A1348

An Act concerning the enforcement of public work project requirements and supplementing and amending P.L.1963, c.150 and P.L.1999, c.238.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) The Legislature finds and declares that:

a. The certified payroll and subcontractor registration requirements in New Jersey’s public works laws are essential to protecting workers, ensuring fair competition, and preventing wage theft and misclassification.

b. Low-level administrative penalties have been insufficient to effectively deter willful violations of New Jersey’s public work project requirements.

c. Strengthened penalties and enhanced enforcement are necessary to ensure that contractors comply with prevailing wage, payroll, and registration requirements.

2. Section 11 of P.L.1963, c.150 (C.34:11-56.35) is amended to read as follows:

11. (a) Any employer who willfully hinders or delays the commissioner in the performance of his duties in the enforcement of [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.), or fails to make, keep, and preserve any records as required under the provisions of [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.), or falsifies any such record, or refuses to make any such record accessible to the commissioner upon demand, or fails to timely respond to or furnish records required by a subpoena issued by the commissioner, or refuses to furnish a sworn statement of such record or any other information required for the proper enforcement of [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.) to the commissioner upon demand, or pays or agrees to pay wages at a rate less than the rate applicable under [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.) or otherwise violates any provision of [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.) or of any regulation or order issued under [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.) shall be guilty of a disorderly persons offense and shall, upon conviction therefor, be fined not less than $100.00 nor more than $1,000 or be imprisoned for not less than 10 nor more than 90 days, or by both such fine and imprisonment. Each week, in any day of which a worker is paid less than the rate applicable to him under [this act] P.L.1963, c.150 (C.34:11-56.25 et seq.) and each worker so paid, shall constitute a separate offense. In addition to the foregoing fines, and in addition to or as an alternative to any criminal proceedings, if an employer fails to comply with any lawfully issued subpoena, or on the refusal of any witness to testify to any matter regarding which the witness may be lawfully interrogated, the commissioner may apply to the Superior Court to compel obedience by proceedings for contempt, in the same manner as in failure to comply with the requirements of a subpoena issued from the court or a refusal to testify in the court.

(b) As an alternative to or in addition to any other sanctions provided by law for violations of any provision of P.L.1963, c.150 (C.34:11-56.25 et seq.), when the Commissioner of Labor and Workforce Development finds that an employer has violated that act, the commissioner is authorized to assess and collect administrative penalties, [up to a maximum of $2,500 for a first violation and up to a maximum] of not less than $5,000 and not more than $10,000 for a first violation, and not less than $10,000 and not more than $25,000 for each subsequent violation, specified in a schedule of penalties to be promulgated as a rule or regulation by the commissioner in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). Each week in which a worker is paid less than the required rate, and each worker so underpaid, shall constitute a separate violation. When determining the amount of the penalty imposed because of a violation, the commissioner shall consider factors which include the history of previous violations by the employer, the seriousness of the violation, the good faith of the employer [and] , the size of the employer's business, and whether the violation was willful. No administrative penalty shall be levied pursuant to this section unless the Commissioner of Labor and Workforce Development provides the alleged violator with notification of the violation and of the amount of the penalty by certified mail and an opportunity to request a hearing before the commissioner or his designee within 15 days following the receipt of the notice. If a hearing is requested, the commissioner shall issue a final order upon such hearing and a finding that a violation has occurred. If no hearing is requested, the notice shall become a final order upon expiration of the 15-day period. Payment of the penalty is due when a final order is issued or when the notice becomes a final order. Any penalty imposed pursuant to this section may be recovered with costs in a summary proceeding commenced by the commissioner pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). Any sum collected as a fine or penalty pursuant to this section shall be applied toward enforcement and administration costs of the Division of Workplace Standards in the Department of Labor and Workforce Development.

(c) When the Commissioner of Labor and Workforce Development finds that the employer has violated provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.), the commissioner may refer the matter to the Attorney General or his designee for investigation and prosecution. Nothing in this subsection shall be deemed to limit the authority of the Attorney General to investigate and prosecute violations of the New Jersey Code of Criminal Justice, nor to limit the commissioner's ability to refer any matter for criminal investigation or prosecution.

