New Jersey NJ Law Prohibits Worker Misclassification Poster

WHAT IS MISCLASSIFICATION?	
•	 Misclassification	is	the	practice	of	an	employer	improperly	classifying		
employees	as	independent	contractors.		
•	 Misclassification	may	illegally	deprive	workers	of	basic	rights,	protections,		
and	benefits	guaranteed	to	employees	such	as	the	right	to	be	paid	the		 	
minimum wage,		the	right	to		overtime		pay,		time and mode of pay		protections,	 	
the	protection	against		illegal deductions		from	pay,		unemployment 	 	
compensation, temporary disability benefits,	 family leave insurance benefits,	 	
workers’ compensation, family leave		and		earned sick leave.	
•	 Often	when	workers	are	paid	in	cash	“off	the	books”,	it	may	be	a	method	to		
hide	misclassification	or	other	employment	related	legal	obligations.	
AM I AN EMPLOYEE OR AN INDEPENDENT CONTRACTOR?	
• 	Under	New	Jersey’s	Unemployment	Compensation	Law,	Wage	and	Hour	
Law,	Wage	Payment	Law,	Wage	Collection	Law,	 Temporary	Disability	
Benefits	Law	(including	sections	providing	for	Family	Leave	Insurance)	
and	Earned	Sick	Leave	Law,	if	you	perform	a	service	and	are	paid,		you are 	
presumed to be an employee,		unless	the	employer	can	prove	all	three	of		
the	following:	
(A)	 You	have	been	and	will	continue	to	be	free	from	control	or	direction	 	
over	performance	of	the	service,	both	under	a	contract	of	service	
and	in	fact;	and	
(B)		 The	service	is	either	outside	the	usual	course	of	the	business		
for	which	such	service	is	performed,	or	the	service	is	performed	
outside	of	all	the	places	of	business	of	the	enterprise	for	which	
such	service	is	performed;	and	
(C)		 You	are	customarily	engaged	in	an	independently	established		
trade,	occupation,	profession	or	business.	
•	 This	is	referred	to	in	New	Jersey	as	the		“ABC test”		for	independent		 	
contractor	status.	
•	 Please	go	to		www.myworkrights.nj.gov	 	
to	learn	about	the	factors	considered	for	each	of	the	three	above	tests.	
DO I HAVE TO PROVE THAT I AM AN EMPLOYEE?	
•	 No.	If	you	worked	and	were	paid,	you	are	presumed	to	be	an	employee.	It		is 	
the employer’s burden		to	show	that	all	three	parts	of	the	ABC	test	are	met.		
•	 If	the	employer	can’t	meet	its	burden	to	establish	all		three		parts	of	the	ABC		
test,	then	you	are	deemed	to	be	an	employee,	entitled	to	the	rights,	protections,	 	
and	benefits	of	an	employee	under	the	above-cited	New	Jersey	laws.	
•	 If	you	believe	you	are	misclassified,	email	 [email protected].	
DOES	IT 	MATTER 	IF 	I 	RECEIVED 	AN 	IRS 	FORM 	1099, 	AS 	
OPPOSED 	TO 	IRS 	FORM 	W-2?	
•	 No.	It	does	not	matter	which	federal	tax	form	the	employer	uses	to	report		
earnings.			
•	 What	matters	are	the	facts	surrounding	your	working	relationship	with	the		
employer	and	the	application	of	the	ABC	test	to	those	facts.	
IF MY EMPLOYER HAD ME SIGN AN INDEPENDENT 	 	
CONTRACTOR 	AGREEMENT 	BEFORE 	HIRING 	ME, 	DOES 	
THAT MAKE ME AN INDEPENDENT CONTRACTOR?	
•	 No.	Your	employment	status	is	determined	based	on	an	analysis	of	all	the		
facts	surrounding	your	relationship	with	the	employer	under	the	ABC	test.			
•	 NJ	DOL	would	review	the	agreement	you	signed	but	your	employment		 	
relationship	would	not	be	determined	by	this	agreement	alone.			
•	 New	Jersey	courts	have	ruled	that	to	consider	only	the	agreement,	if	one		
exists,	and	not	the	totality	of	the	facts	surrounding	your	relationship	with	
the	presumed	employer,	would	be	to	“place	form	over	substance,”	which	
the	courts	say	is	wrong.	
