Jul 13 TAX ALERT: NJ Passes Laws to Combat Employment Misclassification by Businesses
On Thursday July 8, New Jersey Governor Phil Murphy passed a series of laws targeting employment misclassification. The state believes many businesses have shirked their payroll tax and employment obligations (e.g., paying benefits) by misclassifying workers as independent contractors rather than employees.
The new laws do not change the definitions of employees or independent contractors. Instead, they aim to identify and punish businesses for misclassifying their workers.
In particular, the new laws: ease the state’s ability to issue stop-work orders when employment misclassification is detected; create processes to more rapidly identify employment misclassification; create a new Office of Strategic Enforcement and Compliance in the state Department of Labor; and create a database of employers and employees on all public works projects. Businesses should expect payroll determinations to face more consistent challenges from the state. New Jersey will also move more quickly to disrupt business operations when it suspects businesses are misclassifying their workforce.
We will continue to keep you updated as details emerge. Please reach out to your Sax tax advisor to proactively identify and address your employment classification matters.