The New Joisy Supreme Court just fashioned a test to determine whether a worker is an employee or an independent contractor for purposes of resolving a wage-payment or wage-and-hour claim. And, shockingly, it doesn’t involve jughandles, diners, or Taylor Ham.
(I live in NJ now, so I can say that stuff and get away with it).
I’ve got all the details after the jump…
On Wednesday, the NJ Supreme Court, in this opinion, concluded that the “ABC” test, a creature of the New Jersey Unemployment Compensation Act, will determine whether plaintiff is an employee or an independent contractor for purposes of resolving a wage-payment or wage-and-hour claim.
The law presumes that an individual is an employee. It’s then up to the company to prove otherwise; i.e., that the individual is an independent contractor. To do this, the company must do the following:
- Show that it neither exercised control over the worker, nor had the ability to exercise control in terms of the completion of the work.
- Show that the services provided were “either outside the usual course of the business . . . or that such service is performed outside of all the places of business of the enterprise.”
- Show that the purported independent contractor actually “has a profession that will plainly persist despite the termination of the challenged relationship.”
If any one of these factors cuts in favor of an employer/employee relationship, then the individual is an employee.
And why does this matter? You can pay independent contractor whatever you want. For sh*ts and giggles, I once paid one in shoelaces and sarcastic grins. Then I turned on the sprinklers.
Conversely, employees must be paid minimum wage, and time and a half for overtime. So, if you mess up the classification of one of your workers, in addition to the unpaid wages that you may owe, there are potential fines and, oh yeah, attorney’s fees and costs.
In other words, oh, marone a mi!