NJ Redefines Part C of the ABC Independent Contractor TestJanuary 3, 2018
The New Jersey Supreme Court has made changes in employment law that redefine part C of the ABC Independent Contractor test. They claim that part C does not require an individual to operate an independent business, engaged in the same services that are provided by the employer, to be considered an independent contractor.
What is the ABC Independent Contractor Test?
The ABC Independent Contractor test is used to determine if a worker is an official employee of a company. The test presumes that a worker is an employee unless the employer can demonstrate three factors that suggest they are an independent contractor. The factors are:
- A – An individual has been and will continue to be, free from control or direction over the performance of services, both under his contract of service and in fact
- B – The service is either outside of the usual course of business for which it is normally performed, or is preformed outside of all places of business for which the service is normally performed
- C – The individual is engaged in an independently established trade, occupation, profession, or business
The Case and Ruling
The case in question was between Garden State Fireworks, Inc. and the New Jersey Department of Labor and Workforce Development, and touched on topics of employment contracts and wrongful termination. The appellate panel discussed whether pyrotechnicians hired by the firework company to conduct firework displays were properly classified as independent contractors rather than employees under the New Jersey Unemployment Compensation Law.
Although employees at the firework company were initially deemed to be misclassified as independent contractors, the pyrotechnicians in question were given complete control over firework displays preformed offsite and outside of all places of business. Furthermore, the work was so infrequent that hired technicians were either full-time employees in other endeavors, or retired workers searching for seasonal work. As all qualifications of the ABC Independent Contractor test were met, the ruling was in favor of Garden State Fireworks, Inc.
Redefining Part C
Despite the favorable outcome for the fireworks company, the case put part C of the ABC Independent Contractor test into question. In reviewing previous cases, the New Jersey Supreme Court decided that the terms of part C should be defined on a case by case basis. Furthermore, the final clause of the independent contractor test varies by state, bringing more factors into play where independent contractors are concerned.
Ultimately, the use of the ABC Independent Contractor test is a fact-sensitive inquiry. Employers who hire employees as independent contractors that fail the test may be liable for unemployment compensation and disability benefits. In addition, an employer’s failure to satisfy the test with respect to its independent contractors can result in liability for unpaid wages and overtime.
Cherry Hill Employment Lawyers at Sidney L. Gold & Associates, P.C. Assist Clients with Employment Disputes
If you have concerns about your employment contract, our team of experienced Cherry Hill employment lawyers at Sidney L. Gold & Associates, P.C. are here to help. With a conveniently located office in Philadelphia, we are easily accessible throughout Pennsylvania and New Jersey. You can schedule a consultation to discuss your employment concerns by contacting us online, or by calling 215-569-1999.