Measures Target Activity That Exploits Workers, Damages Overall State Economy
Two pieces of legislation Assemblymen Gary Schaer, Eric Houghtaling and Troy Singleton sponsored to protect New Jersey workers by combating wage theft and upholding long-standing laws implemented to ensure fair practices within the construction industry were advanced Monday by an Assembly committee.
Unfair practices have fostered an underground construction economy that puts law-abiding companies at a competitive disadvantage and undermines the entire industry, the sponsors noted. An estimated 35,000 people in New Jersey – approximately 14 percent of the construction industry – are unreported or misclassified construction workers.
“In New Jersey’s construction industry, well-established workers’ rights too often are regarded as suggestions rather than the law. Illegal practices like unreported employment and misclassification not only hurt working people and their families but also rob the state of tax revenue that funds public goods and services,” said Schaer (D-Bergen/Passaic). “Prevailing wage violations and other abuses by employers must come with serious consequences. Cracking down on poor business practices is a matter of standing up for workers and businesses that follow the rules.”
The first measure (A-4353) would supplement the “Construction Industry Independent Contractor Act” to further target employers in the construction industry who improperly classify direct employees as self-employed independent contractors. Misclassification, which is used as a means of avoiding paying state and federal taxes, also deprives workers of proper Social Security benefits, overtime pay, workers’ compensation and other benefits.
Under current law, employers found guilty of misclassification may be deemed ineligible for public contracts for a three-year period. The bill would enhance the law by requiring employers within the construction industry to post notification of workers’ rights, including the right to unemployment benefits, minimum wage, overtime pay, protection from retaliation and other federal and state workplace protections in a location accessible to all employees. The notice, an individual copy of which shall be provided to each employee, also must include contact information for authorities that workers may reach to report violations or ask questions regarding their rights. Employers who fail to post and distribute the required notice would be subject to a penalty of $1,500 for a first offense and up to $5,000 for any subsequent violations within a five-year period.
“Some employees may suspect that what their employer is doing is wrong, but because they are unsure about what exactly the law says or don’t know who to call, the violation goes unreported,” said Houghtaling (D-Monmouth). “If employees in New Jersey know their rights and they know where to go when those rights are violated, then they’ll be empowered to take an active role in making sure those who break the law face consequences.”
The second measure (AR-194) would urge the governor to allocate $250,000 to increase prevailing wage enforcement staff within the Division of Wage and Hour Compliance (WHC) in the Department of Labor and Workforce Development. Assembly Democrats worked to include this allocation in a Democratic budget focused on rebuilding the middle class and reducing poverty in New Jersey. The governor rejected it in June via a line-item veto.
WHC field representatives inspect workplaces, interview workers, obtain records and examine the facts of wage complaints to ensure that workers and employers act in accordance with state labor laws. A 30 percent reduction in staffing within the division over the last decade has led to less stringent enforcement of these laws, including the “New Jersey Prevailing Wage Act.” Because penalties collected from violators of the law fund WHC, the reduction in staff – and thus collections – makes it difficult to pursue penalties and hire additional employees, which perpetuates unenforcement.
The prevailing wage, or the wage rate paid by virtue of collective bargaining agreements by entities employing a majority of workers within the construction industry subject to the agreements, sets a wage floor that attracts better workers and ultimately yields higher productivity, the sponsors said. Moreover, these workers tend to spend their earnings in their own communities, which benefits the local economy, they noted.
“New Jersey’s prevailing wage law reflects the fundamental notion that someone who works hard ought to receive fair compensation,” said Singleton (D-Burlington). “Proper enforcement of this law will uphold the integrity of the state’s construction industry by ensuring that the rights of workers are respected.”
Both measures were advanced by the Assembly Labor Committee.