Even before the pandemic, overworked, underpaid Americans had begun to raise concerns about the plight of the independent contractor. These complaints reached fever pitch just before the work-from-home orders went into effect in the early spring of 2020. Entrepreneurship websites make the gig economy sound glamorous. In reality, the difference between gig work and full-time employment has more to do with employers cheating the system than with scrappy, self-employed workers disrupting it. By classifying workers as independent contractors instead of employees, employers can cut their own costs by not paying for health insurance benefits, paid leave, and workers’ compensation. To add insult to injury, independent contractors are responsible for paying their own Medicare and Social Security taxes, so that they end up paying nearly a third of their 1099 income to the IRS at tax time. The good news is that New Jersey Governor Phil Murphy has signed into law four bills aimed at protecting workers from unlawful misclassification. If you have questions about unlawful misclassification, contact a Red Bank employment classification lawyer.
Unlawful Misclassification of Employment in New Jersey
On July 8, Gov. Murphy signed into law a legislative package made up of four bills related to the detection and prevention of unlawful misclassification of workers and remedies for workers whose employment has been misclassified. Unlawful misclassification of workers usually takes the form of employers categorizing workers as independent contractors instead of employees. Doing this is a cost-saving measure for employers because by doing it, they can avoid paying health benefits, overtime pay, and some types of taxes. Meanwhile, it is manifestly unfair to workers, who are stuck with the financial burden that their employers avoid by misclassifying them.
The new legislation will create a new Department of Labor Office, called the Office of Strategic Enforcement and Compliance, as well as a database for tracking payroll. It will also make it easier to identify misclassified workers and to impose stop-work orders at workplaces where workers are unlawfully being denied the rights of employees.
An audit conducted in 2018 determined that unlawful misclassification of employment is a widespread problem in New Jersey. After examining only 1% of the businesses in the state, the audit found 12,3000 misclassified workers, $460 million in underreported wages, and $14 million in lost revenue for the state unemployment and temporary disability funds. The new legislation will make it easier to enforce the rules about classifying full-time workers as employees, with all the rights and tax regulations that entails. The authors of the bills included in the new legislation package are Verrelli, Madden, Greenstein, Egan, Karabinchak, Space, Oroho, Sumter, Lagana, Freiman, and Singleton.
Contact an Employment Lawyer About Unlawful Misclassification
Your employment lawyer is committed to protecting your rights as an employee; the law does not permit your employer to deny you benefits by pretending that you are an independent contractor. Contact McOmber McOmber & Luber in Red Bank, New Jersey to discuss your case. Please call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, OR contact us at 888-396-0736 or online for a free consultation. We represent all clients in Middletown, Cherry Hill, and throughout New Jersey.