The 'Rampant' Three
In its comment, New Jersey Building and Construction Trades Council pushes far-reaching independent-contractor policy, citing only a few bad actors.
Only 26 of the estimated 9,500 written public comments that I’m aware of support the proposed independent-contractor rule at the New Jersey Department of Labor & Workforce Development. So far, I’ve published detailed information about 17 of these 26 comments:
The New Jersey AFL-CIO comment, which cannot distinguish between somebody holding down six part-time jobs with six bosses, and a six-figure freelancer doing projects for six different clients.
The Amalgamated Transit Union comment, which alleges that microtransit companies often misclassify workers, but fails to cite any evidence.
The Dēmos comment, which primarily documents a problem of illegal immigration in the State of Texas, near the U.S.-Mexico border.
The Economic Policy institute comment, which includes research based on a bunch of estimates by the think tank, which itself is chaired by the head of the AFL-CIO.
The Engineers Labor-Employer Cooperative comment, which calls misclassification “a serious issue facing the construction industry,” but fails to offer any examples.
The Human Rights Watch comment, which cites an investigation based on interviews with an average of about seven people in each of 13 states, and none of them in New Jersey.
An individual comment that says the submitter agrees with Human Rights Watch.
Another individual comment that says the submitter agrees with Human Rights Watch.
The International Union of Painters & Allied Trades comment, which cites two sources for what it calls the “common” problem of misclassification. One source is a study whose author wrote that it’s hard to accurately measure the prevalence and severity of misclassification, while the other source is congressional testimony given 15 years ago that is based on data as old as 1984.
The New Jersey Association for Justice comment, which urges the Labor Department to move forward with its rule-making in part because of the way the mob infiltrated the Teamsters union in the 1970s.
Make the Road New Jersey’s comment, which urges rule-making that targets all kinds of independent contractors while citing Amazon dozens of times.
The National Employment Law Project comment, which cites Economic Policy Institute research; data from research done in Washington, D.C., and California; data based on a study of just 288 gig workers; and data as old as 1984.
The Public Justice Center comment, which urges New Jersey’s Labor Department to proceed based on things that allegedly happened to five people in the State of Maryland.
The Teamsters union comment, which includes an anecdote that alleges misclassification with no supporting evidence, and which cites research that is 20 years old.
The United Food & Commercial Workers International Union comment, which details a business-model shift the union doesn’t like, but fails to offer any evidence of misclassification.
The Workplace Justice Lab comment filed by Jake Barnes and…
The largely identical Workplace Justice Lab comment filed by Melanie Stratton Lopez, both of which cite a union-backed study whose methodology cannot definitively tell the difference between misclassification and off-the-books illegal schemes; and which cite a study by the Workplace Justice Lab whose findings appear to contradict the Workplace Justice Lab public comments.
Today, let’s take a look at the comment that the New Jersey State Building & Construction Trades Council filed.
It’s an easy read at only two pages:
This public comment urges the Labor Department to proceed with rule-making that targets an estimated 1.7 million independent contractors in hundreds of professions statewide based largely on examples of three bad-actor construction companies that affected a total of 34 people.
The 34 People
New Jersey State Building & Construction Trades Council is a federation of unions that’s affiliated with the AFL-CIO. Its president, whose signature is at the end of this public comment, is William Mullen.
Mullen’s bio includes being an ironworker who comes recommended by former New Jersey Senate President Steve Sweeney—the primary sponsor of the 2019 legislation that attempted to copy California’s freelance-busting Assembly Bill 5 law in New Jersey. (That bill failed amid widespread public opposition, and voters then threw Sweeney out of office altogether.)
The public comment that Mullen wrote calls the misclassification of construction workers a “rampant” problem. To support this claim, the comment cites three instances of bad-actor companies:
“In Princeton, Imperio Castillo Construction was halted by an NJDOL stop-work order after nine laborers were discovered to be misclassified and compensated at sub-prevailing rates; the resulting enforcement effort recovered over $75,000 in back wages, penalties, and interest. In Atlantic County, a routine audit of Coastal Paving, Inc. revealed that fifteen asphalt crew members—ostensibly ‘subcontractors’—should have been classified as employees. Coastal Paving ultimately paid more than $210,000 in retroactive prevailing wages, fines, and interest. And in Paterson, Elite Drywall LLC was fined $50,000 and forced to make whole ten finishers who had been denied their lawful benefits and wage differentials.”
Now, just so we’re all clear on this point: I’ve written before, and I’ll write here again, that if employees are truly misclassified, then the companies they’re working for absolutely should be held accountable. It’s a good thing if those companies pay the employees money they should’ve been paid in the first place.
