Companies are routinely challenged in determining whether they have employees or independent contractors. And the NLRB has added another wrench in this analysis.
Properly classifying a worker is no easy feat because depending upon which law or regulation your worker is being reviewed under, the definition of “employee” changes. For example, the National Labor Relations Act (NLRA), the Fair Labor Standards Act (FLSA), the IRS Code, and New Jersey State Wage and Hour Division all have different definitions of “employee”. Making it somewhat easier for New Jersey employers to navigate this minefield, the New Jersey Supreme Court, in Hargrove v. Sleepy’s LLC, 220 N.J. 289 (2015), has officially adopted the “ABC” test for determining whether a worker is an employee or independent contractor for the purposes of all wage claims. This test includes analyzing whether:
(A) The worker and not the business, determines how to perform the work;
(B) The work the worker is doing is not part of the usual course of business for
the company; and
(C) The worker is used to working independently in an established trade for
Following in New Jersey’s footsteps, the National Labor Relations Board (NLRB), for the first time, has now added the “C” prong adopted by New Jersey to its own analysis of whether a worker is an employee or independent contractor by requiring an overall evaluation of whether the worker is actually rendering services as part of an independent business rather than considering whether the worker has the ability to be a part of an independent business (regardless of whether he/she actually is operating an independent business). With this latest move, the NLRB is now willing to impose new and stricter standards in order to achieve a more “pro-union” outcome. We will be watching the outcome of any appeals filed and keep you apprised of any developments.
Contact Deena B. Rosendahl, Esq. at 201-947-885 or Drosendahl@northjerseyattorneys.com if you have workers classified as independent contractors to ensure they are properly classified.