New Jersey court held that ABC test for determining worker classification does not apply to state wage claims asserted by fully commissioned real estate salespeople. Court did not establish an alternative test or dismiss misclassification lawsuit, even though plaintiff had signed an independent contractor agreement. How parties classify their relationship in a written agreement is only one factor to be considered when determining whether a salesperson is an independent contractor or employee.

In a recently published appellate division decision, Kennedy v. Weichert Co., a New Jersey court addressed the issue of classification of commissioned real estate salespeople as independent contractors. The court ruled that fully commissioned real estate salespeople are not subject to the “ABC” test for purposes of determining whether salespeople are properly classified as independent contractors under the New Jersey Wage Payment Law (WPL).

Under the ABC test, which originates from the New Jersey Unemployment Compensation Law (UCL), a real estate salesperson would need to be “free” from the direction and control of a licensed real estate broker to be properly classified as an independent contractor. The requirement to be free from direction and control, however, conflicts with the clear language of the New Jersey Real Estate Brokers and Salesman Act (“Brokers Act”), which mandates the supervision of salespeople by licensed brokers. While the court held that the ABC test was not...

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