The State of New Jersey has made numerous changes to the employment laws in the last two years. Businesses large and small, as well as nonprofit organizations and government entities in New Jersey will need to adapt to meet the new requirements and reduce their exposure to enforcement actions and lawsuits.

The following list of recently-enacted legislation is daunting, yet we encourage all employers to become familiar with these changes.

• NJ Adopts Unequal Pay Law; Federal Court Declares It Does Not Apply Retroactively – July 2018
• NJ Adopts State-Wide Mandatory Paid Sick Leave – October 2018
• NJ Expands Family Leave Act – February 2019
• NJ Raises Minimum Wage – February 2019
• NJ Bans Confidentiality Provisions in Law Against Discrimination Settlement Agreements, and May Have Banned Arbitration Agreements as Well – March 2019
• NJ Enacts Legislation to Establish a State-Run Auto-Enroll Retirement Plan – March 2019
• NJ Bans Salary History Inquiries – July 2019
• NJ Expands Sanctions and Imposes Criminal Liability for Wage Payment Violations – August 2019

In addition, there are some laws pending in the New Jersey legislature that will potentially increase the penalties for misclassification of entities.

A handy resource for employers is the “Employer Frequently Asked Questions” page of the State of New Jersey Department of Labor and Workforce Development website, which has been updated to include these new laws: https://www.nj.gov/labor/wagehour/content/employer_faqs.html#q2.

Do not attempt to avoid these employment laws by classifying your employees as independent contractors!

The State of New Jersey and the Internal Revenue Service are significantly expanding their investigations into employers that misclassify workers as independent contractors rather than employees. Employers should familiarize themselves with the rules to avoid serious penalties. The New Jersey Department of Labor still uses the ABC Test when analyzing potential employee misclassification. That is, a worker is an independent contractor if they meet the following descriptions:

(A)	Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
(B)	Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
(C)	Such individual is customarily engaged in an independently- established trade, occupation, profession or business.

 

Please contact me or your advisor in Mercadien’s Individual & Family Office or Tax Services Groups for more information on these significant employment law changes. Our team is ready to help ensure your understanding and compliance. I can be reached at agoldman@mercadien.com or 609-689-9700.This link to the Internal Revenue Department’s website is a good resource for learning more about the differences between employees and independent contractors: https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation.