Big News For NJ Employers – NJ AG Files First Complaint Under the Enhanced State Labor and Benefits Laws

On December 11, 2023, the New Jersey Attorney General’s Office filed its first lawsuit under the State’s enhanced labor laws permitting it to commence actions against employers in Superior Court for misclassifying workers as independent contractors.

The lawsuit, commenced in the Essex County Vicinage of the Superior Court and captioned as Asaro-Angelo v. STG Logistics, Inc., et al., was brought under the name of Robert Asaro-Angelo, Commissioner of the New Jersey Department of Labor and Workforce Development, against two shipping and logistics companies, STG Logistics, Inc. and STG Drayage LLC.  Through the action, the State seeks to stop the defendants’ alleged practice of misclassifying over 300 drivers as independent contractors (IC’s), and to recover millions of dollars in penalties, fines, and back wages. The suit aims to be the first of its kind to stop companies from illegally profiting off of the work of their employees by misclassifying them instead as independent contractors to avoid paying workers certain compensation and other benefits.

Under most New Jersey labor laws, workers are presumed to be employees unless the company can satisfy all three requirements of the “ABC test”: a) the individuals are largely free from control or direction over the performance of their work, b) the type of work performed by the individuals is outside of the company’s usual course of business or is outside the usual place of business, and c) the individuals have their own independent trade, job, profession or business. This can be a high burden for employers to satisfy and, therefore, justify their business practices.

Given the new laws and the State’s clear intent to pursue similar misclassification claims, employers are strongly encouraged to consult with legal counsel to ensure that they are properly classifying their workers as employees or independent contractors. If they do not, they may find themselves as the target of the next Superior Court misclassification case brought by the State.