CCSNJ Opposes Bill to Require Employers to Payback State Subsidies
Friday, March 05, 2010

M E M O R A N D U M

TO: Members of the Senate Labor Committee

FROM: Christina M. Genovese, Director, Government Relations, CCSNJ

DATE: March 4, 2010

RE: S-247 (Turner)

The Chamber of Commerce Southern New Jersey respectfully opposes S-427 (Turner), which would require business to repay any State or local government subsidy for failure to maintain and report records required by wage, benefit and tax laws and, in connection with that failure, failed to pay wages, benefits, taxes or other required assessments.

Under the provisions of S-427, if the Commissioner of Labor and Workforce Development finds that an employer receiving State or local development subsidies has failed to comply with laws surrounding the reporting or payment of wages, benefits, taxes or other contributions required by law, to notify that employer and to conduct a subsequent audit. If the audit, which must be conducted within 12 months of the finding of noncompliance, determines that the employer had continued in its failure to maintain the required records or to pay the appropriate wages that employer would be forced to repay any State development subsidy received during the five year period prior to the violation. Further, the employer would have to make this repayment within 60 days of the notice.

Although the Chamber does not advocate that employers be able to evade their legal obligation to compensate employees or to report all records, this bill goes too far. First, we believe that any audit conducted by the Department of Labor for the purposes stated in this bill should be standardized. A standard list of required documents to be collected by the auditors from employers should also be utilized.

Second, finding just one violation for failure to file the required report for just one employee, whether or not it is done so knowingly by the employer, would trigger the same penalty as an employer who does so purposefully and repetitively. We believe that it is more fitting to provide employers an opportunity to comply with the requirements, and to be provided at least one additional opportunity to comply before the penalty is enforced.

Finally, we believe it is excessive to require the employer to pay back subsidies going back five years and to repay that money in just 60 days or be subject to additional penalties and interest under the State Uniform Tax law. The time period of five years appears to be arbitrary and in no way tied to the severity of the noncompliance found during an audit. An employer who simply makes a reporting error for one employee will be treated the same as an employer who knowingly, willfully and repetitively refuses to comply with the law. This is unfair and punitive.

We agree that employers must comply with reporting and wage requirements and a vast majority of them do. The Department of Labor & Workforce Development should work with willing employers to bring them in compliance with requirements, especially small employers who struggle with complying with myriad laws and regulations. We recommend that the Committee work with employer organizations to amend this bill to address the concerns we have enumerated above.

Thank you for the opportunity to present our position on S-427 (Turner).