Labor & Employment Articles by Lisa Gingeleskie

To avoid the costs inherent in the employer-employee relationship, including employee benefits, workers compensation insurance, employment taxes and other liabilities, many employers secure the services of an independent contractor to avoid these liabilities.   There are significant risks with this approach, however.  An employer who misclassifies a worker as an “independent contractor” who, in the eyes of the law, is actually serving as an “employee” faces significant liability for unpaid overtime, employee benefits, payroll taxes, statutory penalties and other consequences.    To make matters worse, individuals who prevail on claims that they were misclassified as independent contractors are eligible for double damages and attorney fees from the employer.

Both at the state and federal levels, the courts have used various tests – applied to various legal contexts – to determine whether a worker should be classified as an independent contractor or an employee in the situation at hand.  While some tests result in a greater number of workers qualifying as independent contractors, the far narrower “ABC test” is widely regarded as a more difficult test for employers to meet when facing an independent contractor misclassification challenge.

On January 14, 2015 the New Jersey Supreme Court issued its opinion in , resolving some of the uncertainty by declaring the ABC test as the governing test to determine an individual’s employment status for purposes of wage-and-hour and wage-payment disputes under New Jersey law.