Prong B of the New Jersey ABC test for independent contractor status under the unemployment law requires the putative contractor to work outside of all of the “places of business” of the alleged employer. Now, the New Jersey Supreme Court will decide whether remote job sites may be deemed as “places of business.” If the Court rules they are, that would make it even more impossible for an individual to be an independent contractor in New Jersey. The case is entitled East Bay Drywall v. NJDOLWD and is under consideration by the NJ Supreme Court.
The Appellate Division ruled that locations where drywall was being installed were not “places of business.” The NJ Department of Labor is urging for this ruling to be overturned. For a worker to be independent, he must perform services which are “…performed…outside of all the places of business of the enterprise for which such service is performed.” The Chief Justice inquired of the DOL lawyer how “courts apply Prong B in the era that we’re in today where much work can be done remotely and where there may not even be the physical site for administrative work in a business of this kind.”
The DAG responded that this was the Company’s “core business” and thus it was a site of employment. Justice Rabner then observed that such an expansive reading would end up including, as an employee, someone who may do just a few installations in a year and received the majority of his income from other entities. The DAG responded that the worker would be an employee for that specific Company, but the Chief Justice then asked whether that person would still be an employee “even if it’s a very small fraction of their overall income and of their overall work, they would still be an employee of East Bay?” The DAG answered that it would.
Justice Anne M. Patterson was also dubious about the statement by one of the lawyers that, “if you say we’re just going to limit [the analysis] to the four corners of an office, that’s going to lead to widespread abuse.” The Justice noted that this would mean that if a worker was engaged by fifty different contractors, this would result in the individual then having fifty different employers. She pointedly asked, “Is that really what the legislature was thinking?”
Justice Patterson asked the Company’s lawyer whether, if the Court ruled that a place of business included all houses built by a general contractor, “the general can no longer hire an independent contractor to do residential construction in New Jersey.” The lawyer responded that “we would not be able to satisfy that second part of [Prong B] because every place where they are building houses would then all of [a] sudden become their place of business and they would be forced to consider those subs as employees.”
This is a very dangerous case for New Jersey employers. If the Court ruled that any place the contractor does any services when engaged by the putative employer are “places of business,” then it will, not may, be virtually impossible for any individual to be deemed an independent contractor. That is not, under any definition, what the Legislature intended.