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New Jersey Continues to Expand Worker Protections – New Protections for Misclassified Workers; New Potential Liability

In addition to bolstering the provisions of its mini-WARN Act (see Part I), New Jersey Governor Phil Murphy also recently signed into law expansive provisions aimed at deterring worker misclassification.  

Fines for Employee Misclassification

A.B. 5839 authorizes New Jersey’s Department of Labor and Workforce Development to fine businesses for intentionally misclassifying workers.  Fines for employers are $250 per misclassified employee for a first violation, and up to $1,000 per misclassified employee for each subsequent violation.  Additionally, employers must pay each misclassified individual up to 5% of the worker’s gross earnings over the past year.

Expanded Liability

Under A.B. 5840, businesses entering into agreements with labor contractors—e.g., staffing agencies—for workers are now jointly and severally liable and share legal responsibilities for violations of state wage and hour laws and state employer tax laws, including those related to employee misclassification. 

A.B. 5840 also impacts manager-level employees of businesses found to have violated state wage and hour and employer tax laws.  The law expands individual liability for violations to any person acting on the employer’s behalf to now include managers. 

Notice Posting Requirements

A.B. 5843 requires employers to conspicuously post notices containing the prohibition against misclassification; the standard for whether an individual is an employee or individual contractor; benefits and protections for employees under state wage, benefit, and tax laws; remedies available for misclassification; and how to report alleged misclassification.  Violations may result in the employer being guilty of a disorderly persons offense and a fine of $100 – $1,000. 

The new law includes an anti-retaliation provision for employees who complain about potential misclassification.  Employers violating the anti-retaliation provision must offer reinstatement to the discharged employee; correct any discriminatory action; and pay the employee considerable damages of reasonable legal costs, lost wages and benefits, and punitive damages equal to two times the lost wages and benefits.

Stop-Work Orders and Public Posting of Violators

In keeping with the trend of employee protections, A.B. 5838 allows New Jersey regulators to issue an immediate stop-work order for worksites where an employer has been found to have violated New Jersey wage, benefit, or tax laws.  Employers who violate a stop-work order may be fined up to $5,000 per day.  While a stop-work order can be issued while an employer appeals a violation decision, an employer may seek injunctive relief, and must then demonstrate the stop-work order would be or has been issued in error.

New Jersey also enacted S.B. 4226, allowing the Department of Labor and Workforce Development to post information of persons who violate state wage, benefit, and tax laws.

© Polsinelli PC, Polsinelli LLP in California


About this Author

Judy Yi, Polsinelli PC, agency investigations attorney, federal statutory litigation, human resources legal counsel, mergers acquisitions lawyer, workplace risk law

Judy Yi’s labor and employment law practice reflects extensive experience in representing management in agency investigations and litigation in both state and federal courts. She focuses on managing and minimizing workplace risks associated with multi-state and federal statutory compliance with employment and human resources issues. She also has experience in handling the employment aspects of complex transactional matters, including mergers and acquisitions.  Judy has conducted comprehensive employment/human resources audits, reviewing employment processes, policies and...

Meghan Hanson Polsinelli Employment Attorney

Meghan Hanson focuses on her practice on a wide variety of employment-related matters. She is committed to understanding the industry in which clients operate and provides valuable counsel to employers as they face sensitive workplace matters. Her experience includes conducting discovery research and drafting memoranda related to employment cases, summary judgement and bankruptcy and physician liability.

Working with seasoned Polsinelli attorneys, Meghan helps employers mitigate risk and prevent or resolve employee issues before they escalate into legal disputes, including by developing workplace policies and procedures by providing practical advice on specific workplace issues.

Prior to joining Polsinelli, Meghan served as a law clerk for the Honorable Julie A. Robinson of the U.S. District Court for the District of Kansas. She attended the University of Kansas law school, where she was the Symposium Editor for the Kansas Law Review.