A multi-agency investigation assessed more than $1.3 million in penalties and back wages for workers allegedly misclassified as independent contractors by 20 companies working on a high-rise construction project in downtown Jersey City, the state of New Jersey reported.
The joint investigation was the first of its kind among cooperating state agencies, including state departments of Labor and Workforce Development, Treasury, and Banking and Insurance as well as the attorney general’s office. The multi-agency team of more than 60 investigators conducted an unannounced sweep in summer 2021 in response to allegations of workers being misclassified. Grand Street Construction LLC of Jersey City, the owner/general contractor on the project, can be held responsible for the unlawful actions and back wages of its sub-contractors, according to the state.
Allegations also included workers not being paid properly for overtime and employers failing to pay appropriate taxes on purchased construction materials and not carrying workers’ compensation insurance.
“Under Gov. [Phil] Murphy’s leadership, our state agencies are working in partnership to identify and root out worker misclassification by companies and contractors that illegally withhold wages and benefits due to workers,” said Department of Banking and Insurance Commissioner Marlene Caride. “We are grateful for the collaboration with our sister agencies on this joint investigation. The department looks forward to our continued work together to protect workers and their families across the state.”
The investigation started shortly after Murphy signed a second package of misclassification bills into law in July 2021.
The Department of the Treasury’s Division of Taxation also found that 14 of the contractors had pending tax issues, and one out-of-state contractor was served a jeopardy assessment warrant for noncompliance.
Subcontractor P & B Partitions of West Berlin, New Jersey — which hired several of the other subcontractors at fault — was cited for records violations, misclassifying employees and unpaid and late wages; it assessed more than $324,000 in penalties and fees in addition to a $8,692 misclassification penalty to be paid to 22 of its workers. P & B Partitions is contesting that assessment. In addition to its own violations, P & B also contracted with at least five other lower-tier subcontractors that also failed to properly classify employees and pay them properly, the state reported. Those violations and penalties total $237,289.63, and that liability also lies with both P & B Partitions and Grand Street since those contractors failed to challenge the alleged violations against them, according to the state.
NJDOL noted it will continue to pursue collection of the assessed back wages and penalties as cases settle. Each contractor has the right to appeal the allegations.