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New Jersey fights illegal labeling of independent contractors

On Behalf of | Aug 29, 2019 | Firm News


Joining forces with Pennsylvania and Delaware, New Jersey is cracking down on employers who treat workers as independent contractors when the law says they must be given all the rights and benefits of full-fledged employees. This illegal misclassification workers generally cheats taxpayers and competing employers.

If your employer pays you and denies you benefits as if you’re an “independent contractor” but expects you to work like a full-time employee, you need to know you have a legal right to be represented.

Misclassification is everybody’s problem

Labeling a worker as an independent contractor saves employers money; but there are strict rules for telling a real contractor from employees who have strict, specific and valuable rights under the law. Misclassification denies workers overtime pay, workers’ compensation for job-related health problems, unemployment benefits, vacations, sick leave, and family leave.

The Governor claims misclassification cost workers more than $46 billion in wages and benefits in 2018 alone. He also says New Jersey “has lost tens of millions of dollars every year since 2000 in foregone state income taxes and unemployment and disability contributions”.

A Rutgers professor of labor relations adds that contractors are rarely eligible for health benefits and must pay their own Social Security taxes. In the end, employers often wind up “outsourcing” their obligations and expenses to Medicaid or other taxpayer-funded care.

New Jersey and Pennsylvania join forces

New Jersey Governor Murphy signed a law last year authorizing the state’s Department of Labor to shut down workplaces completely or fine the employer $5,000 for every day the employer misclassifies its workers. At the same time, the state’s Task Force on Employee Misclassification also released its report proposing 16 actions the state could take.

New Jersey quickly signed agreements with Pennsylvania, Delaware, and the federal Department of Labor to coordinate, share information, and launch joint investigations.

The state is also training investigators in misclassification and contacting business accountants urging them to educate and warn all clients who hire workers.

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