On February 11, 2022, the New Jersey Supreme Court granted NJCJI’s request to participate as an amicus curiae (“friend of the court”) in the matter of East Bay Drywall, LLC v. New Jersey Department of Labor and Workforce Development. The East Bay Drywall case addresses the application of the “ABC test” to determine whether a worker is an employee or an independent contractor.
In this case, the New Jersey Department of Labor (“NJDOL”) decided that when an enterprise sends contracted installers to private properties around the state, each and every premises where installers work is a “place of business” for the enterprise. This undermines virtually any enterprise’s argument that their independent contractors are not employees, because any place where work is done is transformed into a “place of business.” The New Jersey Supreme Court previously rejected this interpretation of the “B” prong of the ABC test, reasoning that if the NJDOL’s view were the law, it would effectively be impossible for any enterprise to satisfy the “B” prong. The NJDOL contends in East Bay Drywall that the Supreme Court should narrow or revisit its prior holding. NJCJI’s brief asked the Supreme Court to reaffirm its prior decision.
Traditionally, the “C” prong of the “ABC test” asks whether the worker is customarily engaged in an independently established trade, occupation, profession or business. In East Bay Drywall, NJDOL conducted its employee-versus-contractor audit after twelve of the contract installation businesses had gone out of business. The enterprise provided NJDOL with certificates of insurance from those contractors, along with credible testimony explaining the enterprise’s belief that each of these contractors was an independently established business that satisfied the “C” prong. An administrative law judge (“ALJ”) sided with the enterprise, but the NJDOL Commissioner overturned the ALJ’s decision. NJDOL had no evidence tending to disprove that these contract installers had not been independently established businesses, but the Commissioner nevertheless took the position that that the enterprise had not satisfied its burden. NJDOL’s application of the “C” prong would impose such a high burden of proof on businesses as to make it nearly impossible to challenge any NJDOL determination that a worker was misclassified. In its amicus brief, NJCJI urges the Supreme Court to hold the NJDOL to a higher standard before it can disregard an ALJ’s findings of fact.