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Amendment to New Jersey's Prevailing Wage Act Significantly Expands the Authority of the Commissioner

July 2019

CSG Labor & Employment Alert

Effective July 9, 2019, employers who fail to pay prevailing wages to employees working on projects in New Jersey subject to the Prevailing Wage Act (“Act”) may be subject to the issuance of stop-work orders by the Commissioner of Labor and Workforce Development (“Commissioner”).

The recent amendment to the Act grants the Commissioner significantly greater authority to issue stop-work orders, providing that:

  • The Commissioner can immediately issue a stop-work order to an employer regardless of whether the matter was referred to the Attorney General, if an initial determination was made that the employer has violated the Act by paying employees less than the prevailing wage.
  • A general contractor has the right to immediately terminate a subcontractor who has been issued a stop-work order.
  • A stop-work order remains in effect until the Commissioner issues an order stating otherwise.
  • The Commissioner may require an employer to file periodic reports with the Department of Labor and Workforce Department ("DOL") for up to two years as a condition for release from a stop-work order.
  • An employer that conducts business in violation of a stop-work order will be subject to penalties for up to $5,000 for each day that it conducts business in violation of the stop-work order.
  • Upon receiving a complaint or as part of a routine investigation of potential violations of any wage and hour law, the Worker's Compensation law, or the Unemployment Compensation law, the Commissioner or his/her agent can enter a place of employment during business hours to, among other things, examine payroll and other records and interview employees.
  • The Commissioner is empowered to subpoena witnesses, books, and records, and employers can be fined no less than $1,000 for each day the employer fails to comply with the subpoena.
  • The Commissioner can issue a stop-work order if it is determined that an employer has violated any wage and hour law, the Worker’s Compensation law, or the Unemployment Compensation law.
  • An employer which has been issued a stop-work order has the right to appeal the decision within 72 hours.
  • Instead of issuing a stop-work order, after determining that an employer is in violation of the Act, the Commissioner may transfer the case to the Division of Workers’ Compensation for investigation.

The practical impact of this new legislation is to permit the DOL to issue stop-work orders on public works projects where the DOL believes there are potential wage and hour violations under any wage and hour law.

While this recent amendment provides for an expedited hearing as to the propriety of the issuance of the stop-work order, the outcome is, in reality, a foregone conclusion. The stop-work order effectively prevents the contractor from completing the project, and the cessation of work will undoubtedly constitute a breach of the underlying contract.

For more information, please contact your CSG attorney or the author listed below.

Ronald L. Tobia | Member | | (973) 530-2044