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Governor Combats Employee Misclassification

The Forum - Directors Digest
February  2020

Governor Phil Murphy has signed a package of bills aimed at combating worker misclassification and employee “exploitation.”

According to a statement from the governor’s office, the bills will crack down on employee misclassification in businesses by allowing stop-work orders against employers violating state wage, benefit and tax law; providing assessment of penalties for violations in connection with misclassification of employees; and requiring employers to post a notice for their employees regarding employee misclassification, among other provisions.

"We cannot build a stronger and fairer economy without strong workplace protections that ensure fairness for employees," Murphy said in a statement. "I am proud to sign these bills today to curb this unethical and illegal practice that hurts our working families and exploits New Jersey's workers."

Initially included in the bill package, S-4204 would have changed how employers are able to use independent contractors or freelancers for work by allowing a business to classify someone as a freelancer only if that person were performing duties outside of the normal scope of the business. Under that version of the bill, a landscaper could be classified as an independent contractor if they were performing work for a funeral home. A trade embalmer, however, might not be able to be classified as an independent contractor for a funeral home. This bill was pulled from consideration after meeting opposition from business groups and freelance workers.

The modified bill was reintroduced during the new legislative session as S-863, and seeks to codify into law the Murphy administration’s interpretation of the “ABC test” that governs the classification of employees and independent contractors. Trade organizations, including the New Jersey State Funeral Directors Association, are still assessing the impact this proposed measure will have on funeral homes.

The Enacted Bill Package

The governor signed the following legislative package of bills into law.

A-5838 (DeAngelo, Danielsen, Houghtaling/Madden, Singleton)—Concerns stop-work orders
A-5839 (Moriarty, Verrelli, DeAngelo/Madden, Singleton)—Concerns penalties for misclassification of employees
A-5840 (Carter, Moriarty/Greenstein, Madden)—Concerns joint liability for payment of employer tax law
A-5843 (Speight, Verrelli, Moriarty/Lagana, Greenstein)—Requires employers to post notice for employees on employee misclassification
S-4226 (Madden, Singleton/Calabrese, Verrelli, Moriarty)—Permits the Department of Labor and Workforce Development to post information of person who violates state wage, benefit and tax laws
S-4228 (Lagana, Madden/Chiaravalloti, Moriarty)—Concerns tax data sharing between state Department of Treasury and Department of Labor and Workforce Development

“These bills protect employees who are misclassified as independent contractors as well as independent contractors improperly treated as employees and provide critical support for employers who play by the rules,” said Labor Commissioner Robert Asaro-Angelo in a statement.

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