New Jersey Supreme Court Rules on Worker Classification Under the “ABC Test”

In East Bay Drywall, LLC v. Department of Labor & Workforce Development, the New Jersey Supreme Court upheld a determination by the Department of Labor and Workforce Development (“the Department”) that 16 workers (individuals and business entities) were misclassified as independent contractors, even though East Bay had provided business registrations and insurance certificates for the workers in question. By way of background, East Bay is a drywall installation business that hires installers on a per-job basis. The Department conducted a routine audit and determined that 16 of East Bay’s workers were improperly classified as independent contractors, instead of employees, and thus directed the company to pay unemployment and temporary disability benefit contributions for these misclassified workers. East Bay challenged the audit results and requested a full evidentiary hearing, which was held before an administrative law judge in the Office of Administrative Law (OAL). At the hearing, East Bay’s principal, Benjamin DeScala, testified that once a project bid was accepted, East Bay contacted workers who were free to accept or decline East Bay’s offer of work, and some had even left mid-project if they found a better opportunity. DeScala explained that some workers had told him they had worked for other businesses, but he did not provide any evidence to support that claim. DeScala also stated...