New Jersey employment laws strive to ensure that employees receive a minimum wage, additional payment for overtime work, and other rights. For a worker to recover damages for unlawful actions by their employer, they must demonstrate that an employment relationship exists between them and their employer. Laws that address matters like wages and overtime pay apply to employees, but not independent contractors who have a less formal legal relationship with their employers. Employers sometimes engage in “misclassification,” meaning that they wrongfully classify employees as independent contractors to avoid obligations under state and federal employment laws. New Jersey employees can sue employers for misclassification. A law passed by the state legislature in 2021 allows the state to sue employers who allegedly misclassify employees. In December 2023, the New Jersey Attorney General (AG) filed the first lawsuit under this law seeking back pay and other remedies for the defendant’s employees.
Independent contractors do not enjoy the protection of many employment laws. Their recourse is often limited to the terms of their contracts. Employees, on the other hand, have broad protections under New Jersey law. Defining who is an “employee” and who is not can be tricky. The New Jersey Wage and Hour Law, for example, defines the term as “any individual employed by an employer.” Most other state and federal statutes are not much more helpful. It has largely fallen to the courts to develop ways to distinguish employees from independent contractors.
The New Jersey Supreme Court issued a ruling in 2015 that adopts the “ABC test” in employee misclassification cases. The test gets its name from a section of the state’s unemployment law that contains a three-part definition of “employee” with subsections labeled A through C. A New Jersey court will presume that an individual is or was an employee unless the employer establishes all three of the following:
A. The employer did not have the right to exercise control over how the worker did their job, nor did they exercise such control.
B. The worker’s services were either performed away from the employer’s usual place(s) of business, or they were outside of the employer’s usual type of business.
C. The worker has their own profession that does not depend solely on the employer, meaning that they may continue to work for others if their relationship with the employer ends.
The New Jersey AG’s lawsuit alleges that the defendants, a group of trucking companies, engaged in “systematic misclassification of employee truck drivers as independent contractors.” One of the ways that the defendants allegedly tried to conceal their scheme, according to the complaint, was to require drivers to purchase their trucks in their own names, making them appear to have separate trades as discussed in part C of the ABC test. The defendants also, however, allegedly required drivers to lease those trucks to the defendants for their “exclusive possession, control, and use,” and prohibited drivers from using the trucks for other work without written permission. The lawsuit seeks unpaid wages and other damages.
Employers that violate federal or state law might owe compensation to employees that they have harmed through those violations. If you believe that an employer has engaged in unlawful activities that infringe on your rights, an experienced and knowledgeable employment lawyer can help you assert a claim for damages. The Resnick Law Group advocates for workers in New Jersey and New York in various employment claims. To schedule a confidential consultation to discuss your case, please contact us today at 973-781-1204, 646-867-7997, or online.