WHAT HAPPENS WHEN IT IS FOUND BY A STATE AGENCY 
OR COURT THAT AN EMPLOYER HAS MISCLASSIFIED AN 
EMPLOYEE AS AN INDEPENDENT CONTRACTOR?
In	addition	to	the	award	of	a	remedy	or	remedies	to	make	the	misclassified		 	
employee	or	the	State	agency	whole	for 	the	employer’s	violation	of	the	underlying	 	
New	Jersey	wage,	benefit	or	tax	law	(for	example,	the	award	of	back	pay	to	the	
misclassified	employee	who	has	been	illegally	deprived	of	the	statutory	minimum	 	
wage	or	overtime	premium	pay	in	violation	of	the	State	Wage	and	Hour	law,	or	
whose	pay	was	subject	to	illegal	deductions	in	violation	of	the	State	Wage	Payment	 	
law),	New	Jersey	law	also	empowers	the	Department	of	Labor	and	Workforce	
Development	to	take		actions		and	impose		penalties		against	an	employer	who	has		
misclassified	employees	including:	
• A 	penalty paid by the employer to the misclassified employee		of	not	more		
than	5	percent	of	the	worker’s	gross	earnings	over	the	past 	12	months.	
• A 	penalty of up to $250 per misclassified employee for a first violation and 
up to $1,000 per misclassified employee for each subsequent violation. 	 	
•	 For	violation	of	State	wage,	benefit	or	tax	laws	in	connection	with	the		 	
misclassification	of	employees,	the	imposition	of		
›		A stop-work order.	
›	 The		suspension or revocation of any one or more licenses that 	 	
are held by the employer		and	that	are	necessary	to	operate	the		 	
employer’s	business.	
›	 Additional		penalties and fees payable to the Department		and		
where	wages	are	owed	to	the	employee,	an	additional	amount	in	
liquidated damages payable to the employee equal to not more 
than 200 percent of the wages owed.	
AM I PROTECTED FROM RETALIATION BY MY EMPLOYER 
FOR REPORTING MISCLASSIFICATION?	
•	 Employees	are	protected	from	retaliation	by	their 	employers	for	having	made	 	
an	inquiry	or	complaint	to	the	employer,	to	the	Commissioner	of	Labor	or	
to	an	authorized	representative	regarding	any	possible	violation	by	the	
employer	of	any	State	wage,	benefit	or	tax	law,	including	those	inquiries	or	
complaints	that	involve	misclassification,	or	because	the	employee	caused	
to	be	instituted	or	is	about	to	cause	to	be	instituted	any	proceeding	under	
or	related	to	State	wage,	benefit	or	tax	law,	or	because	the	employee	has	
testified	or	is	about	to	testify	in	such	a	proceeding.	
•	 Where	such	retaliation	has	occurred,	the	Department	is	authorized	by	law		
to	issue	an	administrative	penalty	against	the	employer;	however,	only	the	
courts	are	authorized	by	law	to	order	reinstatement	and/or	back	pay.	
New Jersey Department of Labor and Workforce Development 
NEW JERSEY LAW PROHIBITS WORKER MISCLASSIFICATION
NOTICE OF EMPLOYEE RIGHTS & EMPLOYER RESPONSIBILITIES	
NJ.GOV/LABOR	
MW-899 (5/20)	
REPORTING MISCLASSIFICATION
If	you	have	been	misclassified	and	would	like	to	file	a	claim,	you	can	do	so	here:		https://wagehour.dol.state.nj.us/default.htm	
To	seek	further	information:
EMAIL:		[email protected]	CALL:	 609-292-2321	FAX:	 609-292-7801	WRITE:	  	Employer	Accounts	
	Subject	–	Misclassification
		 NJ	Department	of	Labor	and	Workforce	Development
		 1	John	Fitch	Plaza	P.O.	Box	942
		 Trenton,	NJ	08625-0942	
•	 Whichever	way	you	chose	to	reach	out,	multilingual	staff	will	be	able	to	assist	you	and	translation	assistance	made	available	as	needed
•	 You	can	also	visit		www.myworkrights.nj.gov	 to	learn	more	about	misclassification.
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