New Jersey Labor Commissioner Robert Asaro-Angelo’s Prepared Remarks to the Senate Labor Committee 

“Good afternoon, Chair Madden, Vice-Chair Lagana, and members of the Committee. Thank you for inviting me today to talk about two things: misclassification and unemployment insurance.

I’m going to start with misclassification, which the legislature has put a bullseye on and used its authority and jurisdiction with great success. I will then discuss unemployment, a federal program, which limits the state’s ability to make changes – even those that would directly benefit workers in need.

This entire time, through pandemic and UI issues, our resolve to achieve our core mission has never wavered: to ensure our workforce is among the strongest and healthiest in the country, to see our businesses flourish, and do our part to help achieve a stronger and fairer economy.

You – our legislators, this committee in particular – have worked hard to make New Jersey a great place to work and do business.

We want all our workers to reap the benefits of your policies, which is why we’re putting your laws to good work, especially the new packages of bills aimed at combatting misclassification.

Falsely classifying employees as independent contractors, and paying workers in cash off the books, deprives them of their rights to minimum wage, overtime, earned sick days, workers’ comp, family leave, unemployment… and most work-related benefits you can think of.

New Jersey has taken a very strong bi-partisan stance against misclassification; and our best in the nation ABC Test has been upheld in state and federal courts time and time again.

Misclassification costs New Jersey billions of dollars in critical income tax and benefits contributions, and we’ve clearly seen during the pandemic how vital these benefits are.

One very helpful tool you gave us is the power to issue stop-work orders for violations of state wage, benefit, and tax law. We’ve used this power about four dozen times, on construction contractors, restaurants, medical offices, an internet radio station – a wide variety of businesses, most of which paid their workers at the mere sight of the stop-work notice.

In September, we implemented a misclassification penalty – paid from the employer to a misclassified worker, and equal to 5% of the worker’s gross earnings for the prior 12 months. In the past six months, more than half a million dollars was paid to 641 misclassified workers from 39 different businesses. We are the only state to have this innovative tool for misclassified workers.

The misclass laws have made it easier for us to work with our sister agencies to take down bad actors and pursue criminal charges. Our staff meets regularly to collaborate with stakeholders and our partners at Treasury, DOBI, and the AG’s office.

Our success on this issue in New Jersey is making waves. I quote directly from the recently released Pennsylvania Misclassification Task Force report which says: “Many experts in the field, along with members of this Joint Task Force, consider New Jersey the ‘Gold Standard’ for addressing worker misclassification.”

You’ve made our policies strong and given us the tools to protect our workers and keep our employers accountable.

I know you all want to know why you’re still hearing about unemployment insurance, or UI. This is the tougher issue to remedy as a state.

I understand everyone’s concerns. I know you and your staff get distressing calls to your offices from UI claimants, and you want to know what we’re doing about it.

When the pandemic hit, workers reached out to elected leaders for help navigating an unfamiliar and complex system that excludes far too many.

My thanks and appreciation to you and your staff cannot be overstated.

And I’m extremely proud of DOL staff and the work they’ve done working day and night to help the millions of claimants seeking their hard-earned benefits. They’ve been handling the same calls and emails as your offices. Hearing of the dire situations of our residents every day. Crying with your constituents over the phone as they do whatever they can to help.

In 2019, each agent provided about $23 million in benefits on average to 4,500 claimants; in 2020, their individual productivity skyrocketed to almost $140 million per agent, paid to 9,600 claimants. So, no one can say they haven’t been doing their jobs. In fact, I doubt any group of state workers has been as effective and productive as our UI agents these past two years. They’re doing the best job they can, day in and day out, and for that I am grateful and inspired every day.

It may not seem like it on your end, but I assure you that circumstances are very different now than last year at this time, when we were dealing with record numbers of claims and implementing multiple enhanced federal benefits programs.

With the aid of those programs, we’ve gotten over $37 billion dollars in benefits out the door and into the hands of over 1.6 million New Jerseyans, including over 200,000 self-employed workers with small businesses who received over $7 billion dollars.

$37 billion dollars to more than 1.6 million claimants is incredible, and no state program has delivered that much money to so many people in such a short time, ever, let alone during a pandemic.

But, I know none of that matters to the small percentage who have been waiting for their benefits; or to you and your staff, who have been patiently fielding calls. Of course, we care deeply about all claimants, but that small percentage is not representative of the whole picture. But I know for them – and for your offices – it’s the world.

We’ve done everything in our power to serve as many unemployed workers as quickly as possible and ensure the most workers possible are eligible. Every determination is made to the letter of the law that we are bound to implement and enforce.

Luckily, here in New Jersey, for almost 90 years, Governors, legislators, and voters have supported one of the most generous UI programs in the country, and one of only three in which workers contribute.

As Sen. Madden pointed out last Thursday in the Senate Chambers, we’re processing complete applications in 2 to 3 weeks, the same as before the pandemic.

If a claim requires agent intervention, it may add another few weeks, depending on the issues and the responsiveness of the claimant and their employer.

