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New Jersey Court Further Limits Ability To Classify Workers As Independent Contractors

A recent ruling by the New Jersey Supreme Court in the matter Hargrove v. Sleepy’s, LLC has held that the strict “ABC” test must be used for determining whether an individual is an employee or independent contractor for wage and hour purposes. This is bad news for NJ employers who will now find it even harder to effectively classify workers as independent contractors. As a result of this ruling, employers should expect an increase in claims alleging that they have failed to properly pay wages and overtime to individuals misclassified as independent contractors.

Unlike other tests previously used for determining independent contractor status, the ABC test presumes all workers are employees unless it is shown that 1) the individual has been and will continue to be free from control or direction over the performance of their services; 2) such services are either outside the usual course of business or performed outside of the places of business of the presumed employer; and 3) the individual is customarily engaged in an independently established trade, occupation, profession or business. Unless all three requirements are met, the worker will be deemed an employee.

Employers should immediately review the practices and procedures they have in place for determining who is an independent contractor.

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About this Author

Ari G. Burd, Giordano Law Firm, Labor Employment Attorney

Mr. Burd practices in both the Labor and Employment Law Practice Area and the Health Care Practice Area. In the Labor and Employment Practice Area, Mr. Burd devotes his time to litigation and counseling employers with regard to traditional employment and labor related issues. Mr. Burd has extensive experience in both the state and federal courts in areas including retaliation, wrongful termination, wage and hour, sexual harassment and race, age, gender and disability discrimination. Mr. Burd also has considerable experience in assisting negotiating and drafting employment related...