On March 14, NJCJI appeared as a friend of the New Jersey Supreme Court in East Bay Drywall, LLC v. New Jersey Dep’t of Labor and Workforce Devel., No. 085770, a dispute over application of New Jersey’s “ABC Test” for determining whether workers paid as independent contractors should instead have been classified as employees. The drywall installation company at issue sent drywall contractors to job sites all over the state. At issue in the case are whether (1) those remote job sites—the customers’ premises—count as “places of business” for the drywall company (as the State contends), and (2) the drywall company provided sufficient evidence that its contractors operated independent businesses (which the State disputes). The Appellate Division sided with East Bay Drywall and the Supreme Court granted the State’s petition to review the case.
The Justices posed tough questions to both sides in the case and to the two amici, NJCJI on the defense side and the New Jersey chapter of the National Employment Lawyers Association in support of the State. With respect to whether remote work sites count as the drywall company’s “places of business,” precluding the company from satisfying the test’s “B” prong, questioning focused on differences between this case and Carpet Remnant Warehouse, Inc. v. N.J. Dep’t of Labor, 125 N.J. 567 (1991), in which the Supreme Court found that customers’ premises where the defendant’s contractors installed carpets were not the defendant’s places of business. Narrowing or reversing this interpretation of the “B” prong in the manner argued by the State would have serious implications not just for construction, but for many industries in New Jersey. For that reason, NJCJI urged the Court to follow and affirm its decision in Carpet Remnant.
As to whether East Bay Drywall provided sufficient evidence that its contractors operated independent businesses, the test is fact-intensive. The State contended that the evidence East Bay Drywall submitted should not have sufficed, but the State neither provided any evidence of improper practices by the company nor explained where it would set the proof bar. Several Justices noted that the absence of regulations explaining what employers in East Bay Drywall’s position must provide is unfortunate and leaves employers without proper guidance. NJCJI acknowledged that the “C” prong issues in the case are complex and urged the Court not to impose an evidentiary burden higher than small businesses in the State would be able to meet without undue expense.
Jeffrey Jacobson, a litigation partner at Faegre Drinker and a former Chief Counsel to the New Jersey Attorney General, briefed and argued the case for NJCJI. NJCJI would like to thank Jeff for his brilliant advocacy in this case and steadfast support of NJCJI.