Brent Bouma, Peter Shapiro Pen Law360 Expert Analysis on N.J. Worker Classification Legislation

Newark, N.J. (September 23, 2022) - Newark Partners Brent A. Bouma and Peter T. Shapiro recently authored an Expert Analysis article for Law360 concerning the implications of New Jersey legislation – passed in the last few years – that has sought to address worker misclassification.

The authors open the article, titled, “Worker Misclassification Poses Large Perils For NJ Cos.,” by explaining that since early 2020, the New Jersey legislature has passed several pieces of legislation that further a central goal of Governor Phil Murphy’s administration: remedying employee misclassification. Messrs. Bouma and Shapiro further describe that after the governor created the Misclassification Task Force in 2018, the group issued a report identifying misclassified workers as well as the resulting underreported wages and benefits. Governor Murphy subsequently signed a four-bill legislative package in 2021 that sought to increase the policing of worker misclassification.

Messrs. Bouma and Shapiro next discuss the implications of the legislation, noting, “The ramifications of these bills on companies that operate in New Jersey are profound.” The authors explain that pursuant to the legislation, the Commissioner of the Department of Labor (DOL) gained the broad power to issue stop-work orders – across all company worksites and locations – to employers that have violated the wage and hour laws. Calling the DOL “prolific,” the authors describe that its “expanded power has yielded far-reaching results,” including the issuance of 71 stop-work orders across various industries since the legislation was passed.

The authors go on to point out that the New Jersey judiciary has helped expand efforts to curb employee misclassification. They review recent decisions of the New Jersey Supreme Court in which it adopted the statutory “ABC Test” to determine whether an individual was an employee or an independent contractor for purposes of wage payment and wage and hour claims. The authors recommend that, “In light of the legislature and Governor Murphy’s focus on worker misclassification, and the judiciary’s embrace of the statutory ABC Test for various forms [of] worker classification . . . New Jersey businesses that classify some workers as independent contractors should consider regular reevaluations to ensure compliance with the ABC Test as applied under the UCL [Unemployment Compensation Law].”

The authors also observe that the “peril is ever-increasing” for companies, pointing out that the DOL may assess significant penalties against employers for each day that it conducts business in violation of a stop-work order. Moreover, the legislation “hits the employer’s bottom line” because it requires companies to pay affected employees for the first 10 days of work lost because of a stop-work order, even if the employees would not have been working during that time.

Messrs. Bouma and Shapiro are members of Lewis Brisbois’ Labor & Employment Practice. This Expert Analysis article was based on a legal alert they recently authored regarding the New Jersey Supreme Court’s decision in East Bay Drywall, LLC v. Department of Labor and Workforce Development. Mr. Bouma is an experienced litigator who focuses his practice on the representation of employers, corporations, and individuals in actions alleging employment discrimination, harassment, and retaliation. Mr. Shapiro is the Northeast Regional Vice-Chair of the firm’s Labor & Employment Practice and has more than 30 years of litigation experience, with an emphasis on the defense of employment discrimination, ADA access matters, non-compete, wage and hour, civil rights, and trade secrets.

You may read the full Expert Analysis as a PDF here or on Law360 here (subscription may be required).