The New Jersey State HouseThe New Jersey Civil Justice Institute strongly opposes the so-called “wage theft” bill the Assembly Judiciary Committee is holding a hearing on today. A862 does much more than protect employees against wage theft, which is, of course, already illegal. As amended, this bill would mess with the definition of “independent contractor” and provide a backdoor for getting all the worst aspects of the pending “paid sick leave” legislation enacted.


This bill has been described as a mere strengthening of procedures and penalties, designed to help employees who have been victims of wage theft, and indeed the original bill, A-862, appears to be a serious effort targeted at employers who have failed to pay employees their wages.


The committee substitute, on the other hand, would do much more.  In fact, it would interfere in a number of disputed areas of legal policy, and impose anti-employer presumptions and extraordinary penalties to what are actually nuanced questions of law, exposing employers engaging in good faith employment practices to an unwarranted risk of liability.


The classification of individuals as either employees or independent contractors is currently the subject of significant controversy, both in the test to be applied, and how the factors of the test apply to a given set of facts.  This bill would arbitrarily create a presumption that an individual earning less than two-thirds the median hourly wage is an employee and not an independent contractor.


To say that the presumption would not “alter existing criteria” is small comfort when the business owner now has to burden of affirmatively proving compliance with a standard of existing criteria that is already unclear, especially when losing means triple damages, plus opposing party’s attorney’s fees and court costs.  The presumption cannot be altered by contract, so individuals who mutually agree to an independent contractor relationship would nevertheless face the risk of those contractual expectations being overturned by class action litigation.


The committee substitute would go even further to regulate voluntary paid sick leave programs as “wages” protected under this bill, with all of the presumptions and severe penalties currently found in pending paid sick leave legislation.  The ninety-day presumptive window when any “adverse action” taken with respect to an employee disputing a sick leave decision or even discussing rights to sick leave with another employee, coupled with triple damages plus attorney fees and court costs, would present a significant new risk of unwarranted liability for those employers who voluntarily offer this benefit.


These aggressive liability provisions would deprive employers of the very flexibility that has enabled the vast majority of employers in this state to offer generous sick leave policies.


Incentivizing litigation over the manner in which leave is offered would deprive employers of that flexibility to manage timing or abuse, and would encourage businesses to scale back or even eliminate sick leave, harming the employees this bill would seek to help.


To be clear – deliberate “wage theft” is already, of course, illegal.  If legislators believe existing remedies are insufficient to the task, the original A-862 would provide significant new remedies for employees who have not received timely agreed upon wages.  The committee substitute, by contrast, would go well beyond penalizing willful bad actors, and would bring an extraordinary hammer to one side of a number of nuanced legal policy disputes, to the detriment of businesses, employees, and independent contractors alike.


On behalf of our members, we respectfully request a NO vote on the committee substitute.