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Monday Morning Memo-01-19-15
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New Jersey Supreme Court Restricts Ability to Label Workers as Independent Contractors

On January 13, 2015, the New Jersey Supreme Court issued a unanimous decision that will likely have a far reaching effect on employers by severely limiting their ability to classify workers as independent contractors.  In Hargrove et. al. v. Sleepy's, LLC, the Court held that the "ABC" test, derived from the New Jersey Unemployment Compensation Act, governs whether a plaintiff is an employee or an independent contractor for purposes of resolving a wage-payment or wage-and-hour claim under New Jersey law.


The "ABC" test is arguably the most difficult standard to overcome, and presumes that an individual is an employee unless the employer can make a three prong showing as to the individual's autonomy and independent nature of the services.  The failure by the employee to satisfy even one of the three criteria will result in a finding of "employment."  A ruling that the "ABC" test governs with respect to New Jersey wage and hour claims has negative implications for employers, including the potential liability for failure to pay proper wages, and in particular overtime, to workers that employers have deemed to have misclassified as independent contractors

For the full legal brief, click here.
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