New Jersey workers can run into trouble when there is a dispute as to whether they are an independent contractor or an employee. While they might not think it is a big concern at the time, it can eventually lead to problems if they are seeking benefits they would otherwise be entitled to.
They might not receive the legal minimum wage or overtime. They could be deprived workers’ compensation benefits if they are injured on the job. And they cannot exercise their rights under the Family and Medical Leave Act. With these issues in mind, it is wise to know the criteria to being considered an employee vs an independent contractor. A fundamental part of that is the ABC test.
What is the ABC test?
The ABC test is used to determine if a worker is an employee or not. First, the person needs to have been working under the control or direction of an employer. If, for example, it is a maintenance worker, they are told what tasks they should handle and are overseen by the employer. If they are working for another entity like an outside service that provides maintenance, they are not considered an employee.
Next, they must do work that is part of the normal daily operations for the workplace. If a contractor is brought in to make repairs and they have their own employees who are doing those repairs, those workers are not employees. If the business has a department for repairs as part of its daily operations, then they are generally considered employees.
Third, the worker cannot be employed and engaged in an independent trade, profession, occupation or business. An electrician would be working in a trade, but if they are not specifically employed by the business and are working on their own, they are not an employee.
In short, if the workplace cannot tell the worker what to do and when to do it as part of the daily course of business, the worker is not an employee. It is important to remember that every box under the ABC rule must be checked to classify the worker as an employee.
Misclassified workers are being deprived of their legal rights
Accurate classification of employees is essential. Workers who are seeking to exercise their rights under the law for workers’ compensation, unemployment insurance, to receive their proper wages, and use FMLA could run into difficulty if the employer claims they were contractors and not employees. Misclassification should not be tolerated, and employers can be held accountable. For advice with the ABC test and moving forward with a case, it is useful to have professional assistance.