Unemployment is confusing – especially when you’ve never had to navigate it before. We’ve done our best to ease the process through automation, and by providing information on our website, including three dozen new pages, about 25 documents in several different languages, and instructional videos, explaining everything from eligibility, how to submit a claim, and how to resolve common issues.

We continue to add efficiencies week in and week out. Recently we launched a tool for employers to report UI information online instead of going through the mail.

But as easy as we try to make it, we know some claims require more time and attention than others due to the many nuances of federal unemployment policies.

Claims with multiple wage sources, student workers who are typically ineligible for unemployment, deductions for pension and retirement benefits, or making a simple mistake on an application or weekly certification… all require the attention of a specialist.

Unfortunately, the reality is, not everyone is eligible for unemployment benefits under federal law. Generally, 20% of claims are ineligible – they may not have enough earnings, may have exhausted their benefits, or they might be self-employed. This has equated to over 400,000 New Jerseyans since COVID hit.

Those who are ineligible or exhaust benefits aren’t left in the lurch. We share important resources and programs that can assist with food, child care, health, rent, housing, utilities, as well as specialized services for older adults, individuals with disabilities, and survivors of domestic or sexual abuse. And, of course, we provide information on our career services to get them back on the job.

People call your offices and ours in dire financial situations, often telling their stories about their serious medical condition, having to take care of a relative who is sick from, or highly at-risk of, COVID, they’re retired on a fixed income, they have a serious injury preventing them from working and can’t support their family… and they can’t get their unemployment – these stories are heartbreaking, but more heartbreaking is the fact that they’re most likely not eligible for UI.

During the pandemic, the enhanced UI benefits, particularly here in New Jersey, were so generous that it became the first stop for almost every financial issue.

I wish we could give benefits out to absolutely everyone who needs them – as much as they need, for as long as they need. But UI is not an entitlement to anyone out of work, and the benefits eventually do run out. We try harder than any other state to get to a “yes” on eligibility, which is why we consistently lead the country in the percentage of unemployed workers who receive benefits.

But we have a responsibility of due diligence on each claim. Otherwise, we would further deplete the trust fund, and possibly force that claimant’s employer to pay thousands of additional dollars in taxes the next year.

As mentioned earlier, New Jersey law pushes as far as we can to offer eligibility to as many workers as possible, but if we push the boundaries too far, the US Department of Labor reminds us we are risking our ability to pay any benefits at all, and the ability for more than 250,000 employers to receive their federal payroll tax deduction.

You may remember in May of 2020, we had over 40,000 workers a week tripping up on the weekly certification process. We were proud our IT staff programmed a process to clear them automatically so they could continue collecting benefits. Unfortunately, the USDOL made us stop this automated process late last year, which contributed to increases in calls to us and to you even though overall claimant numbers are declining.

We’re forced to go through a gauntlet of federal requirements before paying out claims.

Many federal and state government programs were rolled out in response to the economic strain caused to individuals and businesses by COVID-19.

Here are all the rules and regs to apply and receive assistance from the NJEDA’S Sustain and Serve NJ Program, 77 pages.

On the federal side, the United States Treasury Department, not known for being clear and concise, issued rules to receive assistance from one of their Coronavirus State and Local Fiscal Recovery programs, 437 pages.

For New Jerseyans who found themselves out of work after COVID hit, these are all the unemployment regulations they had to wade through, over 7,000 pages handed down to us by the federal government.

It is a massive program that takes time and expertise to administer. Federal rules and regulations have changed about 30 times just over the past two years, far exceeding other programs like the Paycheck Protection Program.

With this massive set of rules for our agents to navigate, we contracted a call center to help with our unprecedented call volume. Last year, the call center answered up to 12,500 calls per day. Last month, they averaged a 3-minute wait, 90 percent of calls got resolved on the spot, and 10 percent needed additional support from a specialist. As claims and call volume have decreased, we’ve been able to shift more UI agents to the phones to get more claims resolved on the spot.

And recently we were able to remove the dreaded message claimants often heard – “due to high call volume, you may not be served.”

Long before the pandemic – and long before my tenure as commissioner – UI was moved from in-person to online and by telephone because it was faster and more efficient. Agents can process more claims online and over the phone than meeting in person. There haven’t been ‘unemployment offices’ in two decades.

Limited UI services remained at about a dozen One-Stop Career Centers, which we paused during the pandemic for customers’ and workers’ safety, and because we needed all hands on deck to help as many claimants as efficiently as possible.

By the end of this month, we’ll resume in-person assistance at the One-Stop locations across the state where they were available pre-pandemic.

We’re committed to getting all claims resolved – every single eligible one on your desks – and we understand sometimes a worker needs to speak to someone face to face to fully feel comfortable with the process.

With the complexities involved with unemployment, the services at the One-Stops will be like going to the hospital. If you go to the ER, the nurse might wrap a bandage or fit a wrist splint, and an ER doc may give you a prescription, but you also might need to follow up with a cardiologist or orthopedist to get the underlying issue straightened out. If you come for an appointment at a One-Stop, our agents may be able to do some basic things with your claim, but you may still have to follow up with the specialist that can help with your unique case, and we’ll do everything we can to expedite that on the spot.

