Governor Murphy Releases Report on Employee Misclassification (NJ)

Posted by National Alliance for Fair Contracting on

Governor Murphy Releases Report on Employee Misclassification
Announces Intent to Sign Law Giving the New Jersey Department of Labor & Workforce Development Authority to Shut Down Job Sites When Violations Are Found

July 9, 2019, 12:08 pm
Insider NJ

ATLANTIC CITY – Governor Phil Murphy today released a comprehensive report from the Task Force on Employee Misclassification, vowing to intensify efforts to curtail the widespread and illegal practice of misclassifying workers as independent contractors instead of employees, which cheats some workers out of benefits and wages, hurts law-abiding business owners, and costs the state tens of millions of dollars a year in lost employment-related tax revenue.

The Governor has given the New Jersey Department of Labor and Workforce Development (NJDOL) new tools to help put an end to misclassification and noted that his administration has already acted on eight of the task force’s 16 recommendations.

Additionally, while addressing the New Jersey State Building & Construction Trades Council’s annual convention, the Governor announced his intent to sign a bill (A-108/S-2557) giving the NJDOL the power to issue stop-work orders whenever an initial work site investigation finds sufficient violations.

“Employee misclassification hurts hardworking New Jersey workers and prevents them from receiving the benefits and the pay they worked for and deserve,” said Governor Murphy. “We know that we cannot build a stronger and fairer economy without strong worker protections. Our Administration has made cracking down on misclassification a top priority, and we will continue to root out contractors who exploit and cheat workers.”

The Governor established the task force by Executive Order No. 25 in May 2018 in response to the widespread problem of employee misclassification. In an audit last year of one percent of New Jersey businesses, NJDOL found that 12,315 workers were misclassified, resulting in $462 million in underreported wages and $14 million in lost contributions to unemployment, disability, family leave and workforce programs, according to the report.

“Misclassifying workers as 1099 employees denies them benefits, robs the State Treasury of needed revenue, and makes it harder for law-abiding businesses to compete,” said Labor Commissioner Robert Asaro-Angelo. “I want to thank Governor Murphy for his leadership on this issue, which is critical to his vision for a stronger, fairer economy.”
Misclassification is especially prevalent in construction, janitorial services, home care, transportation, trucking and delivery services, and other labor-intensive, low-wage sectors.

Among the report’s recommendations are expanding interagency cooperation through coordinated enforcement, data sharing, and cooperation with neighboring states.

NJDOL already has in place a Memorandum of Understanding with the U.S. Department of Labor, enabling the two agencies to more easily share information and jointly develop misclassification cases. A similar Memorandum of Understanding among New Jersey, Pennsylvania, and Delaware was signed today. The reciprocal agreement maximizes the neighboring states’ enforcement efforts through referrals, data sharing, and joint investigations.

The task force held public forums in Newark, New Brunswick, and Atlantic City, where it heard from scores of employees, employers, subject-matter experts, and others impacted by misclassification. Their experiences and comments informed the task force’s report.

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(See PDF of Report)

EDITORIAL: WAGE THEFT SHOULD BE AT THE TOP OF LEGISLATURE’S AGENDA

Posted by National Alliance for Fair Contracting on

October 2, 2018

If you put in an honest day’s work, you should get an honest day’s pay. It’s that simple. The problem is, it’s not happening. Wage theft is occurring across the Commonwealth and dishonest employers are getting away with it, because Beacon Hill has continuously sided with business interests over hard-working families.

The numbers are shocking. About $700 million is stolen from workers every year, the majority of whom are low-income people of color. Only a fraction of those wages, less than 1 percent, is recovered by state authorities.

Often, wage theft happens when bad employers use subcontracting and outsourcing to dodge their basic responsibilities. These crimes are so pervasive, they’re overwhelming the capacity of our existing labor laws and enforcement mechanisms. They’re also a drain on our economy that siphons much-needed revenue, funds that could go toward improving roads, schools, transit, and other public infrastructure.

