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.

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