paid for up to $11 million in off-the-books employment and nearly $9 million from employment of misclassified workers.
Assembly members Wayne DeAngelo (D-Mercer, Middlesex), Nicholas Chiaravalloti (D-Hudson), Paul Moriarty (D-Camden, Gloucester), Shanique Speight (D-Essex), Anthony Verrelli (Mercer, Hunterdon), Linda Carter (D-Middlesex, Somerset, Union), and Clinton Calabrese (D-Bergen, Passaic), are sponsors of the bills in the package.
The legislation addresses the following concerns:
- A-5838 (DeAngelo) Concerns stop-work orders related to Misclassification of Employees;
- A-5842 (Chiaravalloti/Moriarty) Concerns tax data sharing between State Treasury and DOLWD;
- A-5843 (Speight/Verrelli/Moriarty) Requires employers to post notice for employees on employee misclassification;
- A-5839 (Moriarty/Verrelli/DeAngelo) Requires employer to pay misclassification penalties if found to have violated State wage, benefit, and tax laws;
- A-5840 (Carter/Moriarty) Concerns joint liability for payment of employer tax law; and
- A-5841 (Calabrese/Verrelli)) Creates a new list for employers found in violation.
The sponsors of the bill issued the following joint statement:
“Classifying workers as independent contractors as an alternative to full or part-time employment has been a grossly misused practice of misclassification.
“It hurts employees and their families who do not have access to critical benefits and protections they are entitled to by law, including minimum wage, overtime compensation, family and medical leave and unemployment insurance. It also hurts each of the taxpayers and businesses paying their fair share while others avoid their tax duties.
“These measures will work in concert to stem the practice of misclassification together with expanding stop work orders beyond those for construction trades and prevailing wage, and requiring tax data to be shared between the state Department of Treasury and Labor to support more comprehensive investigations.”