Editor’s Note: A previous version of this article said the three-part standard used by state labor laws was first adopted by the California Supreme Court. It was not. The Court cited New Jersey’s rule as a model.
New Jersey’s Department of Labor won’t change how it enforces certain workplace protections in the wake of a decision by its national counterpart that deemed certain employees working for an unspecified virtual marketplace company were independent contractors and not employees.
“This opinion letter has zero effect on how the New Jersey Department of Labor enforces state laws regarding wage payment, minimum wage, overtime, earned sick leave, equal pay, unemployment compensation, temporary disability insurance benefits, or family leave insurance benefits,” Workforce Development Commissioner Robert Asaro-Angelo said.
Independent contractors enjoy fewer protections under labor law than employees, and firms generally do not withhold any taxes for independent contractors, as they would for employees.
The U.S. Department of Labor’s Wage and Hour Division ruled, using a six-factor test, that service providers working for the company were independent contractors because, among other reasons, the company did not impose strict schedules on its workers or invest in office space for the same and because those workers controlled how much work they did with the firm.
New Jersey’s labor laws use a stricter three-part standard that focuses on whether workers actually pursue opportunities outside a relationship with a given firm.
The rule says that a worker can only be an independent contractor if they regularly independently engage in similar work elsewhere, the work is outside the company’s purview and the worker is free of control and direction from the company in performance of the work.
“Governor Murphy and the Legislature have worked hard to improve economic security for New Jersey workers and their families. These rights are undermined when employees are misclassified,” Asaro-Angelo said.