(The Center Square) — New Jersey officials say a multi-agency investigation has recovered $1.3 million in lost wages for workers who were allegedly cheated out of money by their employers.
The investigation by the state departments of Labor and Workforce Development, Treasury, and Banking and Insurance and the Attorney General office resulted in penalties being issued to 20 contractors working at 88 Regent Street in Jersey City over allegations they misclassified as independent contractors or paid them off-the-books.
“We will not tolerate companies and contractors that cut corners to make an extra buck,” Attorney General Matthew J. Platkin, said in a statement. “The misclassification of workers is illegal and damages the quality of life for the affected employees and their families.”
Other allegations stemming from the investigation against the contractors included workers not being paid properly for overtime, employers failing to pay appropriate taxes on purchased construction materials and not carrying workers’ compensation insurance, officials said.
The Treasury’s Department found 14 of the contractors had pending tax issues, and one out-of-state contractor was served a jeopardy assessment warrant for non-compliance. Investigators assessed the non-compliant businesses $104,092 in back taxes and have collected $46,597 to date, officials said.
The Labor Department said it will continue to pursue collection of the assessed back wages and penalties as court cases settle. Each contractor has the right to appeal the allegations, the agency noted.
A 2018 Department of Labor audit found more than 12,300 cases of workers being misclassified, resulting in more than $460 million in underreported gross wages and $14 million in lost state unemployment and disability contributions. The audit covered just 1% of businesses, suggesting the actual cost of misclassification was much higher.
Gov. Phil Murphy signed a package of bills in 2021 beefing up the state’s labor laws in an effort to crack down on worker misclassifications and exploitation by private employers.
“Workers who are misclassified as independent contractors miss out on fair wages and benefits,” Murphy said during a bill signing in July 2021. “These business practices are unfair, abusive, and illegal and they cannot be tolerated.”
Joseph Petrecca, commissioner of wage and hour compliance at the state Department of Labor, said the crackdown shows New Jersey is serious about “holding employers accountable to our state’s wage, benefits and tax laws.”
“We want to make sure employees aren’t paid any less than what they deserve for an honest day’s work,” he said. “This has been an intensive, large-scale investigation, and we’re far from finished with this case or future enforcement.”
