Murphy signs laws to combat misclassifying workers as contractors instead of employees

Posted Jul 08, 2021

Gov. Phil Murphy on Thursday signed a package of bills into law to further crack down on worker misclassification in New Jersey, calling it “an unfair and frankly abusive practice.”

Officials say misclassification is when employers purposefully label workers as contractors instead of employees, often to pay them off the books, without having to cover benefits and taxes.

Under the four new laws Murphy signed, the state will simplify the process of identifying misclassification, order stop-work orders at worksites that are found to misclassify workers, create a new office to address the matter, and craft a database to track payrolls.

“These employers do this for a simple reason: to save themselves a few bucks by skipping out on paying their employees their fair wages and benefits,” Murphy, a Democrat, said during a Zoom bill signing event.

A 2019 report from Murphy’s administration said more than 12,000 workers in New Jersey were cheated out of more than $450 million in wages and benefits in 2018 because they were misclassified or paid off the books.

The practice, officials said, also gives these employers an unfair advantage over those who don’t misclassify. Plus, they said, the state misses out on tax revenue.

“All we’re talking about is everybody playing by the same set of rules,” state Senate President Stephen Sweeney, D-Gloucester, said.

But Anthony Anastasio, president of the New Jersey Civil Justice Institute, said the new laws provide the state with “additional draconian enforcement powers to further the Murphy administration’s pro-labor union special interest agenda.” That, he said, includes “forcing employee status upon workers who desire independence.”

“Many workers, including working mothers, rely on the flexibility of independent work arrangements to successfully integrate their careers and personal lives,” Anastasio said. “Considering the widespread legal confusion surrounding worker classification, this legislation provides ideal conditions for more regulatory overreach in that area.”

The laws Murphy signed Thursday are:

  • A5890, which will allow the state to enforce of worker misclassification and stop-work order laws.
  • A5892, which streamlines how to identify worker misclassification.
  • A5891, which creates an Office of Strategic Enforcement and Compliance in the state Department of Labor.
  • A1171, which requires the state labor commissioner to create Statewide a database of certified payroll information for public works projects.

The first two bills passed the Democratic-controlled state Legislature largely along party lines. The other two had Republican support.

These laws come a year and a half after Murphy signed a package of earlier bills to combat misclassification. Those aimed to protect the rights of so-called gig workers — self-employed people such as truckers and freelance writers — in New Jersey and require the companies that hire them pay their share of payroll taxes.

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published this page in News and Politics 2021-07-09 03:23:44 -0700