New regulations were adopted today that give clear guidance to both employers and workers so proper classification as either an independent contractor or employee can more easily be determined.
Worker classification and the unlawful practice of misclassification by employers is a significant problem in today’s workforce. When workers are misclassified as independent contractors rather than as employees, workers are stripped from eligibility from a number of earned benefits, including unemployment insurance, temporary disability insurance, workers compensation, paid family leave, earned sick days, overtime, minimum wage, access to employer provided health insurance and pensions and the right to form and join a union.
Furthermore, the state is estimated to lose over $500 million a year in payroll taxes due to misclassification because employers are not required to pay these taxes on independent contractors. Misclassification also places legitimate businesses at a competitive disadvantage in the bidding process because labor costs are significantly reduced for the companies that intentionally misclassify their workers as independent contractors rather than as employees.
“This is a positive step forward in assisting businesses and workers alike so they can better understand the ABC test and properly apply it to their workforce” said New Jersey State AFL-CIO President Charles Wowkanech. “This isn’t a union vs. non-union issue, nor is it intended to hurt legitimate businesses. We respect the work schedule flexibility that independent contractors enjoy and we have no issue with legitimate independent contractors. However, when intentionally misclassified, businesses drastically increase profits on the backs of working people, and that must end” he concluded.
For more information, please click here to see the Department of Labor & Workforce Development’s Press Release.