New Jersey is one of the most aggressive states in the nation when it comes to punishing employers who misclassify workers as independent contractors. Now, in addition to facing criminal, civil and administrative penalties, new state laws have significantly expanded the state’s enforcement powers.
NJBIA has updated its Fast Fact document, Independent Contractors and Worker Misclassification, to provide members with the latest information on changes to worker misclassification laws and penalties, which now include stop-work orders that could shut down all an employer’s worksites and business locations if the state labor commissioner says workers are being misclassified as independent contractors.
Worker misclassification occurs when an employer hires someone and incorrectly (whether intentionally or unintentionally) treats that person as an independent contractor rather than an employee as required by law. Employers do not have to pay unemployment taxes, disability taxes, Social Security taxes, or workers’ compensation premiums for independent contractors, which is why the state and federal governments take worker misclassification seriously.
The New Jersey Department of Labor and Workforce Development (NJDOL) estimates $535 million in taxes go unreported due to employee misclassification, which is why both the NJDOL and IRS conduct random audits of businesses to check for workers that are misclassified as independent contractors.
Read the NJBIA Independent Contractors and Worker Misclassification Fast Fact here to learn more about the criteria used to determine if a worker has been misclassified and how your business can avoid running afoul of laws, including the four new bills signed by Gov. Phil Murphy on July 8.
To view NJBIA’s entire directory of employer Fast Facts on a wide variety of topics, go here.