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December 09, 2025
Governor-Elect Sherrill: Worker Misclassification Is Out of Control—Your Administration Can Stop It
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Dear Governor-Elect Sherrill,
As you prepare to lead New Jersey—and to appoint the state’s next Attorney General—I write to urge your administration to prioritize an issue that is quietly draining billions from workers, law-abiding businesses, and taxpayers: widespread worker misclassification.
Many gig workers who drive for Uber or Lyft, deliver for DoorDash, or haul Amazon Flex packages think they’re earning an honest living. They’re not. They’re working with zero safety net while these companies save millions—if not billions—by evading minimum wage and overtime laws.
When gig workers are laid off, they get no unemployment benefits. When they’re injured, they get no workers’ compensation to cover medical bills. With nowhere else to turn, many are pushed onto government assistance, leaving taxpayers to foot the bill. Whether we like it or not, we are all subsidizing the gig economy.
These companies deliberately misclassify their workers as “independent contractors” to dodge labor costs. Executives pocket the savings while workers and taxpayers absorb all the risk.
Misclassification is rampant and accelerating. I see it every day in my legal practice, and one thing is clear: private lawsuits alone cannot stop it. New Jersey prosecutors must use the powerful statutory tools already at their disposal to finally hold these companies accountable.
The Misclassification Playbook
Worker misclassification isn’t new. For decades, employers have mislabeled employees as independent contractors to evade minimum wage laws, overtime requirements, workers’ compensation, unemployment insurance, and payroll taxes. What is new is the scale: misclassification has become the gig economy’s entire business model.
Companies like Uber, Lyft, DoorDash, and Amazon built billion-dollar empires on a simple scheme: call your workers independent contractors, control them like employees, and dare anyone to stop you. Millions of people now labor under the fiction that they’re independent businesses when, in truth, they’re employees stripped of the protections the law guarantees.
Private plaintiffs’ attorneys have challenged this scam for decades, bringing wage cases, filing class actions, and securing multimillion-dollar settlements. But even when we win, companies rarely change their practices. They simply treat the judgment as a cost of doing business.
That calculus changes only when prosecutors use their full enforcement authority. And while New Jersey has brought some cases, those efforts barely scratch the surface of a massive, growing problem.
New Jersey Already Has the Tools—They’re Just Not Being Used Enough
New Jersey’s anti-misclassification laws are some of the strongest in the country. The state’s “ABC” test—codified at N.J.S.A. 43:21-19(i)(6) and affirmed in Hargrove v. Sleepy’s—presumes a worker is an employee unless the company proves (1) the worker is free from control and direction, (2) the work is outside the usual course of the employer’s business, and (3) the worker is customarily engaged in an independently established trade or business.
No gig company meets these criteria. Uber drivers do not run independent transportation businesses—they drive for Uber, on Uber’s app, and under Uber’s rules. This isn’t a close call.
When the Department of Labor finds misclassification, the penalties—at least on paper—are severe: civil fines of up to $1,000 per worker, payments of up to 5% of a worker’s annual earnings, mandatory audits, suspension or permanent revocation of business licenses, and enforcement actions in Superior Court seeking any remedy available by law, including injunctions.
These are powerful tools. But tools only matter when they’re used.
A Few Prosecutions Have Shown What’s Possible
Recent cases reveal what an aggressive enforcement campaign could accomplish.
Lyft paid $19.4 million for allegedly misclassifying more than 100,000 drivers. Publishers Circulation Fulfillment paid $2.7 million for misclassifying 2,400 delivery workers. STG Logistics trapped drivers in sham truck-leasing schemes that left some with negative pay. And in 2025, New Jersey sued Amazon for misclassifying thousands of Flex drivers to dodge minimum wage, overtime, sick leave, and unemployment contributions.
These cases are laudable, but they represent only a sliver of the problem.
New Jersey’s 2019 Misclassification Task Force found 12,315 misclassified workers in just a 1% audit sample. Extrapolated statewide, that means roughly 1.2 million New Jersey workers—about one in eight—are misclassified.
Even if only a fraction of them rely on government assistance because employers refuse to provide legally required wages and benefits, taxpayers pay the price while corporations pocket the savings.
What an Aggressive Enforcement Campaign Should Look Like
With the right Attorney General, New Jersey could rapidly change this landscape. State prosecutors could launch simultaneous investigations into dozens of companies, file verified complaints seeking immediate injunctions, order ongoing audits, and suspend or even revoke business licenses.
No jury trials are needed. Prosecutors can determine misclassification through existing statutory authority. And gig companies have no viable defense.
Just as important, the next Attorney General should prioritize retaining private attorneys as special counsel, just as states did in the tobacco and opioid litigation. This would immediately multiply the State’s enforcement capacity and allow New Jersey to take on the gig-economy giants with equal firepower.
Arbitration Makes Public Enforcement Essential
Private workers are routinely forced into mandatory arbitration agreements that push their claims into secret, individual proceedings. This prevents workers from banding together, hides corporate misconduct from public view, and shields companies from accountability. It has also stunted the development of case law, because arbitration decisions are not binding on courts, rarely reviewed, and typically kept confidential.
Prosecutors face none of these constraints. Arbitration clauses do not bind the State. That gives prosecutors a unique—and badly needed—ability to confront misclassification at scale, in open court, without being dragged into the private tribunals built to suppress claims rather than expose wrongdoing.
A Call to Action
Governor-Elect Sherrill, New Jersey has taken on powerful industries before—tobacco companies, opioid manufacturers—and won. When prosecutors commit resources and partner with private counsel, they change industries and protect the public.
Worker misclassification deserves the same response. Millions of New Jerseyans have been stripped of basic workplace rights. Billions in wages and tax revenue have vanished. And companies keep breaking the law because they’ve come to expect sporadic, limited public enforcement.
Private attorneys cannot solve this crisis on their own. But your Attorney General, together with skilled special counsel, can.
New Jersey has the laws. The violations are obvious. The tools are sharp. Now is the time to use them. New Jersey’s workers and taxpayers are depending on it.
Jeremy E. Abay is the chair of the national employment litigation group at Pond Lehocky Giordano, the largest workers’ compensation and social security disability law firm in Pennsylvania, and one of the largest in the U.S. He can be reached at jabay@pondlehocky.com.
Reprinted with permission from the December 3, 2025 edition of The New Jersey Law Journal © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.
