Changes to New Jersey Law Expand Worker Protections and Target Employee Misclassification

March 23, 2020

Several recent changes in New Jersey employment law have increased protections for Garden State workers. This stands in contrast to new interpretations of federal wage and hour law, which have generally been viewed as much more employer-friendly. The new laws in New Jersey attempt to address the widespread problem of employee misclassification, provide employees with more avenues to pursue claims for unpaid wages and overtime pay, and impose stiffer penalties on employers that violate workers’ rights.

Crackdown on Employee Misclassification

In New Jersey and across the country, employers have long sought to minimize their costs and legal obligations by classifying workers as independent contractors rather than employees. Companies are not required to provide independent contractors with overtime pay, nor do they pay independent contractors’ wage withholding, unemployment, Medicare, Social Security, and other taxes. In addition, independent contractors are not protected by federal and state laws covering “employees” with respect to health care, family leave, wage and hour provisions, discrimination, and sexual harassment.

But an employer does not get to unilaterally make the call as to who is or is not an “employee.” That determination is based on the law, which takes into account the realities of the worker’s responsibilities, and the degree of control an employer exerts over the worker’s behavior.

The distinction between an independent contractor and employee can be a tricky one for workers to understand, and many people who work as independent contractors do so solely because that is what their employer calls them. Such workers may not realize that they may be misclassified as independent contractors, and entitled to much more in terms of compensation and other workers’ rights.

That is why Assembly Bill 5843, signed into law on January 21, 2020, now requires that all New Jersey employers conspicuously post notices at their worksites describing employee misclassification, including posters clarifying how workers can report an alleged misclassification. The new law also gives workers a private right of action if an employer retaliates against them or treats them adversely for complaining or inquiring about misclassification. Employers can be fined between $100 to $1,000 for each violation, and any worker terminated in retaliation for engaging in protected conduct will be entitled to reinstatement plus back pay and legal fees.

Similarly, A.B. 5839 and A.B. 5840 focus on increasing penalties for companies, staffing agencies, and business owners and managers who misclassify workers as independent contractors.

Businesses that enter into arrangements with labor contractors or agencies to provide them with workers will now share legal responsibility for any civil violations of state wage or tax laws, including laws regarding worker misclassification. Importantly, a putative employer’s owners, officers, or managers who act on the company’s behalf may be held personally liable for their roles in any incidents of intentional misclassification.

Expanded Mass Layoff and Shutdown Protections

Prior to the January 2020 enactment of Senate Bill 3170, New Jersey employers were required to provide covered employees with 60 days’ advanced notice of a plant shutdown or mass layoff, consistent with a federal law known as the WARN Act.

Under the new law, which takes effect July 19, 2020, covered employers in New Jersey must instead provide 90 days’ advanced notice before a plant shutdown or mass layoff. Significantly, employers must also provide severance pay to all workers impacted by mass layoffs as a form of back pay. Any employer that fails to provide the full 90 day’s notice must pay employees an additional four weeks of severance pay.

Finally, A.B. 5838 empower state regulators to issue stop-work orders for sites at which they find employers violating state wage, benefit, or tax laws. Businesses who ignore any such orders face fines of up to $5,000 per day.

Outten & Golden: Protecting the Rights of Workers

These recent changes to New Jersey law are welcome enhancements to the protection of workers in the state. If you have questions about these developments or are concerned that your employer is engaging in employee misclassification or other prohibited conduct, the wage and overtime attorneys at Outten & Golden stand ready to help. If you have questions or concerns about employment discrimination, please contact us today.

(*Prior results do not guarantee a similar outcome.)