(d) If the commissioner makes an initial determination that an employer has violated the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.) by paying wages at rates less than the rates applicable under that act, whether or not the commissioner refers the matter to the Attorney General or other appropriate prosecutorial authority for investigation or prosecution pursuant to subsection (c) of this section, the commissioner may immediately issue a stop-work order to cease all business operations at one or more worksites or across all of the employer's worksites and places of business. The stop-work order may be issued only against the employer found to be in violation or non-compliance. If a stop-work order has been issued against a subcontractor pursuant to this subsection, the general contractor shall retain the right to terminate the subcontractor from the project. The stop-work order shall remain in effect until the commissioner issues an order releasing the stop-work order upon finding that the employer has agreed to pay wages at the required rate and has paid any wages due and any penalty deemed satisfactory to the commissioner. Once the stop-work order is issued, any employee affected by a stop-work order issued pursuant to this section shall be entitled to pay from the employer for the first ten days of work lost because of the stop-work order. Upon request of any employee not paid wages, the commissioner can take assignment of the claim and bring any legal action necessary to collect all that is due. As a condition for release from a stop-work order, the commissioner may require the employer to file with the department periodic reports for a probationary period that shall not exceed two years that demonstrate the employer's continued compliance with the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.). The commissioner may assess a civil penalty of $5,000 per day against an employer for each day that it conducts business operations that are in violation of the stop-work order. That penalty shall be collected by the commissioner in a summary proceeding in accordance with the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).

(cf: P.L.2021, c.165, s.5)

3. (New section) a. A contractor or subcontractor engaged in public work shall submit a complete and accurate certified payroll record within 10 days of the payment of wages, in the form prescribed by the commissioner pursuant to P.L.1963, c.150 (C.34:11-56.25 et seq.).

b. Any contractor or subcontractor who fails to submit a certified payroll record within 10 days of the payment of wages shall be subject to a civil penalty of $1,000 per project, for each day of noncompliance.

c. Any contractor or subcontractor who knowingly submits a false certified payroll record shall be subject to a civil penalty of $15,000 for a first offense and $25,000 for each subsequent offense within five years.

d. Each payroll period and each affected worker shall constitute a separate violation.

e. Upon notice of noncompliance, a public body shall withhold contract payments sufficient to cover unpaid wages and penalties until compliance is achieved.

4. Section 14 of P.L.1963, c.150 (C.34:11-56.38) is amended to read as follows:

14. The public body awarding any contract for public work, or otherwise undertaking any public work, or entering into a lease or agreement to lease pursuant to which public work is to be done, shall first ascertain from the commissioner the list of names of contractors or subcontractors who have failed to pay prevailing wages as determined in section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) or failed to submit certified payroll records pursuant to section 7 of P.L.1963, c.150 (C.34:11-56.31), and no contract shall be awarded to such contractor or subcontractor, or to any firm, corporation or partnership in which such contractor or subcontractor has an interest until three years have elapsed from the date of listing as determined in section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37).

The prohibition period shall be five years if, within any five-year period, a contractor or subcontractor is found to have committed two or more violations involving:

(1) failure to submit certified payroll records for consecutive payroll periods;

(2) knowingly submitting false payroll records; or

(3) willful payment of less than the prevailing wage.

For purposes of this section, "interest" shall mean an interest in the firm, corporation or partnership bidding on, or performing public work, whether having the interest as an owner, partner, officer, manager, employee, agent, consultant or representative. The term may also include, but not be limited to, all instances in which the contractor or subcontractor listed by the commissioner under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) has received payments, whether those payments are in the form of cash or any other form of compensation from the firm, corporation or partnership, or when the contractor or subcontractor listed by the commissioner under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) has entered into any contract or agreement with the firm, corporation or partnership for services performed or to be performed, for services that have been or will be assigned or subletted, or for the sale, rental or lease of vehicles, tools, equipment or supplies during the period from the initiation of the proceedings under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) against the contractor or subcontractor until three years have elapsed from the date that the contractor or subcontractor has been listed by the commissioner under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37). The term "interest" shall not include shares held in a publicly traded corporation if the shares were not received as compensation after the initiation of proceedings under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) from a firm, corporation or partnership bidding or performing public work.

