Accurate Worker Classification in New Jersey is Crucial for Legal Compliance, Safeguarding Employee Rights, and Avoiding Legal Repercussions
Businesses can hire help to support their operations in different ways. When an individual comes to work at a company or organization, they may be hired as an employee or an independent contractor. There are advantages for a business in hiring an independent contractor because they are not required to withhold taxes on behalf of the employee or pay unemployment insurance. In some cases, it can be more cost-effective for an employer to hire someone as an independent contractor rather than an employee, but under New Jersey law, if an individual meets certain requirements, they must be classified as an employee. Employees in New Jersey are afforded certain rights and protections that are not provided to independent contractors. If an employer incorrectly classifies an individual who should, under the legal criteria, be classified as an employee as an independent contractor instead, they can face legal consequences.
Laws on Misclassification of Employees in New Jersey
Some employers may erroneously, though not intentionally, misclassify an employee as an independent contractor. Others, however, may intentionally try to avoid employment’s legal and financial obligations. In New Jersey, the unethical practice of misclassification violates state labor laws. Employees who are improperly classified are entitled to pursue restorative measures.
In determining whether an individual is properly classified as an employee or an independent contractor, New Jersey relies on the “ABC test,” which mandates that employers must be independent of the employer’s control or direction over their work performance. The work performed should fall outside the company’s usual course of business or be executed outside the company’s place of business. Finally, the third factor of the test requires that the worker possess an independent trade, job, profession, or business.
Misclassification deprives workers of rights guaranteed to employees but not to independent contractors. These include the right to earn overtime for working over 40 hours, workers’ compensation benefits, earned sick leave, job-protected family leave, and health and safety protocols and protections.
The ABC Test in The Garden State
The ABC test is a crucial tool in determining compliance with NJ Labor Laws, evaluating three elements: the absence of control, the business scope, and independently established trade. The individual must be free from control or direction over work performance. The work should be outside the usual course of business for the employer or conducted outside the employer’s place of business. The individual must engage in an independently established trade, job, profession, or business.
Classification under the test significantly impacts workers’ compensation benefits. Inaccurately classified workers may lose access to critical benefits and protections, leading to delays in receiving unemployment benefits and increased tax liabilities at the year’s end.
Legal Milestone as NJ Attorney General Takes on Worker Misclassification Lawsuit
In a groundbreaking move, the New Jersey Attorney General’s Office initiated the first lawsuit under the state’s bolstered laws against worker misclassification. Filed on December 11th, 2023, in Essex County Superior Court, the case targets logistic giants STG Logistics and STG Drayage. The lawsuit, led by Commissioner Robert Asaro-Angelo, seeks to halt the misclassification of over 300 drivers as independent contractors, alleging millions of dollars in back wages, penalties, and fines. The legal action is a direct outcome of legislative measures signed by Governor Phil Murphy in 2020 and 2021, empowering the state to take robust actions, including filing lawsuits in Superior Court, to curb misclassification and protect workers’ rights.
The complaint underscores the companies’ alleged misclassification scheme, resulting in truck drivers being paid below New Jersey’s minimum wage. The “ABC test” becomes central to the case, requiring companies to provide three criteria for classifying workers as independent contractors. Apart from rectifying misclassification, the suit aims to recoup lost wages and secure complaints within the labor laws. Attorney General Matthew J Platkin issued a stern warning emphasizing that improper labeling denies workers steady income and strips them of crucial benefits like sick leave and workers’ compensation. With a strong message for corporations who engage in illegal labor practices, the case signals that New Jersey is actively enforcing laws to protect workers’ rights.
The Comprehensive Impact of Alleged Misclassification at STG Logistics INC.
The crux of the case against STG Logistics INC. STGL and STGD practices centers around a systematic misclassification scheme directed towards employee truck drivers as independent contractors, allegedly orchestrating a scheme to evade legal responsibilities and denying workers their rightful wages and essential labor rights. The misclassification, according to the complaint, was not only limited to categorizing drivers inaccurately but extended to manipulation of many aspects of the working arrangements.
The allegations detail how the defendants exerted substantial control over the drivers, compelling them to purchase and maintain trucks under their names while simultaneously enforcing exclusive control over them. Drivers were allegedly restricted from using the trucks for other work without written consent, and the companies maintained authority over route assignments and pay rates. The misclassification scheme, as outlined, not only deprived drivers of fundamental rights but also resulted in yielding them less than New Jersey’s minimum wage. Deductions from their pay allegedly sometimes exceeded their gross earnings, leading to negative net pay for specific pay periods.
Contact Our Workers’ Compensation Lawyers to Handle Any Doubts Regarding Your Job Classification in NJ
If you are a worker who believes you are being misclassified as an independent contractor, you should speak with a New Jersey employment and workers’ compensation attorney. At Cohen & Riechelson, our lawyers can help you navigate the complexities of labor laws, advocate for fair treatment, and pursue legal remedies. If necessary, we can challenge misclassification in court, helping you seek back pay for minimum wage or overtime violations and reimbursement for illegal deductions. Additionally, our team can help you recover other entitlements, like workers comp benefits, and explore options for filing complaints with labor authorities. Legal representation is necessary to rectify the injustices stemming from misclassification schemes.
If you believe your employer has mislabeled you for their benefit, contact an experienced workers’ compensation and employment lawyer at our office in Hamilton for a confidential and free consultation. Call us today at 609-528-2596 for a free case assessment. We assist workers with obtaining the benefits they deserve in Lawrence, Lambertville, Woodbridge, East Windsor, Princeton, Trenton, and across Mercer County, Middlesex County, Burlington County, and the state of New Jersey.
