One frequently contested issue in workers’ compensation cases is whether an injured claimant is covered as an employee, or not covered because they’re an independent contractor. This distinction could make a massive difference for an individual who is hurt while doing a job and incurs substantial medical expenses while being unable to work. Though New Jersey presently uses a three-part test for these determinations, a proposed new rule from the Department of Labor and Workforce Development would adjust how the test is applied. 

Generally, the three-pronged analysis used to decide a claimant’s employment status is known as the “ABC Test.” The specific determinants are as follows:

• Prong A — Someone who retains an independent contractor does not have control or direction over the performance of their work. Even if the assignment is carried out pursuant to a contract, the individual is an employee if the business has say over how they complete their tasks.

• Prong B — Contractors perform services that are outside the usual scope of the enterprise, or outside the location where that type of work is typically done.

• Prong C — The individual must be customarily engaged in an independently established trade, occupation, profession or business. Hiring someone to do an employee’s job and calling them an independent contractor will not suffice. 

Under the proposed rule clarification, the burden of proof lies squarely on the putative employer. This means that companies must convincingly demonstrate that the individual worker satisfies all conditions of the ABC test to be considered an independent contractor.  

Notably, this is a reaffirmation of an existing principle enshrined at N.J.S.A. 43:21-19(i)(6), emphasizing that services performed for remuneration are presumed to be employment unless proven otherwise to the satisfaction of the division.

Furthermore, the conjunctive nature of the ABC test means that failing to meet even one prong results in the default classification of the worker as an employee. This comprehensive standard aims to ensure that workers are not misclassified, protecting them from being deprived of workers’ compensation benefits and other employee entitlements, such as minimum wage.

For businesses operating in New Jersey, these proposed rules stress the importance of diligent compliance and careful evaluation of worker relationships. Misclassification can lead to substantial legal and financial repercussions, making it essential for employers to rigorously document and substantiate the independent nature of contractual relationships. If you’ve been injured on the job and have been told that you are not able to collect reimbursement for your medical expenses and lost income because you’re classified as an independent contractor, it might be time to contact a lawyer. 

Hollander, Strelzik, Pasculli, Vandenberg, Hontz & Associates, LLC advocates on behalf of New Jersey clients who are seeking the workers’ compensation benefits they have earned. For a consultation, please call 973-737-1023 or contact us online. We have locations in Newton and Succasunna.