A rebuttable presumption that a contractor or subcontractor listed by the commissioner under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) has an interest in another firm, corporation or partnership may arise if the two share any of the following capacities or characteristics: (1) perform similar work within the same geographical area and within the same monetary range, (2) occupy the same premises, (3) have the same telephone number or fax number, (4) have the same email address or internet website, (5) employ substantially the same administrative employees, (6) utilize the same tools and equipment, (7) employ or engage the services of any listed person or persons involved in the direction or control of the other, or (8) list substantially the same work experience in order to obtain the requisite pre-qualification rating from the Department of the Treasury, or any other entity, to participate in any public work.

If a rebuttable presumption has arisen that a contractor or subcontractor listed by the commissioner under section 13 of [this act] P.L.1963, c.150 (C.34:11-56.37) has an interest in another firm, corporation or partnership, the adversely affected contractor or subcontractor, including the firm, corporation or partnership, which would by virtue of a finding of "interest" be prevented under this section from being awarded public work, may request a hearing, which shall be conducted in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

(cf: P.L.2007, c.67, s.1)

5. Section 4 of P.L.1999, c.238 (C.34:11-56.51) is amended to read as follows:

4. No contractor shall bid on any contract for public work as defined in section 2 of P.L.1963, c.150 (C.34:11-56.26) , or for which payment of the prevailing wage is required by any other provision of law, unless the contractor is registered pursuant to [this act] P.L.1999, c.238 (C.34:11-56.48 et seq.). No contractor shall list or utilize a subcontractor in a bid proposal for the contract unless the subcontractor is registered pursuant to P.L.1999, c.238 (C.34:11-56.48 et seq.) at the time the bid is made and throughout the performance of the contract. No contractor or subcontractor, including a subcontractor not listed in the bid proposal, shall engage in the performance of any public work subject to the contract, unless the contractor or subcontractor is registered pursuant to that act.

A contractor that knowingly utilizes an unregistered subcontractor shall be subject to a civil penalty of $10,000 per subcontract for a first offense and $25,000 per subcontract for each subsequent offense within five years, and shall be jointly and severally liable for any unpaid wages, benefits, and penalties arising from the subcontractor’s violations.

(cf: P.L.2019, c.376, s.2)

6. This act shall take effect on the first day of the fourth month following enactment, except that the Commissioner of Labor and Workforce Development may take any advance anticipatory administrative action as may be necessary to implement the provisions of this act.

STATEMENT

This bill concerns the enforcement of public work project requirements and the submission of certified payroll records.

The bill increases penalties for violations of the prevailing wage law and “The Public Works Contractor Registration Act.”

Under current law, the maximum administrative penalty that may be assessed for violations of the prevailing wage law is $2,500 for a first violation and $5,000 for each subsequent violation. The bill raises the penalty range to between $5,000 and $10,000 for a first violation, and between $10,000 and $25,000 for each subsequent violation.

Further, the bill establishes civil penalties related to the submission of certified payroll records. A contractor or subcontractor who fails to submit a certified payroll record within 10 days of the payment of wages will be subject to a civil penalty of $1,000 per project, for each day of noncompliance. A contractor or subcontractor who knowingly submits a false certified payroll record will be subject to a civil penalty of $15,000 for a first offense and $25,000 for each subsequent offense within five years. Each payroll period and each affected worker constitutes a separate violation.

The bill extends the period a contractor or subcontractor may be prohibited from receiving a contract for public work. Under current law, the prohibition is three years if the contractor or subcontractor failed to pay prevailing wages. The bill includes failure to submit certified payroll records in the existing three year prohibition. The prohibition period will be five years if, within any five-year period, a contractor or subcontractor is found to have committed two or more violations involving:

(1) failure to submit certified payroll records for consecutive payroll periods;

(2) knowingly submitting false payroll records; or

(3) willful payment of less than the prevailing wage.

Finally, the bill provides that a contractor that knowingly utilizes an unregistered subcontractor is subject to a civil penalty of $10,000 per subcontract for a first offense and $25,000 per subcontract for each subsequent offense within five years, and is jointly and severally liable for any unpaid wages, benefits, and penalties arising from the subcontractor’s violations.