New Jersey: New Employer Rules and Penalties for Employee Misclassification

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New Jersey recently enacted several new laws to combat misclassification of independent contractors. Key points are summarized below.

  • JAN 20, 2020 | A5838 allows the Labor Commissioner to issue a stop-work order to any business in violation of wage, benefit, or tax laws. Following seven days’ advance notice, affected worksites will be required to close until the Commissioner releases them. Violation of the order can result in an additional $5,000 penalty per day.
  • JAN 20, 2020 | A5839 increases penalties for misclassification of employees as independent contractors. Now, the Labor Commissioner can assess up to $250 per misclassified employee as an “administrative misclassification penalty” for first time violations, and up to $1,000 per employee for subsequent violations, in addition to other statutory penalties. Employers may also have to pay a fine of up to 5 percent of the worker’s gross earnings over the most recent 12 months to benefit misclassified workers, which could either be held in trust by the Commissioner or paid directly to the worker.

  • JAN 20, 2020 | A5840 1 makes client employers and labor contractors jointly and severally liable for payment of employer tax laws (e.g., workers’ compensation, temporary disability benefits, state income tax).
  • APR 1, 2020 | A5843 requires employers to post a notice on rights and responsibilities related to employee misclassification.
  • JAN 20, 2020 | S4226 permits the state Department of Labor and Workforce Development (DOLWD) to post information of any person who violates state wage, benefit, and tax laws.
  • JAN 20, 2020 | S4228 permits the Division of Taxation to share tax data with the DOLWD.

Action Items

  1. Have independent contractor classifications reviewed by legal counsel.
  2. Have joint employer relationships and agreements reviewed by legal counsel.
  3. Post required notices.
  4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2020 ManagEase

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