New Jersey Increases Penalties for Misclassifying Independent Contractors

January 31, 2020

As state legislators restart efforts to pass a California-style worker classification law in 2020, New Jersey Gov. Phil Murphy (D) has signed legislation that gives the state the ability to halt an employer’s operations for misclassifying employees as independent contractors and to impose financial penalties for violations.

NJ proponents have vowed to keep pushing for a bill similar to California’s AB5—although advocates say their version will be better written to withstand the legal challenges the California law has faced.

New York also is expected to follow California’s lead, with a major proposal to address worker classification.

Outlook: NJ’s new two-year legislative session began on January 14, 2020, and a misclassification bill is likely to be introduced.  It is expected to have fewer carve outs than California’s law, but the language defining independent contractor status is likely to be more lenient than the California test.