A3418

An Act establishing a commission to review and make recommendations regarding employee misclassification.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. The practice of misclassifying workers as alleged independent contractors, rather than in accordance with their actual status as employees, causes serious negative repercussions to our State’s economy;

b. Workers who are improperly classified suffer an economic disadvantage and are involuntary disenfranchised from the social insurance benefits and basic worker protections provided to individuals classified as employees, including unemployment and disability insurance, Social Security wage credits, and employee health and pension benefits offered by the employer to its workforce;

c. Employers who willfully misclassify workers as independent contractors realize an unfair competitive advantage over employers who properly identify their workers as employees;

d. Evidence indicates that misclassification rates throughout the country are disproportionately higher in the construction industry compared to most other industries, a trend that is reflected in New Jersey with a United States Department of Labor study suggesting that 11.4 percent of New Jersey construction payroll workers were misclassified as independent contractors in 2014;

e. The State has undertaken significant efforts to address this problem, including the enactment of the “Construction Industry Independent Contractor Act,” P.L.2007, c.114 (C.34:20-1 et seq.), which sets standards for making the determination of an employee in the construction industry with respect to certain labor and tax laws, and also specifies penalties and employee rights; and

f. The State’s efforts to address the problem of employee misclassification in the construction industry and to ensure contractor compliance with the “Construction Industry Independent Contractor Act” will be enhanced through the creation of an advisory body comprised of government officials and private sector representatives with expertise in this subject.

2. There is established in the Department of Labor and Workforce Development the New Jersey Commission on Construction Industry Independent Contractor Reform. The purpose of the commission is to develop recommendations for a comprehensive and strategic Statewide approach to addressing the problem of employee misclassification in the construction industry and to ensure contractor compliance with the “Construction Industry Independent Contractor Act” and any other applicable law regarding employee misclassification. To fulfill the purpose of the commission, the commission shall be authorized to:

a. make recommendations to the Department of Labor and Workforce Development, the Office of the Attorney General, and the Department of the Treasury with respect to synchronizing each respective department’s regulations and policies regarding employee misclassification;

b. conduct public hearings to increase public awareness of the illegal nature and harms inflicted by employee misclassification in the construction industry and to highlight potential significant cases of misclassification that may warrant investigation by the appropriate government agency;

c. make recommendations to enhance mechanisms for identifying employee misclassification in the construction industry;

d. work with business, labor and community groups associated with the construction industry to develop educational materials to provide clear guidance regarding the difference between an independent contractor and an employee; and

e. cooperate with State, federal and local social service agencies to identify ways to provide assistance to vulnerable populations that have been exploited by employee misclassification in the construction industry, including, but not limited to, immigrant workers.

3. a. The commission shall consist of thirteen voting members as follows:

(1) the Commissioner of Labor and Workforce Development, or a designee, who shall serve ex-officio;

(2) the Attorney General, or a designee, who shall serve ex-officio;

(3) the State Treasurer, or a designee, who shall serve ex-officio;

(4) one member of the Senate, to be appointed by the President of the Senate; and one member of the General Assembly, to be appointed by the Speaker of the General Assembly;

(5) two public members who shall be appointed by the President of the Senate and who shall include one representative of residential developers and one representative of commercial developers;

(6) two public members who shall be appointed by the Speaker of the General Assembly and who shall include one representative of residential construction contractors and one representative of commercial construction contractors; and

(7) four public members who shall be appointed by the Governor and who shall include representatives from three different building trades unions and one representative of the New Jersey AFL-CIO.

b. The Commissioner of Labor and Workforce Development or the commissioner’s designee shall serve as chairperson of the commission. The commission shall organize as soon as practicable following the appointment of its members and shall select a vice-chairperson from among the members. The chairperson shall appoint a secretary who need not be a member of the commission.

c. The presence of seven members of the commission shall constitute a quorum. The commission may conduct business without a quorum, but may only vote on recommendations when a quorum is present.

d. The public members shall serve without compensation, but shall be reimbursed for expenses actually incurred in the performance of their duties, except that no funds shall be appropriated or allocated to the commission.

e. The commission shall be entitled to call to its assistance and avail itself of the services of the employees of any State department, board, bureau, commission or agency it may require and as may be available to it for its purposes.

f. The commission may meet and hold hearings at the places it designates during the sessions or recesses of the Legislature.

g. The Department of Labor and Workforce Development shall provide staff support to the commission.

h. Vacancies in the membership of the commission shall be filled in the same manner provided for the original appointments.

4. The commission shall report its findings and recommendations to the Governor and Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1) no later than 18 months after the date of organization of the commission. The findings and recommendations shall include, but not be limited to, information on the status of the implementation of the “Construction Industry Independent Contractor Act” and of any publicly available information regarding the enforcement of that act, such as: cases filed; wages and taxes recovered on behalf of the State; outcomes of cases; legal or administrative barriers to successful implementation; a review of the process used to adjudicate misclassification cases; and proposals for any additional legislative action that may be needed to enhance the State’s efforts to address employee misclassification in the construction industry.

5. This act shall take effect immediately and shall expire upon the submission of the commission’s report.

STATEMENT

This bill establishes the New Jersey Commission on Construction Industry Independent Contractor Reform within the Department of Labor and Workforce Development. The purpose of the commission is to develop recommendations for a comprehensive and strategic Statewide approach to addressing the problem of employee misclassification in the construction industry and to ensure contractor compliance with the “Construction Industry Independent Contractor Act,” P.L.2007, c.114 (C.34:20-1 et seq.), and any other applicable law regarding employee misclassification. To fulfill its purpose, the commission is authorized to: make recommendations to the Department of Labor and Workforce Development, the Office of the Attorney General, and the Department of the Treasury with respect to synchronizing each respective department’s regulations and policies regarding employee misclassification; conduct public hearings to increase public awareness of the illegal nature and harms inflicted by employee misclassification in the construction industry and to highlight potential significant cases of misclassification that may warrant investigation by the appropriate government agency; make recommendations to enhance mechanisms for identifying employee misclassification in the construction industry; work with business, labor and community groups associated with the construction industry to develop educational materials to provide clear guidance regarding the difference between an independent contractor and an employee; and cooperate with State, federal and local social service agencies to identify ways to provide assistance to vulnerable populations that have been exploited by employee misclassification in the construction industry.

Under the bill, the commission is required to consist of thirteen voting members as follows:

(1) three ex-officio members, or their designees, that include the Commissioner of Labor and Workforce Development, the Attorney General, and the State Treasurer;

(2) one member of the Senate, to be appointed by the President of the Senate; and one member of the General Assembly, to be appointed by the Speaker of the General Assembly;

(3) two public members who shall be appointed by the President of the Senate and who shall include one representative of residential developers and one representative of commercial developers;

(4) two public members who shall be appointed by the Speaker of the General Assembly and who shall include one representative of residential construction contractors and one representative of commercial construction contractors; and

(5) four public members who shall be appointed by the Governor and who shall include representatives from three different building trades unions and one representative of the New Jersey FL-CIO.

The commission must report its findings and recommendations to the Governor and Legislature no later than 18 months after the date of organization of the commission. The findings and recommendations must include, but are not be limited to, information on the status of the implementation of the “Construction Industry Independent Contractor Act” and of any publicly available information regarding the enforcement of that act.