Picture of the NJ State HouseEarlier today, NJCJI’s Chief Counsel, Alida Kass testified against S1396, which has been described as a bill that will simply punish employers who commit wage theft. However, the legislation, which is being sponsored by Sen. Loretta Weinberg (D-Teaneck), would in fact expose employers engaging in good faith employment practices to an unwarranted risk of liability.


Although this bill has been described as a mere strengthening of the penalties to be imposed when wage theft occurs, the legislation would do much more than that. In fact, it would interfere in a number of disputed areas of legal policy, and expose 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 terms of which test should 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 the burden of affirmatively proving compliance with a standard that is quite unclear despite the fact that it is technically “existing.” Adding to this confusion, is the threat that a business will be on the hook for double or triple damages plus opposing party’s attorney’s fees and court costs if a court rules against them.


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, and actually regulate voluntary paid sick leave programs as “wages” protected under this bill. As in the stand-alone paid sick leave bill, there would be a 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, could trigger a lawsuit.


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 the flexibility to manage timing or abuse, and would encourage businesses to scale back or even eliminate their paid sick leave policies, harming the very employees this bill seeks to help.


To be clear – deliberate “wage theft” is already illegal.  This bill would go well beyond penalizing willful bad actors, and bring an extraordinary hammer down on 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 S-1396.