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Making NJ Affordable Shouldn’t Mean Cutting Wages For Skilled Tradesmen (NJ)

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By Guest Contributor | December 9, 2019

A recent poll showed 44 percent of the people are planning on leaving New Jersey- soon. The reason is costs. It’s a damn expensive place to live. Gov. Murphy is accepting of the fact that New Jersey taxes are high (and likely to go higher) so either get used to it or move. Republican State Sen. Mike Doherty has recently chimed in with his ideas on creating affordability and his approach isn’t much better than the governor’s. The senator wants to punish hard working tradesmen and blame them for New Jersey’s affordability crisis.

Doherty has sponsored a bill (S-175) that will allegedly deal with bringing down the cost of transportation infrastructure construction. But Doherty has already betrayed the real reason for the legislation – it is his published opinion that that New Jersey’s prevailing wage laws are the culprit in the state’s high costs and that the state would be better off if it paid building tradesmen a lot less. Baloney.

Skilled tradesmen built the infrastructure upon which the state’s economy rests. It is their hard work that allow people like Sen. Doherty to reap the economic benefit of the tradesmen’s hard work. Nevertheless, Sen. Doherty, an attorney, is reviving a shopworn attack on the state’s prevailing wage law. (The prevailing wage is the union wage scale for skilled trades workers in publicly financed projects.) There are many things that make New Jersey unaffordable, but the prevailing wage law isn’t one of them.

New Jersey ranks at or near the bottom in every measurable economic index from property taxes, to debt, to business environment. Despite the obvious need to cut unnecessary spending, borrowing and regulation, Sen. Doherty, blames skilled labor for the state’s high cost of living. He finds trade unionists making $68 an-hour for public projects untenable. But that wage (of which $40 is actual salary and the rest is benefits, pension and training costs) is a pittance compared to what those in Doherty’s profession take from taxpayers.

A large share of public infrastructure costs is paid long before the jobs are even started. The money is paid to lawyers, bond counsel and other professionals used to execute the borrowing to finance the projects. The professional class also exacts healthy fees from taxpayers to conduct the consulting work on the actual projects once the money is in hand. These professionals enjoy generous six figure consulting fees are they are paid at every level of government and at dozens of obscure agencies and authorities, such as county improvement authorities.

For example, last year the Passaic County Freeholders funded construction of a new public works building and bonded $17 million through the county improvement authority. The fees paid to lawyers and other financial consultants to borrow that money was $241,000! Over in Bergen County, the improvement authority there paid out more than $431,000 in professional fees for six of its last 10 financings – topping out at $674,000 for one refinancing package! State government pays similar sky-high fees to professionals just to borrow money.

The fees paid to execute borrowing are not competitively bid nor are they publicly reported. Similarly, legal, and other professional work commissioned by governments for construction projects are not subject to the state’s bidding laws.

If Sen. Doherty truly wanted to reduce costs for public works project, he would sponsor legislation mandating competitive bidding and transparency for professional fees; but I doubt he or any other legislator is willing to do that. For Doherty to complain about the high cost of living in New Jersey and then turn a blind eye toward the lucrative dark-money industry of professional fees is at best hypocritical. Don’t those fees contribute to the state’s affordability problem?

Good paying jobs in New Jersey are disappearing as corporations move to less expensive states. Manufacturing jobs have been pushed out for decades; replaced by low wage service jobs. And with the growing internet economy, even low wage retail jobs are disappearing. The only jobs that New Jersey seems to entice lately are low-wage warehouse jobs.

The prevailing wage money paid to union tradesmen are among the few good-paying jobs that still exist in this state. The prevailing wage law makes certain that those who are charged with updating our electrical, water and transportation infrastructure are capable of sustaining themselves and their families. The wages earned by tradesmen helps support the local economy and ensures that contractors hire skilled, knowledgeable workers trained in their craft and in safety precautions. If Sen. Doherty had his way, state contractors could hire unskilled labor or illegal immigrants and pay them whatever they pleased. From an attorney’s perspective that may seem okay, but it is not fair to working people or good for our economy.