Cities and towns across the Commonwealth understand what’s at stake, and they’ve shown real leadership standing up for the public good and confronting these criminals head on.

Boston Mayor Marty Walsh led the charge in 2014, when he issued a powerful executive order protecting vulnerable workers from wage theft. At the time of the historic announcement, he said: “It’s illegal to deny fairly earned wages. This executive order empowers workers to demand what they have worked for. I’m committed to stopping violations and holding employers to the letter of the law.”

Since then, more municipalities, including Chelsea and Lynn, have also passed important anti-wage theft measures. And just this month, the Springfield City Council passed the strongest legislation yet. It ensures that businesses are in full compliance with wage and hour laws, including prevailing wage, before they receive any tax incentives from the city.

It’s a groundbreaking measure, and further proof that cities and towns are showing the way forward, but we still need a statewide solution that protects families from Norwood to New Bedford from this unlawful crime wave.

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TENNESSEE DRYWALL WORKERS WIN UNPAID OVERTIME IN DOL SETTLEMENT (TN)

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EMPLOYEES MISCLASSIFIED AS INDEPENDENT CONTRACTORS SHORTED ON WAGES, WORKERS COMPENSATION, SAFE WORKPLACES

November 21, 2018, 1:15PM. By Anne Wallace

Hermitage, TN – On October 19, 2018, the U.S. Department of Labor announced that Tennessee contractor, Vasquez Drywall, had agreed to pay $103,300 in back wages to workers misclassified as independent contractors and a $2,424 civil penalty. Employment misclassification is rampant in the construction industry in Tennessee and throughout the country. The practice deprives employees of overtime pay, workers compensation insurance and basic workplace safety protections. Undocumented construction workers are particularly at risk because they are unlikely to bring lawsuits or seek other enforcement action to preserve their rights.

VASQUEZ DRYWALL — PART OF A BIGGER PROBLEM

DOL Wage and Hour Division investigators found that Vazquez Drywall violated the Fair Labor Standards Act’s (FLSA) overtime requirements by inaccurately classifying employees as independent contractors and paying them piece rates or flat salaries regardless of whether they worked more than 40 hours a week. The Division also found the employer failed to keep accurate payroll records for these workers. “Even if employees are paid piece rates, or on salaries,” noted Wage and Hour Division District Director Nettie Lewis, “they are typically still due overtime when they work more than 40 hours in a week.”

Since the wage order and fine were the products of a settlement, the details of what actually occurred and how many workers were affected remain unclear. What is clear, however, is that underpayment is a chronic problem in the Tennessee construction industry.

In June 2018, workers brought a federal lawsuit against two subcontractors involved in the construction of a new J.W. Marriott in downtown Nashville. The lawsuit claims that Mr. Drywall and First Class Interiors violated the FLSA by failing to pay workers the federal minimum wage or overtime pay for hours in excess of the normal 40-hour work week. It alleges that the company “willfully filed fraudulent information returns [with the IRS] classifying the plaintiffs as independent contractors rather than employees.”

In 2013 the Nashville Post reported that “[b]ased on estimates the [Tennessee Department of Labor and Workforce Development] provided, there are between 21,990 and 36,680 misclassified and unreported construction industry workers in Tennessee. Misclassified and unreported workers are estimated to range from 11 percent to 22 percent of all workers in the construction industry statewide.”

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New Jersey Passes Laws on Sick Leave and Pay Equity; Will Tackle Worker Misclassification (NJ)

Posted by National Alliance for Fair Contracting on

The National Law Review
Wednesday, May 9, 2018

A little more than 100 days into his tenure, New Jersey Governor Phil Murphy has made it clear that employment is one of his top priorities. In the past two weeks, Gov. Murphy has signed a Paid Sick Leave and an Equal Pay bill into law and established a Task Force on Employee Misclassification.

