{"id":194,"date":"2017-10-12T00:00:00","date_gmt":"2017-10-12T00:00:00","guid":{"rendered":"https:\/\/norrismclaughlin.com\/njelb\/2017\/10\/12\/know-abcs-independent-contractors\/"},"modified":"2017-10-12T00:00:00","modified_gmt":"2017-10-12T00:00:00","slug":"know-abcs-independent-contractors","status":"publish","type":"post","link":"https:\/\/norrismclaughlin.com\/njelb\/wage-and-hour\/know-abcs-independent-contractors\/","title":{"rendered":"Do You Know The ABC\u2019s About Independent Contractors?"},"content":{"rendered":"

Recently, New Jersey\u2019s Appellate Division once again addressed the test used to determine whether a person is an employee or an independent contractor.\u00a0 The plaintiff in\u00a0Garden State Fireworks Inc. v. NJ Dept. of Labor<\/u><\/a>, A-1581-15T2 (N.J. App. Div. September 29, 2017), manufactures and sells fireworks and facilitates fireworks shows.\u00a0 Its busiest season is the summertime, between Memorial Day and Labor Day, with 80% of its business conducted around the Fourth of July.<\/p>\n

Plaintiff has a full-time staff that it employs year round.\u00a0 These employees work at the fireworks factory, doing light assembly, storage and packing.\u00a0 Plaintiff hires pyrotechnicians to run fireworks shows.\u00a0 These technicians pick up trucks already loaded with fireworks by plaintiff\u2019s full time employees.\u00a0 The technicians set up the shows, set off the fireworks, clean up, and return plaintiff\u2019s trucks.\u00a0 The technicians operate completely on their own and no one from plaintiff supervises them.\u00a0 They are paid a flat fee by plaintiff for each show they perform.\u00a0 Plaintiff may use more than 100 different pyrotechnicians during its busy season.\u00a0 The technicians are either retired or employed full time in other occupations (doctors, teachers, policemen, etc.). They generally provide services to plaintiff only one to three days a year.\u00a0 Plaintiff classified the technicians as independent contractors and issued 1009 tax forms to them for their services.<\/p>\n

After a routine audit, the New Jersey Department of Labor (DOL) determined that the technicians should have been classified as employees and plaintiff was assessed over $30,000 for unpaid unemployment and disability contributions.\u00a0 Plaintiff appealed and the Appellate Division reversed the DOL\u2019s determination.<\/p>\n

The Court applied the statutory ABC test which requires proof of the following factors in order for an employer to establish independent contractor status: (A) that the individual is free from control or direction by the employer, (B) that the service is outside of the employer\u2019s usual course of business or outside of the employer\u2019s place of business, and<\/u> (C) that the individual is customarily engaged in an independently established trade, occupation, profession or business.\u00a0 N.J.S.A. 43:21-19(i)(6)(A)-(C).<\/p>\n

As to prong A, the Court found that while plaintiff provided the supplies for the firework shows, the technicians had complete control over the shows.\u00a0 None of plaintiff\u2019s employees directed the technicians \u201cas to which fireworks to launch, when to launch, or how to set up the displays.\u201d\u00a0 The Court concluded that the technicians were free from any control or direction by plaintiff.<\/p>\n

Plaintiff satisfied prong B because the firework shows on which the technicians worked were all at locations away from plaintiff\u2019s fireworks factory.\u00a0 (The DOL concluded that plaintiff\u2019s place of business included any location where a fireworks display was conducted.\u00a0 The Court disagreed, holding that the DOL\u2019s broad interpretation of the statute was not supported by the statute or prior judicial decisions.)<\/p>\n

As to prong C, the DOL found that this factor required the existence of a separate \u201centerprise\u201d or \u201cbusiness.\u201d\u00a0 Since there was no evidence that the technicians had established independent fireworks businesses, the DOL determined that plaintiff had not met this criteria.\u00a0 The Court disagreed, noting that this factor is satisfied if the person \u201chas a business, trade, occupation, or profession that will clearly continue despite termination of the challenged relationship.\u201d<\/p>\n

Here, the technicians were either retired or working full time in other professions.\u00a0 None of them relied on plaintiff as their primary source of income.\u00a0 The Court concluded that \u201cit is difficult to conceive that an individual who does work for a company one to three days a year, while working full-time in another profession, could be reasonably considered an employee of that company.\u201d<\/p>\n

The determination of whether an individual is an independent contractor or an employee is a fact-sensitive inquiry.\u00a0 New Jersey employers must remember that all three of the prongs of the ABC test must be proven in order to establish an independent contractor classification.\u00a0 Any misclassification on this issue can have severe consequences.<\/p>\n

If you have any questions regarding proper classification of employees and\/or independent contractors, please contact me at ptcollins@nmmlaw.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Recently, New Jersey\u2019s Appellate Division once again addressed the test used to determine whether a person is an employee or an independent contractor.\u00a0 The plaintiff in\u00a0Garden State Fireworks Inc. v. NJ Dept. of Labor, A-1581-15T2 (N.J. App. Div. September 29, 2017), manufactures and sells fireworks and facilitates fireworks shows.\u00a0 Its busiest season is the summertime, […]<\/p>\n","protected":false},"author":73,"featured_media":195,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[76,77,78,47,79,80],"coauthors":[],"acf":[],"yoast_head":"\nDo You Know The ABC\u2019s About Independent Contractors? - Norris in the Workplace<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/norrismclaughlin.com\/njelb\/wage-and-hour\/know-abcs-independent-contractors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do You Know The ABC\u2019s About Independent Contractors?\" \/>\n<meta property=\"og:description\" content=\"Recently, New Jersey\u2019s Appellate Division once again addressed the test used to determine whether a person is an employee or an independent contractor.\u00a0 The plaintiff in\u00a0Garden State Fireworks Inc. v. 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