The New Jersey Supreme Court recently issued two opinions expanding the class of workers entitled to protection under the Conscientious Employee Protection Act ("CEPA"), N.J.S.A. 34:19-1 to -8, also known as New Jersey's "Whistleblower" statute. In D'Annunzio v. Prudential Insurance Co., A-119-05 (July 25, 2007) and Stomel v. City of Camden, A-45/46-06 (July 25, 2007), the Court found that workers hired as independent contractors may be entitled to CEPA's protections.
CEPA prohibits an employer from taking adverse employment action against any "employee" who objects to or exposes an employer's unlawful, criminal, fraudulent or corrupt activities. CEPA has been broadly interpreted, and the broad interpretation has included an expansive definition of who is a covered "employee." According to the Supreme Court, those workers entitled to CEPA's protections include more than those traditionally thought of as employees.
Last year, in Feldman v. Hunterdon Radiological Assocs., 187 N.J. 228 (2006), the Court determined the circumstances under which a shareholder-director of a professional association could be an "employee" under CEPA. Now, in D'Annunzio and Stomel, the Court has analyzed when a worker considered by the employer to be an independent contractor should be considered an "employee" for CEPA purposes. The Court reaffirmed that twelve factors must be assessed:
(1) the employer's right to control the means and manner of the worker's performance; (2) the kind of occupation - supervised or unsupervised; (3) skill; (4) who furnishes the equipment and workplace; (5) the length of time in which the individual has worked; (6) the method of payment; (7) the manner of the termination of the work relationship; (8) whether there is annual leave; (9) whether the work is an integral part of the business of the "employer;" (10) whether the worker accrues retirement benefits; (11) whether the "employer" pays social security taxes; and (12) the intention of the parties.
According to the Court, this test balances three necessary considerations - (1) employer control; (2) the worker's economic dependence on the work relationship; and (3) the degree to which there has been a fundamental integration of the employer's business with that of the person doing the work at issue.
In both D'Annunzio and Stomel, the Supreme Court determined that the plaintiffs were indeed "employees" under CEPA even though both were considered by their employers to be "independent contractors" and were employed pursuant to individual contracts. In D'Annunzio, the Court focused on Prudential's ability to control and manage D'Annunzio's day-to-day activities and performance. In Stomel, the Court focused on the fact that Stomel's public defender position was functionally integrated into the City's delivery of municipal services.
As demonstrated by these two cases, New Jersey courts continue to construe CEPA in a broad and liberal manner. Employers must be mindful that even workers properly characterized as independent contractors for certain purposes (such as for state and federal withholdings) may be deemed "employees" for purposes of CEPA's protections.