The New Jersey Attorney General’s Office announced that the first lawsuit has been filed under N.J.S.A. 34:1A-1.12, a new law that allow the New Jersey Department of Labor and Workforce Development Commissioner to suit in Superior Court against employers who misclassify workers as independent contractors.
The complaint was filed on December 11, 2023, against shipping and logistics companies STG Logistics and STG Drayage. It seeks to stop the misclassification of more than 300 drivers as independent contractors and to recover millions of dollars in back wages, penalties and fines, according to a press release.
The power to bring the action such is the result of legislation signed by Gov. Phil Murphy that came into effect in 2021, and enhanced the state’s power to curtail misclassification of workers. The new law includes the power to bring actions in Superior Court and increase penalties for misclassification and enhance authority to issue stop-work orders, according to the news release.
The complaint alleges that the defendant shipping and logistic companies:
a) Unlawfully deducted millions of dollars from their drivers’ pay, instead of paying those monies to the drivers, in violation of New Jersey’s Wage Payment Law (“WPL”), N.J.S.A. 34:11-4.4 and N.J.S.A. 34:11-4.2;
b) failed to pay their drivers the minimum wage, in violation of New Jersey’s Wage and Hour Law (“WHL”), N.J.S.A. 34:11-56a4;
c) failed to maintain records of hours worked and wages paid to their drivers, and failed to produce those records to the Department of Labor and Workforce Development’s Division of Wage & Hour Compliance, in violation of the WHL, N.J.S.A. 34:11-56a20;
d) failed to make sick time available to their drivers in violation of New Jersey’s Earned Sick Leave Law (“ESLL”), N.J.S.A 34:11D-5;
e) failed to provide all Drivers with workers’ compensation coverage, leaving them without access to medical treatment and temporary and permanent benefits if they were injured on the job, in violation of New Jersey’s Workers’ Compensation Law (“WCL”), N.J.S.A. 34:15-71;
f) failed to make required contributions to the Unemployment Compensation Fund and State Disability Benefits Fund, in violation of New Jersey’s Unemployment Compensation Law (“UCL”), N.J.S.A. 43:21-7, leaving the Drivers at risk of being found ineligible for unemployment, disability, and family leave insurance and depriving the State funds of millions of dollars; and g) failed to make required contributions to the Workforce Development Partnership Fund and Supplemental Workforce Fund for Basic Skills, in violation of the Employment and Workforce Development Act (“EWDA”), N.J.S.A. 34:15D-1 to -34, thus depriving their employees of the ability to benefit from training and other workforce development programs; and
g) hindered the Department of Labor and Workforce Development’s investigation into this matter, in violation of the WHL, N.J.S.A. 34:11-56a22.
In a press statement released by the New Jersey Department of Labor and Workforce Development, Commissioner Asaro-Angelo stated, “Companies illegally profiting through corrosive business models at the expense of hardworking employees have been put on notice. We are proud to have the strongest worker protection laws in the country, which also safeguard employers who play by the rules. Misclassifying employees will not be profitable, nor overlooked.” The Department of Labor is claiming that by misclassifying its employees, the defendants justified paying their truck drivers less than New Jersey’s effective minimum wage and that, in some instances, deductions from the drivers’ pay totaled more than their gross pay, resulting in negative net pay being calculated for some of their pay periods.
The press release said that workers are presumed to be employees under most New Jersey labor laws unless a business can show that workers are independent contractors under the “ABC test.” To meet this standard, the business must demonstrate three elements: First, that the workers are largely free from control or direction over the performance of their work; second, that the type of work performed is outside the company’s usual course of business or outside its usual place of business; and third, that the workers have their own independent trade, job, profession or business.
Attorney General Matthew J. Platkin has described the defendants as “national, profitable corporations with deep pockets who are padding their profits with illegal labor schemes, and they seem to have no plans to stop this kind of behavior.” “When employers unlawfully and callously toss their workers into the ‘independent contractor’ category they are not only depriving them of a steady paycheck, they are also stripping them of earned sick leave, workers’ compensation, minimum wage, and more,” Platkin stated.