As Outlined By NJ Department of Labor
Although one of the major factors in determining employee versus independent contractor status focuses on behavior control, financial control and the type of relationship of the parties, the New Jersey Department of Labor utilizes a different analysis to determine employee status.
For example, liability for unemployment taxes and Wage and Hour Law compliance, utilizes a three prong test called the “ABC” test. Employers have the burden of establishing that a worker meets all three prongs before he or she can classify workers as an independent contractor. This analysis could lead to a different conclusion as to employee classification. The relevant language for NJ’s unemployment taxes reads as follows:
Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter (R.S. 43:21-1 et seq.) unless and until it is shown to the satisfaction of the division that:
(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
(B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business. [N.J.S.A. 43:21-19(i)(6).]
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Prong B can be difficult to establish and is fact sensitive. Contact us today to review your specific situation and assist you in determining if your workers could be re-classified for state labor law purposes.