To create an affordable New Jersey, our elected officials need to summon the courage to cut unnecessary spending and the discipline to set spending priorities and stick to them – and not place the burden of cost cutting on hardworking trades people.

BY CHRISTIAN BARRANCO

Christian Barranco is a journeyman member of IBEW Local 102 and presently works as a project manager and supervisor on many large, critical energy and industrial infrastructure projects in New Jersey. He is also the founder of Square Deal for NJ, an organization founded to encourage ideas to address New Jersey’s many problems.

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Singleton Calls for Crackdown on Employee Misclassification (NJ)

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November 13, 2019

Moorestown, NJ – Senator Troy Singleton today called on the Executive Branch of State Government to stop the rampant and widespread illegal abuse of workers in the construction industry through employee misclassification.

Companies who misclassify full-time workers as contractors commit wage theft by paying below minimum wage, establishing illegal work weeks, paying cash and evading taxes – all to increase profits. Senator Singleton called on the NJ Department of Labor, the Attorney General’s Office, the Department of Treasury, and the Governor’s Task Force on Misclassification, to continue to address this issue.

“Employee misclassification is a problem because when workers are misclassified as independent contractors by their employers, it not only diminishes their access to labor protections, but it also has real consequences on the State’s economy and tax revenues,” said Singleton. “Ensuring workers are treated fairly is a priority for me and while progress has been made when the Governor signed my Stop Work Order legislation, more needs to be done to protect workers and hold offenders accountable.”

Singleton was the prime sponsor of Senate Bill 2557, which concerns stop-work orders related to prevailing wage and construction worker employment. S2557 was signed into law in July 2019 and would permit the Commissioner of the Department of Labor and Workforce Development to issue a stop-work order against an employer upon determining that an employer has paid a worker less than the prevailing wage. The stop-work order would apply to every site where the violation continues to occur. It could only be lifted by the Commissioner if the Department finds the employer has agreed to pay future wages at the required rate, return any back-wages owed to workers and pay any penalty assessed by the Department.

“There must be a level playing field for all New Jersey workers,” continued Singleton. “As a devout supporter of the construction trades, I call on those in the Executive Branch of our state government to use all available resources to crack down on this unfair practice immediately.”

The William J. Hughes Center at Stockton University released a study that said approximately 35,000 workers are illegally misclassified as independent contractors, while the state is losing $25 million a year in tax revenue due to the fraud.

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New Jersey Is About to Take Another Step Towards Eliminating the Use of Independent Contractors by Providing Them with Benefits (NJ)

Posted by National Alliance for Fair Contracting on

October 30, 2019
J.D. Supra

Executive Summary: The New Jersey Legislature appears poised to pass S67, the Portable Benefits Act for Independent Contractors, in the upcoming lame-duck session. If passed, the Governor is expected to sign the bill before the end of the year. The bill doubles down the current administration’s effort to end misclassification of independent contractors by creating a financial disincentive to utilizing contractors. Though the intent of the bill seems to be directed at online companies such as Uber, Lyft, Amazon, Handy and others, the impact will affect any business that relies on contractors. The bill also appears to subtly create new opportunities for organized labor through the creation of “Qualified Benefit Providers.” At least half of the members of the Boards of these funds must be worker representatives or workers. Though not in its final form, it appears some form of this bill will soon become law.

Summary of Bill Provisions: In sum, the Bill requires any entity that utilizes 50 or more contractors in 12 consecutive months within the state of New Jersey to contribute funds to a Qualified Benefit Provider for the benefit of the independent contractors. The amount contributed must equal 25 percent of the contractor’s total fee or $6.00 per hour, prorated to ten cents per minute. Contributions must be made on no less than a monthly basis.

