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New Jersey Department of Labor and Workforce Development v. Morley

A-0004-07T3 (N.J. Super. App. Div. 2008) (Unpublished)

CONTRACTORS; REGISTRATION — Where a contractor allows a valid certificate of registration from the Department of Labor to lapse, but was mistaken in doing so and does not hire any workers for an ongoing project, thereby not violating any prevailing wage statutes, it is permissible to waive the final penalty that would otherwise be imposed on that contractor for performing a public works contract without a valid certificate of registration.

A subcontractor was hired by a general contractor working on a public school. The subcontractor was to install a sprinkler system. Its business was located out of state, but it had a valid certificate of registration from the state labor department as required by statute. Between the time the sub-contract was executed and the time the project was completed, the subcontractor’s registration expired. The subcontractor applied for renewal around the time that the project was almost finished, but its application was considered incomplete by the New Jersey Department of Labor, which did not inform the subcontractor of the incompleteness. More than two years later, a labor department official conducted an inspection and issued a notice of violation to the subcontractor for failure to register. At a department hearing, the official testified that although more than two years had passed, the Department maintained jurisdiction and had the right to conduct subsequent inspections under certain circumstances.

After a penalty was assessed, the subcontractor appealed to the Labor Department, which upheld the official’s decision. The subcontractor challenged the Department’s decision at an administrative hearing where it again was found to be in violation of the contractor registration statutes for public contracts, but the penalty was reduced by half. Roughly two months later, the Department issued a final order adopting the administrative law judge’s finding. One month later, the Department sent a second final order that did not account for the fact that its original decision had been appealed. It subsequently debarred the subcontractor from performing any further public work for failing to comply with the Department’s orders and for failing to pay the penalty due.

Following the filing of a second appeal, the Department sent the subcontractor a letter acknowledging that the debarment was in error and that the first notice of a final decision was its actual decision. The subcontractor went on to argue in the appeal that the contractor registration statutes did not authorize the Department to issue fines for a failure to register. He further claimed that he was registered when he executed and performed the contract, and that the Department was barred by the statute of limitations from issuing a penalty against him two years later. The Court pointed out the statutory requirement to register was to prevent contractors and subcontractors from benefitting from taxpayer funded contracts while denying benefits and adequate pay to their workers under prevailing wage statutes. The Court agreed with the administrative law judge’s finding that the subcontractor had violated contractor registration statutes, but found that because the Department did not properly consider that it was the subcontractor’s first violation; that he was mistaken in his failure to renew his registration; and that he did not hire any workers for the project and as a result did not violate prevailing wage statutes; the fine was wrongly imposed. As a result, the finding of a violation was affirmed, but the fine was vacated.

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