The Murphy Administration and my colleagues at other departments have had great success in bringing our services directly to the communities that needs them most. I look forward to working with all of you to bring the full services of the Department of Labor: job placement, family leave insurance, Wage and Hour, resume and interview assistance, vocational rehabilitation services, training placement and UI help to areas of your district you feel might need additional touches.

To make UI benefits more accessible, we recently applied for USDOL grants to help fund eight UI equity-improving projects – totaling $6.8 million dollars. We hope to complete these initiatives within the next two years. These projects will aim to make UI easier for everyone to use and understand, and to strengthen our communication with claimants. We seek to increase our ability to analyze our equity-measuring data –with a focus on outreach and better communication with under-resourced communities.

As I showed you, we’re held up by the laundry list of regulatory hurdles per federal law before paying claims.

Delays haven’t been unique to New Jersey. No state has been spared, even those who’ve spent hundreds of millions of dollars to modernize their computer systems. I’ve watched many of my counterparts testify in sometimes raucous hearings in just the past few weeks.

As Chair of the National Association of State Workforce Agencies, or NASWA, I’ve seen how we’ve performed versus the other 52 states and jurisdictions, as well as the many issues we prevented.

Still – after two years – the headlines keep coming every day from around the country:

To quote KMBC in Kansas City… “People still navigating Kansas Labor Department to get pandemic unemployment payments”

Channel 8 News in Richmond, VA… “Issues with unemployment upgrades ‘unacceptable,’ says Virginia Employment  Commissioner” when asked about their newly modernized system their new Commissioner said, “we have not been able to run it for 30 days without major defects… The first part of this was launched when I was previously in the governor’s office two administrations ago, and to see where we are today just doesn’t really make a lot of sense.”

…In Harrisburg last week, at a hearing like this one, the Pennsylvania Department of Labor’s unemployment efforts were called ‘a stain on the Commonwealth’

All these headlines were from the last few weeks. And that was a small sampling.

And two of those states launched new modernized systems in the past year.

The problems lie in federal policies – not legacy computer systems, not virtual services. Everything we and our colleagues in other states are trying to do to ease this process for our workers is just putting duct tape and band-aids on outdated federal policy, seemingly designed for applicants to fail.

And none of these policy issues are new. They’ve been largely unchanged since the 1930s, but never before have tens of millions of people tried to access their benefits at the same time.

I’ve been very vocal on how antiquated our federal UI system is, and how ill-equipped it is to be the main source of emergency funding. I and my counterparts have been advocating for almost two years on the need for change at the federal level.

Unfortunately, there’s been almost no progress. In September 2020, I wrote to our congressional delegation outlining key issues: outdated eligibility restrictions, procedural issues surrounding the weekly certification process and verification of interstate wages. There’s no flexibility to modify these requirements, even in times of crisis.

Last March, I wrote our delegation again, urging their support of the Unemployment Insurance Technology Modernization Act of 2021.

I’m proud New Jersey provided the most co-sponsors of any state and thanks to Congressman Smith, the only sponsor from the other side of the aisle.

Unfortunately, it did not get a vote, but many important provisions made it to the American Rescue Plan, including funding for USDOL to partner with the U.S. Digital Service in a pilot program to modernize the application process.

I’m thrilled New Jersey was chosen as a pilot state, because we’ve been at the forefront of system improvements throughout the pandemic – creating innovative solutions to paying benefits during a time of unprecedented demand, and providing some of the most generous benefits in the country. Our counterparts in other states often call us for advice.

The purpose of this pilot is to design an application system with equitable and timely access to benefits for eligible workers, while rooting out fraudulent claims that bog us down. This is an effort not only to upgrade our systems, but make New Jersey a national model for equity, fairness, and true customer service. Through this pilot, we seek to address the major communication issues claimants face – like eliminating the jargon on application forms and weekly certifications, the major problem I spoke of earlier, and providing real-time claims statuses.

This week our pilot partners from USDOL and USDS were here in Trenton on-site for three days of meetings and user testing, which is why I couldn’t join you all on Monday.

Today, I’m excited to announce that we’re on track to roll out our first round of user-friendly changes by the end of April. This first set of improvements, and the ones to follow, will help solve many of the problems claimants run into just answering the questions. Later this year we’ll have a whole new system for our agents to work within, which will give them easier access to information about the claim and allow us to fix claimants’ issues faster.

This week, on the two-year mark of the pandemic, I sent another letter to our delegation, reiterating the biggest issues and presenting solutions: one being to eliminate the weekly certification process altogether.

During the pandemic, eligible claimants answered a question adversely on their weekly certification over 2 million times and, per USDOL, each can only be cleared for payment after the personal attention of an agent. Even now, more than 5,000 claimants per week get caught in this trap causing financial harm and taking valuable time from our agents who could be resolving other claims.

Despite our repeated correspondence, there’s been no action in Congress, not even in the multi-trillion-dollar omnibus package passed last night. But I won’t give up hope. We need solutions at the federal level that will clear up the most common issues we’ve seen holding up claims. Changes that will make more workers eligible for benefits and make staying eligible easier.

I thank you very much for your support and the support of your staff during these difficult times. Thank you for having me here today, and I’m happy to answer any questions.”  

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