Contributions are made to Qualified Benefit Providers, who will create trust funds to provide contractors with workers’ compensation and other benefits, which are to be selected by the contractors. Qualified Benefit Providers may use up to five percent of the amounts collected to cover administrative costs. The New Jersey Department of Labor (NJDOL) will determine who may be a Qualified Benefit Provider utilizing the following criteria: 1) must be a nonprofit, 2) half the board must consist of workers or organizations representing workers, 3) board members may not have any interest in entities that utilize contract workers, 4) the organization must work toward maximizing benefits for workers, 5) the board has a fiduciary responsibility to the workers and 5) the organization must demonstrate adequate viability and financial sufficiency. These criteria seem to place organized labor in a prime position to be selected to run these new trust funds.
The bill only exempts four types of contractors: real estate agents; financial product salespersons; anyone subject to a collective bargaining agreement; or anyone who solicits orders as a sales representative of the principal entity. NJDOL will be responsible for monitoring, overseeing these new benefit providers, ensuring workers’ compensation insurance is provided, and establishing a fee to charge entities utilizing contractors to fund their efforts. Failure to comply with this Act may be enforced by either the NJDOL or a private right of action on behalf of the contractors.

Employers’ Bottom Line: Although it is unclear what the language of the final law will be, it is clear that New Jersey is aggressively attempting to eliminate reliance on independent contractors. We expect this legislation to become New Jersey law soon, which will substantially increase the cost of utilizing independent contractors within New Jersey.

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Sweeney Bill Would Protect Workers Against ‘Misclassification’ (NJ)

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November 14, 2019

Trenton – A bill authored by Senate President Steve Sweeney that would help protect workers from being exploited through their misclassification as independent contractors gained the approval of the Senate Labor Committee today.

“This is a pro-worker bill for the new gig economy,” said Senator Sweeney. “It will codify into law existing regulations and close a loophole that has allowed for the misclassification and exploitation of some employees. It’s all about protecting the rights of workers.”

A misclassification is the improper designation of workers as “independent contractors” rather than “employees” in order to allow employers to evade basic workers’ rights. Employers are required to contribute to unemployment and temporary disability insurance, abide by labor protections such as the minimum wage and overtime, allow employees to take maternity, paternity, and family leave, and withhold New Jersey income taxes – but they are not required to do the same for independent contractors.

“Misclassification not only hurts workers, it hurts law-abiding businesses and the state,” said Senator Sweeney. “The businesses that don’t play by the rules aren’t paying into the unemployment fund or the disability fund, which raises costs for workers and all other businesses. It shortchanges everyone else.”

Currently, the “ABC test,” adopted by the New Jersey Department of Workforce Development and affirmed by the New Jersey Supreme Court, is used to determine whether a worker should be classified as an employee or independent contractor for the purpose of labor and tax laws.

The bill would strengthen the “B prong” of the three-part test so that workers could not be deemed exempt from employee status because they perform their work “outside of all the places of business of the enterprise for which the service is performed.” It would also strengthen the “C prong” of the test by requiring that work performed to meet this standard is in an independently established trade, occupation, profession, or business in which the individual providing the service is customarily engaged.

The bill, S-4204, was approved with a vote of 3 – 1.

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Responsible Bidder Requirements OK’d (NJ)

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By Vince Conti
Nov 9, 2019

COURT HOUSE – Long ordinance drafts filled with legal language and dealing with issues of contract performance do not generally gain the attention of many citizens, even though they may provide important protections for the taxpayer.

That was the case Nov. 4, when Middle Township Committee held the second reading and public hearing on an ordinance that establishes “responsible bidder” requirements for municipal contracts. No one spoke at the hearing, and the ordinance was adopted unanimously.

The bidder requirements protect the municipality from situations where it might have been required to accept a low bid on a contact from a firm that could not satisfactorily complete the contract.

The ordinance lays out bidder requirements that speak to a potential contractor’s compliance with federal, state, and county laws, adequate insurance coverage, satisfactory past performance, a record of conformity with environmental and other laws, skilled workforce levels, and other factors.

Having the ordinance in place lessens the chance that a municipal action to justifiably bypass a low bid would be overturned in court.

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State agencies help workers fight wage theft, know their rights (NJ)

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By Michael Hill, Correspondent
November 8, 2019, 3PM EST

For many New Jersey workers, wage theft, discrimination, sexual misconduct and more are all-too-common workplace realities. That’s why the Department of Community Affairs and the Attorney General’s office are equipping workers with knowledge of their rights through a series of wage theft clinics across the state.

