The clock on the prolifically anti-business 2019 lame duck session finally ran out this past Tuesday.  And as expected, Governor Murphy signed most of the legislation that had arrived on his desk. 

There was one pleasant surprise.  Assemblyman Zwicker’s legislation concerning “payment of independent contractors” was pocket vetoed and has not (yet) been reintroduced.  This legislation was initially drafted to create a mechanism under DOL to ensure payment of freelance workers.  It was then amended on the floor to become a mini Independent Contractor/Worker Misclassification bill – with codification of the ABC test.  It was then amended again to simply incorporate by statutory reference existing standards for independent contractors.

The legislation would have brought collection of payment for contract work under the control of the Department of Labor, which in theory could have created a more efficient alternative to litigation over disputed payment.  But we continued to have concerns that the legislation appeared to impose inordinate penalties even for mere failure to abide by the 30-day payment schedule, creating an incentive for contract workers to bring complaints that might otherwise have been resolved informally.  And given the DOL’s dubious interpretations of existing standards for worker classification, their involvement also risked more second-guessing of legitimate IC arrangements.

So it was a bit of a surprise to see the legislation go unsigned.  What could have been the concern from the governor’s office?  There has been some dispute over the intended effect of S863.  Advocates have argued that it merely codifies “existing law.”  But will sometimes concede the intent is to actually codify “existing agency interpretation.”  As explained in this week’s op ed in the Star Ledger, there are significant differences between those two objectives.  So it’s possible there was concern in the front office that codifying these payment procedures by reference to the existing ABC test, would be read to incorporate the existing interpretive case law.  And that could be problem for a DOL that continues to double down on interpretations that run contrary to that case law.

Reminder: NJCJI will host a strategy meeting for the Independent Contractor Coalition next Thursday, January 30th at noon.  Please email Tara McCreedy if you would like to attend.

Some of the highlights of legislation that was actually signed into law:


Assembly Bill 4972regulates organizations that administer arbitration in NJ.  Requires organizations that conduct 50 or more arbitrations in New Jersey to report information about consumer arbitrations including names of parties involved, category of dispute, whether the consumer had an attorney and the outcome.  Prohibits “loser pays” provisions that would require consumers who lose their claims to pay fees and costs of opposing party, and requires fees and costs be waived for “indigent” consumers.  Takes effect May 1.

Severance Pay:

Senate Bill 3170: Legislation creates statutory right to severance pay of one week’s pay per year of employment, whenever an establishment with 100 or more employees terminates 50 or more full or part-time employees within a 30-day period.  “Establishment” includes groups of facilities located within the state.  Also requires 90 days’ notice of layoffs or an additional four weeks’ severance required.  Takes effect July 18. 

Wage & Hour:

Assembly Bill 5840:Under the Wage Theft law signed earlier this year employers jointly and severely liable for wage and hour laws that were violated by contractors. This new law expands that joint and several liability to state employer tax laws, and expands liability to owners, directors, officers, and managers.  Takes effect immediately.

Assembly Bill 5839: Assesses specific penalties for worker misclassification.  The “misclassification penalty” is up to $250 per worker for the first violation and up to $1,000 per worker for subsequent violations. In addition, there is a penalty of up to 5% of the worker’s gross earnings for the past twelve months from the employer who misclassified them. The revenue from the “misclassification penalty” will go to NJ DoL enforcement. The 5% revenue will go as a bounty to the workers. Takes effect immediately

Senate Bill 4228:  Allows the Director of the Division of Taxation to share any tax information with the New Jersey Commissioner of Labor to assist in a NJ DoL investigation. Under current law the Director of the Division of Taxation can only share whether or not a contractor or subcontractor holds a valid business registration, if a license is suspended due to nonpayment of taxed, or wage information with a municipality that is authorized to assess a payroll tax. Takes effect immediately.

Senate Bill 4226: Allows NJ Department of Labor to post on its website name of any person found to be in violation of any state wage, benefit or tax law after final adjudication by NJ DoL Commissioner. Anyone found to have violated a state wage, benefit or tax law shall be prohibited from performing any public work until the liability has been met. Takes effect immediately for any final orders issued after January 20, 2020.

Please contact Alida Kass if you would like to discuss any of this legislation.