APA Opposes N.J. Move Toward Monthly Wage ReportingBy Curtis Tatum, Esq.
On September 11, the New Jersey Assembly Labor Committee held a hearing to consider several proposals involving the state's unemployment insurance system, including Assembly Bill 3156, which would require monthly wage reporting. Prior to the hearing, the APA submitted a Statement in Opposition to the legislation. Three witnesses -- Pete Isberg, representing the National Payroll Reporting Consortium (NPRC); Carol Katz, representing the National Association of Professional Employer Organizations (NAPEO); and Stefanie Riehl, representing the New Jersey Business and Industry Association (NJBIA) -- spoke against the legislation.
After a brief discussion, the Committee reported the bill favorably and referred it to the Assembly Appropriations Committee. The APA's Unemployment Insurance (UI) Subcommittee of the Government Relations Task Force (GRTF) expects that the Appropriations Committee will schedule a public hearing to discuss the legislation. The UI Subcommittee will submit written comments or have a representative testify at that hearing.
Assembly Bill 3156 Background
On May 15, 2014, New Jersey Assembly Member Wayne DeAngelo introduced Assembly Bill 3156. If enacted, this bill will require monthly wage reporting by employers who had 50 or more employees in the prior year. The wage reports would be due 20 days after the end of each month rather than 30 days after each quarter-end. The Assembly Labor Committee's statement indicates that the purpose of the reporting requirement is to "provide a more timely system for the reporting of wages to the department to ensure that unemployed individuals are collecting an accurate level of benefits and to assist the department in identifying individuals who may be collecting benefits for which they are not eligible."
The Labor Committee statement also references a report from the Office of the State Auditor that focused on UI benefit payments and "mechanisms of the benefit payment system that could be improved or updated to improve the collection of data and provide a more timely analysis and verification of wages earned and beneficiary's status."
APA Statement in Opposition
In its Statement in Opposition to the legislation, the APA noted its support for measures that will strengthen the UI system, but said it opposes this legislation because it "will create unnecessary costs and administrative burdens for employers, when a less burdensome solution already exists."
Working through the UI Subcommittee, the APA received estimates of compliance costs from New Jersey employers that ranged from "$250-$500 per year to $400 per month." Members of the Subcommittee also noted that, "wage reporting requirements in New Jersey are more complicated than in other states in which these employers report."
APA asserted that this is because New Jersey uses a broad definition of wages that includes "every form of remuneration" and specifically lists several types of payments that employers may find difficult to calculate on a monthly rather than a quarterly basis. New Jersey's Department of Labor and Workforce Development details these payments in its Employer Handbook.
As an alternative to monthly wage reporting, APA suggested the use of new hire reporting because it will provide information on a more-timely basis. In addition, because the proposed legislation exempts employers with fewer than 50 employees, new hire reporting will provide information from far more employers. APA concluded, "Because the monthly wage reporting mandated by Assembly Bill 3156 will create unnecessary costs and an administrative burden for New Jersey employers and because the information necessary to properly administer the unemployment insurance system is available through new hire reporting, the APA opposes Assembly Bill 3156."
Issues Raised at the Hearing
Katz explained how the proposed legislation could negatively affect members of PEOs. She noted that the co-employment relationship between small businesses and the PEO might inadvertently subject the small businesses to the new reporting requirement. Katz stated, "We are concerned about the increased regulatory workload the bill will impose on our member PEOs, but we are as importantly concerned about the small-business clients of those member PEOs. We have some questions about how the bill will affect them."
In addition to providing examples of the administrative burdens and increased financial costs created by monthly wage reporting, Isberg focused on the State Auditor's report, noting that "it doesn't seem to recommend monthly wage reporting as the solution. It also doesn't recognize effectively the role of new hire reporting in controlling overpayments. We think that new hire reporting is the better answer. It already exists, [and] it already applies to all employers in the state."
Riehl focused on the difficulty of wage reporting in New Jersey and noted, "Sometimes we think that we're talking just about the dollars that an employee is paid. In New Jersey there's a lot that goes into wage reporting where you may be reporting on travel reimbursement, meals, or things of that nature. So you are talking about 50 pieces of information." She also cited the new hire directory as a better method than monthly wage reporting to improve UI integrity.
Following the witness testimony, the Labor Committee members voted on the bill. During the roll call vote, members took the opportunity to speak about the bill. Assemblyman Robert Auth noted his concern that "this is clearly not the time to be adding impediments to businesses in our state" and voted against the bill. Vice Chairwoman Shavonda Sumter voted for the bill but noted that it was on the condition that the bill sponsor would consider the concerns raised during the hearing. Earlier in the hearing, Chairman Joseph Egan also indicated that "Assemblyman DeAngelo has made known to me that he's willing to work on some amendments."
The bill passed by a 5-3 margin and was referred to the Appropriations Committee. The APA's UI Subcommittee will continue to work to alleviate or eliminate the administrative burden of this legislation.