Department of Labor Refuses to Apply Unemployment Statutes

James T. Prusinowski, Esq.
Trimboli & Prusinowski, L.L.C.

An Administrative Law Judge recently ruled that pursuant to statute court reporters are not required to pay into the unemployment system.  They are deemed independent contractors based upon a 2010 amendment.  However, the Department of Labor has refused to apply the statute even after the court ruled in favor of JerseyShore Reporting, represented by Jim Prusinowski.  Instead, the DoL has taken an “interlocutory appeal” to the DoL Commissioner claiming that when the New Jersey Legislature amended the statute, it did not have authority to do so.

Remarkably, the DoL argues that the Legislature did not know what it was doing when it amended the statute nor did Governor Jon Corzine understand the amendment when he signed it into law – this notwithstanding the DoL works for and advises the Governor. The DoL now refuse to enforce the law as written.  Instead it seeks to impose taxes and penalties on JerseyShore Reporting and other court reporting agencies for classifying court reporters as 1099 independent contractors.  As ICs, no unemployment or disability taxes are paid.  Nor are the individuals eligible to receive unemployment or disability.  Rather, they are on the list of many court reporting agencies and if one agency does not have work for them to perform, it is often the case, another does.  Thus, court reporters are generally “unemployed” only if they choose to not work on particular days or at particular times.  The legislative amendment recognizes this; however, the DoL, in its overreach, fails to understand the industry’s business or structure.

Many court reporting agencies are undergoing audits for how they treat their court reporters – employees or ICs.  The industry has historically classified them as ICs, but the DoL looks to invalidate this designation so it can collect more tax revenue.  JerseyShore is one of the first to be assessed in 2010 when the amendment went into effect; therefore, it is the flagship on this issue.  It has consistently argued that the amendment clearly and unequivocally exempts court reporters from unemployment taxes and therefore classifies them as ICs.  An Administrative Law Judge agreed with JerseyShore and ruled against the DoL which sought to impose taxes and penalties.  Now it is up to the Commissioner to affirm the Administrative Law Judge’s decision and apply the statute as written or reject the clear statutory language.

If the Commissioner rejects the clear statutory language he will essentially reject the legislative policy and decree that the unemployment statute will not be followed.  Any and all groups that are exempt from unemployment tax will therefore be subject to the same fate as court reporters – not knowing if they can rely upon the statute or be subject to the whims of the DoL.  If the Commissioner rejects the Administrative Law Judge’s decision, then JerseyShore Reporting has the option of filing an appeal with the Superior Court.

JerseyShore is of course hopeful that the Commissioner will agree with the decision and enforce the clear statutory decision.

Jim Prusinowski is an experienced labor and employment attorney representing businesses concerning their employees.  He advises clients on issues related to independent contractor classification, overtime, discrimination, restrictive covenants and other employee issues.  He is one of New Jersey’s foremost experts on defamation in the workplace having represent clients in the New Jersey Supreme Court regarding defamation claims.