New Jersey takes aim at employers misclassifying workers to cut costs

New Jersey Gov. Phil Murphy has signed an executive order to find a way to stop employers from misclassifying workers in an effort to subvert the law and cut costs.

The misclassification of employees occurs when companies call their workers “independent contractors,” said John Ballantyne with the Northeast Regional Council of Carpenters.

“They do this to avoid paying taxes, insurance costs, and payroll deductions. It hurts workers. It hurts honest law-abiding businessmen that can no longer compete within our industry against such unscrupulous practices,” he said.

This misclassification adversely affects workers, taxpayers, and employers who play by the rules, said New Jersey Labor Commissioner Robert Asaro-Angelo.

“Employers who misclassify workers don’t pay into unemployment or temporary disability insurance cheating their fellow New Jerseyans out of hundreds of millions of dollars in the state treasury,” he said. “Misclassified employees also miss out on vital safety net programs such as family leave insurance, workers compensation, disability, and more.”

The task force will make recommendations on how to improve misclassification monitoring and enforcement, according to the governor.

“This is a question about enforcing what is already on the books and we’re coming out of a period that we’ve done a lousy job. It hasn’t been coordinated. Our backs have been turned on this illegal practice, and we’re saying today that those days are over,” said Murphy.

“If companies circumvent labor law by classifying their workers as self-employed, they’ll be brought into compliance or be put out of business,” said Murphy.