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Governor Phil Murphy

New Jersey Cracks Down on Misclassifying Workers

The state has passed a series of new laws to enact penalties for bosses who misclassify their employees

Brian Young's picture
Jan 22, 2020

With the explosion of independent contractors and freelancers, there has also been an explosion in the misclassification of workers. In New Jersey, the legislature has decided to take up the issue passing a series of bills that will protect workers and help ensure they are properly classified.

The package of bills will crackdown on employee misclassification by allowing stop-work orders against employers violating state wage, benefit and tax laws. It would then assess penalties for violations in connection with misclassification of employees, require employers to post a notice for employees about misclassification, and more.

The illegal practice of misclassification allows companies to avoid the costs of standard workplace protections like workers' compensation, health care, minimum wage and Social Security, passing costs off onto taxpayers, depriving the state of revenue, and putting law-abiding companies at a competitive disadvantage.

The legislation, which passed the State House and State Senate, was signed by Governor Phil Murphy this week.

"This is a tremendous step forward in protecting workers in New Jersey from misclassification," said Fred Potter, Teamsters International Vice President and President of Teamsters Local 469 in Hazlet, N.J. "This legislation will not impact legitimate independent contractors, but it will serve to protect the thousands of workers who are harmed by the illegal practice of being misclassified by their employers as independent contractors when in fact they are employees. It's critical that these groundbreaking laws be followed by enforcement to ensure New Jersey's workers are protected."

An audit of workers in New Jersey found that in 2018, 12,315 workers were misclassified. This resulted in $462 Million in underreported wages and nearly $14 million lost in taxes for unemployment, disability, and family leave insurance.

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