Paid Sick Leave

The New Jersey Paid Sick Leave Act was signed into law on May 2, 2018, and takes effect on October 29, 2018. It will require New Jersey employers of all sizes to offer their employees one hour of sick leave for every 30 hours worked. Covered employees will be eligible for paid sick leave after 120 days of employment and are then permitted to use up to 40 hours of sick leave per benefit year. Employers may set the benefit year. The benefit year does not need to be a calendar year but once set, it cannot be changed without prior notification to the New Jersey Department of Labor and Workforce Development. In lieu of tracking each hour worked and earned, employers may offer 40 hours of paid sick time at the beginning of each benefit year or utilize an existing paid-time-off policy so long as it confers equal or richer paid leave benefits than those provided for in the Act.

…

The Equal Pay Act

The Diane B. Allen Equal Pay Act (NJEPA), signed into law by the Gov. Murphy last month, will take effect in less than four weeks – on July 1, 2018. New Jersey employers across industries should pay close attention to this effective date because the law places onerous requirements on them. The NJEPA contains extensive amendments to the New Jersey Law Against Discrimination (NJLAD) through its:

  • Prohibition of compensation discrimination on the basis of any protected class for “substantially similar work when viewed as a composite of skill, effort, and responsibilities”
  • Increased statute of limitations period from two to six years for claims alleging pay inequity or discrimination
  • Mandatory treble damages for successful plaintiffs

Task Force on Employee Misclassification

On May 3, 2018, Gov. Murphy signed an executive order establishing a Task Force on Employee Misclassification. Misclassification is when workers are incorrectly labeled as independent contractors rather than employees. Workers who are incorrectly classified frequently are not provided benefits and other protections available to employees, such as minimum wage, overtime compensation, family and medical leave, unemployment insurance, and workers’ compensation.

The New Jersey Task Force will be charged with a number of responsibilities to combat employee misclassification, including:

  • Examining and evaluating existing misclassification enforcement by executive departments and agencies
  • Developing best practices by departments and agencies to increase coordination of information and efficient enforcement
  • Developing recommendations to foster compliance with the law, including by educating employers, workers, and the public about misclassification
  • Conducting a review of existing law and applicable procedures related to misclassification

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Governor Murphy Signs Executive Order Establishing Task Force on Employee Misclassification (NJ)

Posted by National Alliance for Fair Contracting on

May 3, 2018

Trenton – Governor Phil Murphy today signed an executive order establishing the Task Force on Employee Misclassification. Employee misclassification can allow employers to escape their legal responsibilities to their workers, such as ensuring adequate workplace protections and providing employment-related benefits like unemployment insurance and workers’ compensation. Employers often misclassify their employees intentionally in order to reduce labor costs and avoid paying state and federal taxes.

“The exploitation of workers is not only unethical – it is illegal,” said Governor Phil Murphy. “In New Jersey, we promote fairness, fight against discrimination, and work to end unfair labor practices. I am proud to take this step forward to end a practice that creates an unfair advantage over companies that play by the rules and hurts our working families.”

“We must crack down on wage theft,” said Attorney General Gurbir Grewal. “More and more employers are misclassifying their workers as ‘independent contractors’ because they think it’s cheaper than doing things the right way. But this practice isn’t just illegal. It actually makes New Jersey’s communities poorer in the long run by denying workers the wages and benefits to which they are legally entitled, and that are essential to building a fair and prosperous economy. We are proud to join with other states in fighting this growing problem.”

“Protecting workers’ rights is an important function of government and that role cannot just be limited to private businesses, but to the State and who it hires,” said Senate President Steve Sweeney. “When someone is in effect working as employee, but deliberately misclassified as an independent contractor, that worker is losing benefits, wages and other compensation. That just isn’t acceptable. This Task Force should ensure that the State is compliant with best practices. I look forward to working with them on this important issue. Anyone working for the State of New Jersey should know that their job, compensation and responsibilities match their job classification. This is about fairness.”