The target audience of one clinic in Atlantic City was immigrant communities, who are especially fearful about “… coming forward to the department to express their rights,” according to NJ Department of Labor & Workforce Development Commissioner Robert Asaro-Angelo, who spoke to attendees in Spanish.

The Hispanic Association of Atlantic County encouraged the state to hold the clinic, and it reached out to Latinx workers, but only a handful came.

“Obviously, to come out to settings like this, maybe the fear is too great for them to come out,” said Bert Lopez, the association’s president.

Those that did come got a step-by-step lesson in filing a complaint with the state department and some advice about proving wage theft.

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Ending payday pilferage (NJ)

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New Jersey strengthens its wage-theft laws

By: Daniel J. Munoz
August 19, 2019 12:01 am

Less than a day after Acting Gov. Sheila Oliver signed a measure ramping up penalties for violations of the state’s wage theft law, state regulators announced they hit an employer with a $20,000 fine for allegedly engaging in that very practice. …

Janice Fine, an associate professor who heads the Center for Innovation in Worker Organization at the Rutgers School of Management and Labor Relations, said that such a quick turnaround will shock employers engaged in the same practices and that they need to start paying workers what they are actually owed.

“If you name and shame it works,” Fine said.

Wage theft happens when an employer does not pay workers what they are owed; it can happen in service industries, blue collar sectors and office environments, Fine said. Theft can take a variety of forms: refusing to pay workers at all or refusing to pay for hours worked; refusing to pay standard hourly or overtime minimum wage rates, or refusing to pay for time out of regular shifts or “off the clock.” Employees might be given checks that bounce, have illegal deductions taken from their paycheck or deductions for meals and other breaks they did not actually receive.

At least $2 billion in stolen wages were recovered nationwide between 2015 and 2016, according to a 2017 study by the Economic Policy Institute.

The newly enacted New Jersey measure increases fines for wage theft to between $500 and $1,000 and provides for prison sentences of between 10 and 90 days for a first offense. Fines would climb to between $1,000 and $2,000 for a second offense, and imprisonment for up to 100 days. Habitual offenders could face up to five years in prison and fines of $15,000.

To force the hands of employers found guilty of wage theft, the state labor commissioner can revoke an employer’s license – effectively shutting down the business – until the correct wages are paid.

Employees can seek recovery of up to six years of stolen wages, or up to 200 percent of their stolen wages – capped at $50,000 – if business owners are found to have retaliated against workers for reporting the thefts. Proponents of the anti-retaliatory measures argue they are necessary to prevent employers from forcing workers to keep quiet about wage theft.

“Today we want to send a message to employers, the bad employers, that in New Jersey we are not going to tolerate the exploitation of any worker,” Oliver said at an Aug. 6 bill-signing ceremony in Elizabeth.

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N.J. contractor gets prison for cheating undocumented workers out of $155K at dorm project in Camden (NJ)

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By Joe Brandt
Posted Sep 12, 2019

Past violations should have stopped Albert Chwedczuk from getting any public money – and therefore, from working on a student housing facility for Cooper Medical School.

He was barred from working on public contracts after past violations of the state Prevailing Wage Act with companies Ren Construction and Real Construction. But he created a new company that soon earned a $400,000 subcontract for masonry work at a Cooper dorm on South Broadway in Camden.

During that work, from 2015 to 2016, Chwedczuk did not pay prevailing wage to his employees, many of whom were undocumented immigrants, the state Attorney General’s office and Department of Labor and Workforce Development said in a news statement.

They estimated that he cheated employees out of about $155,166 in wages once obtaining the contract. He paid most employees a fraction of the prevailing wage they were owed, and others were not paid at all. Chwedczuk also sent falsified payrolls to the project’s general contractor each week.

He also told employees to lie to an investigator from the state labor department about the wages they were receiving, the statement says.

“When contractors receive taxpayer dollars for a public project, they promise to pay prevailing wages to employees for all their hard work,” Attorney General Gurbir Grewal said in the statement. “But this employer cheated his workers and hoarded public funds for his own enrichment. This case is a message to all employers that we will not tolerate contractors underpaying their workers and lying about it.”

