New Jersey Independent Contractors laws & compensation compliance analysis

New Jersey Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.
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The New Jersey Supreme Court held that the “ABC” test governs the classification of employees and independent contractors under two key New Jersey employment statutes: the Wage Payment Law, which regulates the timing and mode of payment of employee wages, and the Wage and Hour Law, which obligates employers to pay minimum wages and overtime (Hargrove v. Sleepy’s, LLC, 220 N.J. 289 (2015)). The ABC test begins with the presumption that a worker is an employee, thereby placing on the employer the burden of proving otherwise. In order to demonstrate that the worker is actually an independent contractor, the employer must satisfy all three prongs of the ABC test. Specifically, it must show that (1) the worker “has been and will continue to be free from control or direction over the performance” of the work he or she is responsible for (2) such work “is either outside the usual course of business for which [it] is performed, or that [it] is performed outside of all the places of business of the enterprise for which [it] is performed” and (3) the worker “is customarily engaged in an independently established trade, occupation, profession, or business.”
New Jersey law uses a three-part test to determine if ...

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New Jersey Independent Contractors Resources

Type Title
Checklists Summary of IRS 20-Factor Test
Forms Model Client-Independent Contractor Agreement
See all Independent Contractors Resources