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DeLauro Introduces Bill to Stop Wage Theft, Boost Workers’ Financial Security

Posted by National Alliance for Fair Contracting on

August 7, 2017
Press Release

WASHINGTON, DC (August 7, 2017) – Congresswoman Rosa DeLauro (CT-03), along with U.S. Senators Patty Murray (D-WA), Sherrod Brown (D-OH), and Al Franken (D-MN), and Congressman Bobby Scott (VA-03), introduced the Wage Theft Prevention and Wage Recovery Act to crack down on employers who unfairly withhold wages from their employees. This bill would give workers the right to receive full compensation for all of the work they perform, as well as the right to receive regular paystubs and final paychecks in a timely manner. It would also provide workers with improved tools to recover their stolen wages in court and make assistance available to build community partnerships that enhance the enforcement of and improve compliance with wage and hour laws.

“The biggest economic challenge facing our country is that too many people are in jobs that do not pay them enough to live on. Across the country, some workers are putting in long hours and working for an honest day’s pay, only to have their employers cheat them out of their hard-earned wages. Wage theft is inexcusable and unconscionable, and our federal laws should hold employers who violate their employee’s right accountable,” said Congresswoman DeLauro. “The Wage Theft Prevention and Wage Recovery Act is comprehensive legislation that will strengthen current federal law and empower employees to recover their lost wages. Whether it is compensation for a day’s work, or overtime, employees should be paid what they earn. This legislation not only protects workers, but it will help our economy grow.”

In May, the Economic Policy Institute published a new report finding that employers steal more than an estimated $15 billion from workers each year, with workers in low-wage industries at the greatest risk. A National Employment Law Project 2008 survey of 4,387 low-wage workers in New York, Los Angeles, and Chicago found that low-wage workers experienced a range of wage and hour violations, with women, immigrants and minorities being disproportionately affected. Common examples of wage theft include forcing workers to work off the clock, refusing to pay the minimum wage, denying overtime pay to workers even after they work more than 40 hours a week, stealing workers’ tips, or knowingly misclassifying workers to avoid paying fair wages.

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US DEPARTMENT OF LABOR, OKLAHOMA EMPLOYMENT SECURITY COMMISSION SIGN AGREEMENT TO PROTECT WORKERS FROM MISCLASSIFICATION

Posted by National Alliance for Fair Contracting on

Date: 09/13/2016
Release Number: 16-1764-NAT

Participants: U.S. Department of Labor’s Wage and Hour Division
Oklahoma Employment Security Commission

Partnership description: The U.S. Department of Labor’s Wage and Hour Division and the Oklahoma Employment Security Commission signed a three-year Memorandum of Understanding intended to protect employees’ rights and level the playing field for employers by preventing worker misclassification as independent contractors or other non-employee statuses. The two agencies will provide clear, accurate and easy-to-access outreach to employers, employees and other stakeholders; share resources; and enhance enforcement by conducting coordinated investigations and sharing information consistent with applicable law.

Background: The division is working with the U.S. Internal Revenue Service and 34 other U.S. states to combat employee misclassification and to ensure that workers get the wages, benefits and protections to which they are entitled. Labeling employees as something they are not – such as independent contractors – can deny them basic rights such as minimum wage, overtime and other benefits. Misclassification also lowers tax revenue to federal and state governments improperly, and creates losses for state unemployment insurance and workers’ compensation funds.

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USDOL Wage & Hour Division – Myths About Misclassification – Updated

Posted by National Alliance for Fair Contracting on

Dr. David Weil
Administrator
Wage and Hour Division
9/7/2016

As you know, the misclassification of employees as independent contractors is a serious problem our country is facing, affecting workers, employers, and the entire economy.

Misclassified employees often are denied access to critical benefits and protections to which they are entitled, such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. Employee misclassification generates substantial losses to the federal, state, and local governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds. It hurts taxpayers and undermines the economy.

The Department of Labor’s Wage and Hour Division wants to clear up confusion about who is an employee and who is an independent contractor. Visit our Myths About Misclassification webpage and download our one-page flyer Get the Facts on Misclassification to view common myths and the truths that dispel each myth.

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(Fact Sheet)