Employers who retain independent contractors in New Jersey may face greater exposure for wage and hour claims following a recent ruling in the 3rd Circuit Court of Appeal.
Significantly, in Bailey v. The Millennium Group of Delaware; NRG Energy, Inc., the 3rd Circuit held that the ABC test is the appropriate test under both the New Jersey Wage and Hour and Wage Payment Laws for the purposes of determining a worker's status as an employee or an independent contractor.
The ABC test makes it more difficult for an employer to establish that a worker is properly classified as an independent contractor. Specifically, under the ABC test, an individual is presumed to be an employee unless the employer can show three things: A) the employer neither exercises control or will exercise control over the individual, nor has the ability to control the terms of the completion of work; B) the services provided are either outside the usual course of business or the services performed are outside of all of the places of business of the enterprise; and C) the employee is engaged in a business enterprise that will persist after the termination of the employment relationship. If all three of these factors are not met, the worker will be deemed to be an employee.
New Jersey has followed the ABC test since the New Jersey Supreme Court's 2015 decision in Hargrove v. Sleepy's, LLC. (A copy of our advisory on this case is New Jersey Supreme Court Adopts Restrictive Test for...
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