SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE, No. 2951
STATE OF NEW JERSEY
DATED: JUNE 24, 2024
The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2951.
This bill requires the Director of the Division of Taxation in the Department of the Treasury to provide monetary awards to whistleblowers who report tax law violations committed by employers in the construction industry. The bill defines “employer in the construction industry” as an employer engaging in any activity related to the erection, construction, alteration, demolition, repair or maintenance of buildings, structures, bridges, highways, roadways, dams, tunnels, sewers, underground buildings or structures, pipelines or ducts and all other construction projects or facilities.
Under the bill, if the director proceeds with an administrative or judicial action against an employer in the construction industry and determines that the action is based on specific and credible information brought to the director by an individual, the director is required to provide that individual an award of at least 15 percent, but not more than 30 percent, of the proceeds collected as a result of the action or from any settlement in response to that action; provided, however, if the director determines an action is based principally on an individual’s disclosure of an allegation resulting from a judicial or administrative hearing, from a governmental report, hearing, audit, or investigation, or from the news media, any award provided by the director to that individual may not exceed 10 percent of the proceeds. The bill requires the director to determine the amount of an award based upon the extent to which any information submitted by an individual contributed to the outcome of an action or related settlement.
If the director determines that the claim for an award pursuant to the bill is brought by an individual who planned and initiated the actions that led to the violation resulting in the administrative or judicial action in which that individual is a party, the bill permits the director to reduce the amount of the award. In addition, if such an individual is convicted of criminal conduct arising from the individual’s role in the violation, then the director is not permitted to provide an award to that individual. The following individuals are also ineligible to receive an award under the bill: (1) an individual who obtained information through the individual’s official duties as an employee of the Department of the Treasury; and (2) an individual who filed a claim for an award based on information obtained from an ineligible individual for the purpose of avoiding the rejection of the claim that would have resulted if the claim was filed by the ineligible individual.
The bill provides that any complaint with respect to an award provided, reduced, or revoked pursuant to the bill is to be filed within 30 days after the date of the provision, reduction, or revocation of that award.
Finally, the bill protects any employee, as defined by the bill, from retaliatory action under the provisions of the “Conscientious Employee Protection Act,” P.L.1986, c.105 (C.34:19-1 et seq.).
FISCAL IMPACT:
The Office of Legislative Services (OLS) determines that the bill have an indeterminate impact on State costs due to the payment of rewards to whistleblowers in the construction industry. The impact to State costs may be mitigated by an increase in successful administrative or judicial actions against construction companies to the extent that the potential rewards provide an incentive for increased reporting of violations.
The bill provides for awards up to 30 percent of the proceeds connected to any case, subject to the various restrictions outlined in the bill. In order to determine a range on potential outcomes, the OLS would need information on the historical annual level of related administrative and judicial actions and determine what portion of the claims would be eligible for the various awards.