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New Jersey Governor Phil Murphy signed a series of bills into law in January designed to enhance worker protections with respect to misclassification, wage theft and mass layoffs.
The recently enacted employment laws cover a range of issues, including:
Misclassification of Independent Contractors
Employers often misclassify employees as independent contractors to avoid minimum wage and overtime requirements. Assembly Bill 5839 authorizes the Commissioner of the Department of Labor and Workforce Development to fine businesses that intentionally misclassify workers up to $250 for every misclassified employee for a first-time violation, and up to $1,000 per employee for subsequent violations.
A.B. 5839 also imposes a fine of up to 5 percent of the worker’s gross earnings over the past 12 months which will either be paid to the affected employee or held in trust by the Commissioner. The new law requires the Commissioner to notify employers of alleged violations prior to assessing any fines and gives employers 15 days to request an administrative hearing to contest the penalty.
A related misclassification law, Assembly Bill 5843, directs employers to conspicuously post notices that explain the ban on employee misclassification and inform workers how to report alleged misclassification. A.B. 5843 also includes a provision that prohibits employers from retaliating against workers for complaining about misclassification.
Joint Liability for Wage and Hour Law Violations
Assembly Bill 5840 holds employers and labor contractors that enter into arrangements for staffing jointly and severally liable for any violations of state wage and tax laws (workers’ compensation, temporary disability benefits, state income tax), including provisions in those laws related to employee misclassification. A.B. 5840 also includes a provision that holds any person acting on an employer’s behalf, including owners, officers and managers, liable for violations of these laws.
Stop-Work Orders
Assembly Bill 5838 authorizes state regulators to issue a stop-work order against employers found to be in violation of any state wage, benefit or tax law. The stop-work order remains in effect until the employer has paid any wages or penalty owed and an order releasing the stop-work has been issued by the Commissioner. Businesses that violate a stop-work order are subject to a penalty of $5,000 per day.
Severance for Mass Layoffs
The Senate bill amends the state WARN Act by requiring employers to provide workers 90 days notice of a mass layoff and mandates severance pay for terminated employees. A mass layoff includes plant closures or layoffs of at least 50 full-time employees in a 30-day period. The severance pay must equal one week’s pay for each full year the worker has been employed. If notice is not provided as required, employers are required to pay an additional 4 weeks of severance.
The Takeaway
A number of legal analysts agree that New Jersey is following in the footsteps of New York and California to become a more employee-friendly state. The best way for employers and employees to understand their obligations and rights, respectively, under the new laws is to consult an experienced employment lawyer.