New Jersey tightens misclassification enforcement

New Jersey is tightening labor enforcement on two fronts at once: worker classification and job-protected leave. State officials in 2026 reached new settlements with logistics companies over allegations they treated employees as independent contractors, while the Labor Department also updated guidance saying some workers receiving Temporary Disability Insurance or Family Leave Insurance now have separate reinstatement rights. The changes do not create a single new law on misclassification, but they raise the compliance burden on employers that use contractor models or route leave requests through fragmented systems. State materials and recent enforcement actions show New Jersey is pressing employers to document who is an employee, who is not, and what happens when a worker returns from leave. ### Which enforcement actions put misclassification back in focus? On July 29, Attorney General Jennifer Davenport and Acting Labor Commissioner Kevin D. Jarvis said New Jersey reached a settlement with STG Logistics, Inc., STG Drayage, LLC and other subsidiaries over allegations that the companies misclassified hundreds of truck drivers as independent contractors. The state said the agreement requires at least $2.775 million in payments to resolve alleged violations of multiple labor laws. (nj.gov) On March 12, the New Jersey Department of Labor and Workforce Development and the Office of the Attorney General announced a separate $7 million settlement with PDX North, Inc., a last-mile automotive parts distribution company. The state said that case resolved longstanding alleged misclassification violations involving delivery drivers after years of litigation. The Labor Department’s 2026 press archive also shows stop-work orders and other public actions tied to misclassification enforcement, including a June 25 order against a Pennsylvania masonry company and a May 26 order against a Teaneck limo company. (nj.gov) Those actions indicate the state is using both litigation settlements and field enforcement tools. ### How does New Jersey decide whether someone is really an independent contractor? New Jersey applies the “ABC” test under its unemployment law. (nj.gov) State guidance says a worker is presumed to be an employee unless the employer can show the person is free from control, performs work outside the usual course or place of the business, and is customarily engaged in an independently established trade or business. (nj.gov) The Labor Department adopted rules on May 5 that it said provide clearer worker-classification standards. State law also allows additional penalties when a labor-law violation is tied to misclassification, including up to $250 per worker for a first violation, up to $1,000 for subsequent violations, and a payment of as much as 5% of a misclassified worker’s gross earnings over the prior 12 months. ### What changed on leave and reinstatement? (nj.gov) July 17 is the key date in the leave guidance. New Jersey’s labor department says that if an employee is receiving Temporary Disability Insurance or Family Leave Insurance benefits from the state or through a private plan as of July 17, 2026, that worker is eligible for job protection. The department says that protection is separate from reinstatement rights under the New Jersey Family Leave Act and the federal Family and Medical Leave Act. (nj.gov) State job-protection pages also say the New Jersey Family Leave Act now covers more employers and employees as of July 17. The department’s materials tell workers and employers that multiple leave laws can apply at once, depending on employer size, tenure, hours worked and the reason for leave. ### Why do these two issues land together for employers? New Jersey’s enforcement pages place both issues inside the same compliance machinery: wage laws, benefit laws, tax rules and leave administration. (nj.gov) A company that misclassifies workers may also create downstream problems in payroll, benefits eligibility and leave handling if records do not match the worker’s actual status. That linkage is an inference from the state’s enforcement structure and guidance, not a new state statement of policy. (nj.gov) The practical effect is that employers need current worker-status records and a clear process for routing leave claims, notices and return-to-work decisions. State guidance says additional information on job protection is still coming, and the Labor Department’s public press page continues to post new enforcement actions and rule updates. ### Where should employers and workers look next? (nj.gov) The New Jersey Department of Labor’s worker-classification pages and leave-benefits portal are the primary places where the state is posting current rules, FAQs and updates. The most immediate milestones are the department’s forthcoming additional guidance on job protection and any new enforcement releases involving stop-work orders, settlements or penalties. (nj.gov)