“Contractors working on public projects in New Jersey must pay their workers every penny they are entitled to under the law,” Labor Commissioner Robert Asaro-Angelo said.

Chwedczuk pleaded guilty on March 27 to a second-degree charge of false contract payment.

On Sept. 6, Camden County Superior Court Judge Mark Chase sentenced Chwedczuk, 45, of Toms River, to three years in state prison.

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10 laborers getting $170K in back pay after state finds company short-changed them on construction job (NJ)

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By: Kevin Shea, for NJ.com
August 9, 2019

Ten construction workers will split a $170,000 settlement with a company the state says underpaid them while working on a construction job at a Trenton senior living community.

The company, Tri County Real Estate Maintenance Co., of Carneys Point, is also paying $30,000 in administrative fees and penalties, the state Department of Labor and Workforce Development announced Friday.

The project at the Trent Center East and West apartments on Greenwood Avenue in Trenton received tax credit incentive funding, through the State Economic Redevelopment and Growth program, and was subject to New Jersey’s prevailing wage laws.

A state Labor Department investigation, sent to the agency by the U.S. Department of Labor, found Tri County underpaid the laborers.

In this case, laborers stated they were paid between $15 and $30 per hour, but the prevailing wage rate was $55.37 per hour for a laborer, the state said.

The state’s Prevailing Wage Act provides level wages for workers on public works projects – to protect workers and prevent unfair labor competition. The rates vary by county and trade, the state says.

“Public contracting is not a right – it is a privilege,” Labor Commissioner Robert Asaro-Angelo said in a statement. “We want all employers to know that our department takes the state’s prevailing wage laws seriously, and we will continue to investigate these matters to protect our taxpayers’ investments.”

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NJ Department of Labor Adopts Regulations on Suspension and Revocation of Employer Licenses (NJ)

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National Law Review
Friday, October 18, 2019

Continuing New Jersey’s efforts to eliminate and to hold employers accountable for employee misclassification, the state’s Department of Labor and Workforce Development (NJDOL) recently adopted Regulations implementing a 2010 law (“Law”) that empowers the NJDOL Commissioner (“Commissioner”) under certain circumstances to direct the suspension or revocation of one or more licenses held by an employer who has failed to maintain and report required State wage, benefits and tax records or who has failed to pay wages, benefits, taxes or other contributions required by State law. The Regulations specifically empower the Commissioner to direct the suspension and revocation of State-issued occupational and professional licenses, such as for physicians, dentists and other licensed healthcare professionals, where such individuals have management responsibilities sufficient to be deemed an “employer.” Incorporating the definition of employer contained in Article 1 of New Jersey’s “Wages” law N.J.S.A. 34:11-4.1(a), the Regulation states, “the officers of a corporation and any agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation.”

By way of summary, under the Law, upon the Commissioner’s finding that an employer has failed to maintain and report all required documentation regarding wages, benefits and taxes and has failed to pay the wages, benefits, taxes or other contributions due – for even a single employee – an employer will face a NJDOL audit within 12 months. Such taxes and contributions owed to the State include for example, employment taxes, and unemployment and temporary disability contributions.

If the NJDOL audit reveals further violation, the Commissioner may direct other New Jersey agencies to suspend or revoke State-issued licenses held by the offending employer. In addition, the employer will be subject to another audit within 12 months. If the Commissioner finds, after hearing, that the employer has continued in its failure to comply with the Law, the Commissioner is empowered to direct permanent revocation of the employer’s State-issued licenses.

Since taking office in 2018, New Jersey under Gov. Phil Murphy has taken action targeting employee misclassification, including the establishment of a Task Force on Employee Misclassification (“Task Force”) (see Task Force Act Now Advisory) and a sweeping “Wage Theft” law (see Wage Theft Act Now Advisory), which added substantial penalties for failure to pay wages and benefits to employees, including workers who were incorrectly classified as exempt or independent contractors. The Regulations, further highlight the Murphy Administration’s focus on this issue by adding another potential element of personal liability for such violations for New Jersey’s licensed professionals who are deemed employers.

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