In East Bay Drywall, LLC v. Department of Labor and Workforce Development, on August 2, 2022, the New Jersey Supreme Court issued a unanimous decision making this seemingly simple determination even more complex.
East Bay Drywall is a drywall installation business that engages workers on a per-job basis. Once a builder accepts East Bay’s bid for a particular project, East Bay contacts workers it alleges are subcontractors to see whether they are available to work on the project. Each worker is free to accept or decline the work offer. East Bay provides the workers with the raw materials necessary for the drywall installation, while the workers must provide their own tools and arrange for their own transportation to and from the worksites. Although East Bay does not direct the workers on how to install the drywall, they remain responsible for the finished product.
Because the issue before the court was whether East Bay was required to contribute to unemployment compensation and temporary disability funds, the court used New Jersey Unemployment Compensation Law’s so-called “ABC” test to evaluate whether these workers were employees. This law provides that an individual is considered an “employee” unless all the following factors are met:
A. An individual has been and will continue to be free from control or direction over the performance of work performed, both under contract of service and in fact; and
B. The work is either outside the usual course of the business for...
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