Gov. Christie may be on his way out the door, but he is still paying close attention to the legislation coming across his desk. This week he conditionally vetoed a wage theft bill that would have exposed employers in the state to significant liability for the good-faith use of independent contractors.
A5072 was promoted as a bill about wage theft – meant to deter willful bad actors who fail to pay wages and treat penalties as a mere “cost of doing business.” However, as drafted it would have reached much more than employers deliberately flouting their legal and contractual obligations. Rather, it would have brought extraordinary penalties to one side of nuanced questions of law and exposed employers engaging in good faith employment practices to an unwarranted risk of liability.
A business owner can easily believe he is properly compensating his workers, only to discover that they should have been classified as employees, rather than independent contractors. But that miscalculation would have subjected employers to three times the back pay owed going back six years – a massive and unjust penalty on employers who believed they were following the law.
The bill would also have imposed joint and several liability on client employers – a “deep pockets” provision that would ensure easy dollars from innocent businesses, without regard to responsibility for the underlying violation.
The Governor’s veto message embraced NJCJI’s concerns, striking the joint liability provisions, and limiting the bill’s increased penalties to employers who “knowingly and willfully” violated the law.
“While I support penalizing businesses that seek to steal money from their employees, I cannot support expanding liability, especially criminal liability, to businesses that are doing their best to follow the letter of the law,” Christie wrote. “Therefore, I am recommending that the expanded liability and remedies for wage theft be limited to knowing and willful violations of the law. Doing so will ensure that aggrieved employees are properly compensated, while more draconian remedies are properly reserved for the most egregious conduct.”
Christie should be applauded for his courage to veto this legislation. As suggested in the governor’s veto message, there are ways to address wage theft without applying the same penalty to the full spectrum of employers – from those who flagrantly break the law, to those who thought they were complying with the law, to those who were in fact complying with the law but had contractual relationships with those who were not.