In the Law360 article “Fear Reigns That NJ Crackdown Might Bruise Employers,” labor and employment partner Lynne Anderson shared insights on the impact of new laws relating to worker misclassification in New Jersey. Misclassification is now considered a violation of the New Jersey Insurance Fraud Prevention Act.
According to the publication, New Jersey faces a record number of unemployment claims, and every misclassified worker signifies lost contributions to the state’s funding for workforce programs. “COVID-19 has brought all of that to the forefront,” said Anderson.
The legislation allows for stop-work orders at all of a company’s locations. It also has steep daily fines for companies that violate the shutdown mandates, including up to $15,000 per violation for evading payment of employee insurance premiums. Anderson noted that this provision has “serious implications” for employers because it subjects them to lengthy investigations, trouble obtaining policies and potentially higher insurance premiums.
Further, New Jersey appears to be discouraging the use of independent contractors due to the misclassification risk. Anderson explained that this is a blow to the burgeoning “gig” economy largely driven by app-based companies specializing in transportation services and food and grocery deliveries.
One piece of advice Anderson had for New Jersey employers wanting to avoid misclassification risk was to use staffing agencies that employ their workforce. “I think what it represents is the reality that the state coffers have been hit hard by COVID-19,” she said.
The full article is available for Law360 subscribers.