LEGISLATIVE FISCAL ESTIMATE

ASSEMBLY, No. 5839

STATE OF NEW JERSEY

218th LEGISLATURE

 

DATED: DECEMBER 16, 2019

 

 

SUMMARY

 

Synopsis:

Concerns penalties for misclassification of employees.

Type of Impact:

Increase in annual State revenue, partially, if not fully, offset by an increase in annual State expenditures.

Agencies Affected:

Department of Labor and Workforce Development.

 

Office of Legislative Services Estimate

Fiscal Impact

Year 1 

Year 2 

Year 3 

 

State Cost Increase

                                    Indeterminate

 

State Revenue Increase

                                    Indeterminate

 

 

 

 

·         The Office of Legislative Services (OLS) estimates that the bill may result in an increase in revenues from the collection of penalties for violations of State wage, benefit and tax laws in connection with the misclassification of employees.

 

·         The OLS notes that, if enacted, the bill may result in an increase, likely insignificant, in administrative State expenditures associated with the enforcement of the bill’s provisions.   Under the bill, any revenue collected must be used to offset any administrative expenditures.

 

 

BILL DESCRIPTION

 

      This bill provides for the assessment of penalties for violations of State wage, benefit and tax laws in connection with the misclassification of employees.

      The bill authorizes the Commissioner of Labor and Workforce Development, in the case of a violation of a State wage, benefit and tax law in connection with failing to properly classify employees, to impose the following penalties in addition to any other remedies or penalties authorized by law.  The commissioner is authorized to assess and collect:

      1.   An administrative “misclassification penalty” up to a maximum of $250 per misclassified employee for a first violation and up to a maximum of $1,000 per misclassified employee for each subsequent violation; and

      2.   A penalty to be provided for the misclassified worker of not more than five percent of the worker’s gross earnings over the past 12 months from the employer who failed to properly classify them.  The employer may be required to make these penalty payments to the commissioner to be held in a special account in trust for the worker, or paid on order of the commissioner directly to the worker.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS estimates that the bill may result in an increase in revenues from the collection of penalties for violations of State wage, benefit and tax laws in connection with the misclassification of employees.  The OLS does not have information on the number of violations to State wage, benefits and tax laws concerning misclassification.

      The OLS notes that, if enacted, the bill may result in an increase, likely insignificant, in administrative State expenditures associated with the enforcement of the bill’s provisions.   Under the bill, any revenue collected must be used to offset any administrative expenditures.

 

 

Section:

Commerce, Labor and Industry

Analyst:

Juan C. Rodriguez

Associate Fiscal Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).