And There It Is
New Jersey's Labor Department just released the results of its years-long misclassification strategy. Spoiler alert: It did not recoup "billions of dollars."
Yesterday, I published this story about how New Jersey Labor Commissioner Robert Asaro-Angelo claimed that “misclassification costs New Jersey billions of dollars in critical income tax and benefits contributions.”
I explained why that claim—billions of dollars—raises a lot of questions, especially since such claims have now become a basis for proposed independent-contractor rulemaking at New Jersey’s Department of Labor & Workforce Development that attorneys say “almost entirely eviscerates” the ability to be self-employed and poses an “existential threat” to independent work.
Among other things, I noted in yesterday’s story that:
In 2018, Governor Phil Murphy’s executive order creating a Task Force on Employee Misclassification claimed the State of New Jersey was losing over $500 million a year
In 2019, the Murphy Task Force Report cited figures totaling $26.7 million, and a state press release noted tens of millions of dollars a year
In 2020, a Murphy administration press release included a claim of hundreds of millions of dollars
In 2021, the Murphy administration’s Division of Taxation cited figures totaling $16.5 million (from the same study that, in 2019, had been quoted totaling $26.7 million, and whose own authors noted that “any estimates should not be taken as absolute”)
In 2022, Labor Commissioner Asaro-Angelo testified that the State of New Jersey is losing billions of dollars
Today, New Jersey’s Labor Department issued a press release touting its results after nearly eight full years of following through on its worker misclassification ideas. This press release states that the Department has “prioritized” this issue and “implemented a gold-standard enforcement strategy.”
The press release also details this strategy’s results.
An Average of $12.5 Million Per Year
Here is how the Labor Department’s press release describes the results of its misclassification strategy after nearly eight full years:
“NJDOL's Divisions of Wage and Hour Compliance and Employer Accounts have helped put $100 million back into the pockets of workers.”
Those workers were cheated, and I’m glad that my fellow New Jerseyans received compensation that they deserved. As I’ve always said, employee misclassification is wrong, and companies that do it should be held accountable.
But to be clear, that $100 million does not demonstrate billions of dollars being lost.
Over eight years, it’s an average of $12.5 million per year.
This data discrepancy is massive and underreported. Going from claims of "billions" to actual recovery of $12.5M annually shows either fundamentally flawed cost estimates or policy justifications built on exageration. I saw similar patterns when tracking regulatory impact statements, where projected benefits get inflated to justify enforcement expansions but actual results never get the same scrutiny. The fact this is being used to justify rulemaking that "almost entirely eviscerates" self-employment makes the numbers gap especially problematic.