Gov. Phil Murphy on Monday signed a package of bills into law that aim to protect the rights of self-employed workers like truckers and freelance writers in New Jersey and require the companies that hire them pay their share of payroll taxes.
The laws address some of the problems associated with businesses misclassifying workers, detailed in a July report by the state Department Labor and Workforce Development.
“Misclassification deprives workers of a suite of rights guaranteed to employees, but not independent contractors,” the report said, including the right to earn overtime, to seek workers’ compensation for on-the-job injuries and to earn sick leave.
“Gov. Murphy has positioned New Jersey to be a leader in the fight against illegal misclassification by giving the Labor Department powerful new compliance and enforcement tools,” state Labor Commissioner Robert Asaro-Angelo said in a statement Monday.
“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," Asaro-Angelo added. “These bills contain important work rights and protections for both our state’s employees and their employers.”
Since 2000, New Jersey has lost tens of millions of dollars every year in forgone state income taxes, employment and disability contributions, the task force said in the report. More than 12,000 workers were misclassified in 2018, leading to $462 million in underreported wages, as well as nearly $14 million in contributions, including unemployment and disability.
The new laws will penalize employers in the state intentionally misclassifying employees (A5839), require employers to post notices describing misclassification (A5843) and allow stop-work orders to be issued against employers violating state wage, benefit or tax law (A5838).
Business leaders fought the bills because they claimed it would raise their costs.
Murphy also signed a law (S4228) that permits the sharing of tax information between the state Department of Treasury with Labor and Workforce Development, and another (A5840) that holds labor contractors and employers in the state equally liable for evading tax laws.
“Today marks a victory for workers all across the state of New Jersey,” said state Sen. Fred Madden, D-Gloucester, one of the sponsors of the bill package. “For far too long, unscrupulous contractors have cheated their workers out of hard-earned wages and benefits in order to undercut the competition and increase personal profits. This has created untold social and economic costs for our middle class families, but today we say no more."
The most controversial of the bills proposed to protect workers never made it to the governor’s desk.
This legislation (S4204), sponsored by state Senate President Stephen Sweeney, would have redefined employees and independent contractors in New Jersey. Freelancers, truck drivers, bakers, wedding photographers, and musicians sharply criticized the bill, arguing it would keep them from finding work, reduce their income, and even force them to leave the state.
Sweeney has said he intended to reintroduce the bill and try again to build support for it in the new Legislative session that began a week ago.