Employee misclassification has grown about 40 percent over the past 10 years, but New Jersey is looking to curb that escalation, according to a report released July 9 by the governor’s office, .
Speaking Tuesday at the New Jersey State Building & Construction Trades Council’s 115th Annual Convention at the Hard Rock Hotel & Casino in Atlantic City, Gov. Phil Murphy touted the findings from his Task Force on Employee Misclassification, along with actions to curtail the practice.
Murphy said he would sign into law Assembly Bill 108/Senate Bill 2557, which would grant the state Department of Labor and Workforce Development Authority the authority to shut down a job site if enough violations are found during an investigation.
Of 16 recommendations put forth by the task force, Murphy said half have already been put into action, such as coordinating across agencies, and state lines, on enforcement efforts.
A Memorandum of Understanding is already in place between the NJDOL and the U.S. Department of Labor to provide for the sharing of information and the ability to jointly develop misclassification cases. Murphy signed a similar agreement among New Jersey, Delaware and Pennsylvania.
Other recommendations in the report include increasing fines and penalties for offenders, targeted education and public outreach, using DOL power to revoke and suspend licenses, strengthening state contracting and criminal referrals.
“We know that we cannot build a stronger and fairer economy without strong worker protections. Our Administration has made cracking down on misclassification a top priority, and we will continue to root out contractors who exploit and cheat workers,” Murphy said in prepared remarks.
According to the governor’s office, a 2018 audit of 1 percent of businesses in the state found that the misidentification of workers as independent contractors – which is particularly relevant in labor-intensive industries like home care, trucking and delivery, transportation and construction – resulted in $462 million in underreported wages.
That misclassification of 12,315 workers caused $14 million in lost contributions to unemployment, disability, family leave and workforce programs, according to the report.
“Misclassifying workers as 1099 employees denies them benefits, robs the State Treasury of needed revenue, and makes it harder for law-abiding businesses to compete,” said Labor Commissioner Robert Asaro-Angelo in a prepared statement.
The task force was established by an executive order signed by Murphy in May 2018; public forums were held in Newark, New Brunswick and Atlantic City to assist the panel in its work.