Last week, New Jersey’s highest court ruled in Hargrove v. Sleepy’s, LLC, No. A-70-12 (Jan. 14, 2015), that the so-called “ABC test” applies when determining whether a worker is an employee or independent contractor under the New Jersey Wage Payment Law (“WPL”) and Wage & Hour Law (“WHL”).  That test presumes an individual is an employee unless the employer can establish that: (i) the individual is “free from control or direction over the performance of [his] service”; (ii) the service is “outside the usual course of business”; and (iii) the “individual is customarily engaged in an independently established trade, occupation, profession, or business.”  According to the Court, the failure to meet any of these criteria results in an “employment classification.”

Given the Court’s decision, companies who engage independent contractors in New Jersey should review their independent contractor relationships and assess whether they can withstand scrutiny under the demanding ABC test.  Such reviews should be conducted with the assistance of counsel to allow the analysis to be protected by attorney-client privilege.  Although the ABC test imposes a high standard, it is a test with which New Jersey businesses should be familiar.  As the Court noted, the test has been used to answer employment classification questions under the New Jersey Unemployment Compensation Act and the New Jersey Department of Labor had already been applying the test in the context of employment classification inquiries under the WHL.

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Photo of Guy Brenner Guy Brenner

Guy Brenner is a partner in the Labor & Employment Law Department and leads the Firm’s Washington, D.C. Labor & Employment practice. He is head of the Government Contractor Compliance Group, co-head of the Counseling, Training & Pay Equity Group and a member…

Guy Brenner is a partner in the Labor & Employment Law Department and leads the Firm’s Washington, D.C. Labor & Employment practice. He is head of the Government Contractor Compliance Group, co-head of the Counseling, Training & Pay Equity Group and a member of the Restrictive Covenants, Trade Secrets & Unfair Competition Group. He has extensive experience representing employers in both single-plaintiff and class action matters, as well as in arbitration proceedings. He also regularly assists federal government contractors with the many special employment-related compliance challenges they face.

Guy represents employers in all aspects of employment and labor litigation and counseling, with an emphasis on non-compete and trade secrets issues, medical and disability leave matters, employee/independent contractor classification issues, and the investigation and litigation of whistleblower claims. He assists employers in negotiating and drafting executive agreements and employee mobility agreements, including non-competition, non-solicit and non-disclosure agreements, and also conducts and supervises internal investigations. He also regularly advises clients on pay equity matters, including privileged pay equity analyses.

Guy advises federal government contractors and subcontractors all aspects of Office of Federal Contract Compliance Programs (OFCCP) regulations and requirements, including preparing affirmative action plans, responding to desk audits, and managing on-site audits.

Guy is a former clerk to Judge Colleen Kollar-Kotelly of the US District Court of the District of Columbia.