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
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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.
ABOUT THE AUTHOR: Sidney Gold
Mr. Gold is the principal shareholder of the Pennsylvania & New Jersey employment law firm of Sidney L. Gold & Associates, P.C. in Philadelphia, which is a preeminent law firm in the field of employment law and civil rights litigation. His practice, as well as that of the law firm, is concentrated in the representation of both employees and employers in all aspects of employment-related litigation in Pennsylvania and New Jersey, including claims under federal and state anti-discrimination laws and federal civil rights laws
Copyright Sidney L. Gold & Associates, PC - Google+
More information from Sidney L. Gold & Associates, PC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
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
FIND MORE LEGAL ARTICLES
Type any word(s)
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.
ABOUT THE AUTHOR: Sidney Gold
Mr. Gold is the principal shareholder of the Pennsylvania & New Jersey employment law firm of Sidney L. Gold & Associates, P.C. in Philadelphia, which is a preeminent law firm in the field of employment law and civil rights litigation. His practice, as well as that of the law firm, is concentrated in the representation of both employees and employers in all aspects of employment-related litigation in Pennsylvania and New Jersey, including claims under federal and state anti-discrimination laws and federal civil rights laws
Copyright Sidney L. Gold & Associates, PC - Google+
More information from Sidney L. Gold & Associates, PC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
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