New Jersey enacts higher penalties for employee misclassification

August 2021 employment law letter

Authors:

Patrick W. McGovern and Daniel Pierre, Genova Burns LLC

On July 8, New Jersey Governor Phil Murphy signed three bills into law raising the stakes for employers that misclassify employees as independent contractors. With the changes, businesses operating in the state and misclassifying employees can expect to pay stiffer fines and face legal enforcement actions that didn’t previously exist.

Stop-work order

The first law is effective immediately and authorizes the New Jersey Department of Labor and Workforce Development (NJDOL) to (1) shut down a workplace found to have violated the Unemployment Compensation Law (UCL) and (2) levy fines for each day the employer ignores NJDOL’s order. Also, an employer receiving a stop-work order must pay its employees for the first 10 days of the order.

State labor officials already had the authority to shut down a worksite under a bill Governor Murphy signed in 2020. The new law increases the tools available to the NJDOL to encourage compliance by employers and exact penalties for noncompliance. More specifically, businesses will feel the impact in the following ways:

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