But it’s hard to justify the use of the word “rampant” to describe employee misclassification if these three examples are the most notable ones that exist. These three cases involved a combined total of only 34 people, in a state where, according to the Labor Department, more than 150,000 people work in construction.
This public comment does go on to state that there are, indeed, more misclassified construction workers out there, but it doesn’t say how many. It instead cites a figure involving back pay:
“These recent actions are just the tip of the iceberg: since January 2024, NJBCTC-supported prevailing-wage claims have recouped over $1 million in back pay for misclassified construction workers.”
Again, I’m all for employees receiving back pay they’re owed if they were, in fact, misclassified—but if the claim is that misclassification is “rampant,” then we need to know how many companies were involved, and how many workers received those funds. The way this information is presented raises more questions about why such basic details are missing from the public comment.
The Trades Council comment goes on to suggest that independent contractors are also working without health insurance:
“Workers driving rebar, pouring concrete, or framing homes under the Ironworkers Local 399 banner report crews organized under sham ‘independent contractor’ agreements, denying them health-benefit coverage and workers’ compensation in the event of injury. Carpenters Local 254 members recount non-union remodelers who advertise ‘independent subcontractor rates’ to undercut union scale by as much as 25 percent—leaving journeymen to fend for themselves when accidents occur.”
We’re given no details and no evidence of any investigations to determine whether these union members’ claims are true. What we can say is that, according to the U.S. Bureau of Labor Statistics, most independent contractors do, in fact, have health insurance.
The Bureau reported less than a year ago:
“Although most workers in alternative arrangements did not receive health insurance through their jobs, a large share had health insurance from some source, including coverage from another family member’s policy, through a government program, or by purchasing it on their own.”
Is the health-insurance system perfect for independent contractors? Absolutely not. There are indeed people out there without health insurance, and those of us who do buy individual plans often are forced to pay through the nose for them—as I testified myself before the U.S. Senate in July, when I held up my nearly $1,000-per-month Blue Cross premium stub for the cameras.
But Republicans in control of Congress are working to solve that problem right now with a package of bills designed to help improve insurance access for independent contractors, along with stopping freelance busting at the federal level.
And notably, when it comes to the Democratic Party’s proposed solution for uninsured people—Medicare for All—it has been the unions themselves urging the party to stop and reconsider.
Beyond the Proposed Rule
Perhaps most notable about this New Jersey State Building & Construction Trades Council public comment is that it urges the Labor Department not only to proceed with the proposed rule-making about independent contractors, but also to go beyond it.
The comment states:
“To maximize the effectiveness of these new regulations, the Trades Council urges the Department to pair codification of the ABC test with a robust education campaign—multilingual outreach to small contractors, pre-construction workshops, and clear online guidance. We also recommend dedicated funding for NJDOL’s Office of Strategic Enforcement and Compliance, ensuring that audit teams can swiftly identify repeat offenders. Finally, an annual reporting requirement on enforcement metrics—number of stop-work orders, back-wage recoveries, and penalties assessed—will foster transparency and allow all stakeholders to track progress.”
These suggestions appear intended to enshrine a government approach to this policy area that has proved highly problematic—not just in New Jersey, but also in other places it’s been attempted.
We do need everyone to learn more about this policy area, including the reasons why attorneys say the Labor Department’s proposed rule is vague and unprecedented and fundamentally flawed from a legal perspective. We need everyone to understand what economists say is an “overkill effect” that is harming our state’s W-2 employment, self-employment and overall employment. We have an urgent need to protect everyone’s fundamental freedom to earn a living, and to ensure that all future policy-making is fact-based and reasonable.
I’d also like to see a robust discussion about the Office of Strategic Enforcement and Compliance—starting with the question of whether this Office should continue to exist. The state created it following the release of Governor Phil Murphy’s task force report that mischaracterizes key research and data about independent contractors. We need to go back to the creation of that task force and understand precisely what’s been going on inside the Labor Department, especially now that we have, so unbelievably, arrived at a point where top Democratic Party senators say what the Department is proposing appears to go beyond the bounds of statute and case law, and may have a “substantial negative impact.”
Last, as for the idea of annual reporting on enforcement metrics: I’m all for more transparency at government agencies, but we first need to determine how much Labor Department time and taxpayer money have been spent across all these years, in the context of the results that are plain for everyone to see right now.
This public-comment process has clearly demonstrated that there is a big difference between targeting employee misclassification and attempting to regulate independent contractors right out of business.
What appears to be undeniably rampant is the use of highly questionable claims to justify the latter, along with 99% public opposition to this approach continuing.