The New Jersey DOL is very aggressive on the issue of independent contractor status, i.e. the issue of misclassification. The latest, perhaps best (or worst) illustration of this view is the agency’s determination that court reporters are employees for purposes of the Unemployment Law. This errant decision, which cuts against traditional modes of thinking on the status of these individuals, is but a sign of the enforcement efforts that have emanated from Trenton.

This determination, which is being fought by Jersey Shore Reporting LLC, brings into the focus the heightened enforcement efforts of the DOL; the end point of all this is alarming for businesses and the lawyers who advise them. This is because not only would these reporters need to pay back due contributions, they would, going forward, have to file the necessary quarterly forms and pay UI, which will significantly reduce their incomes.

The State is clearly becoming very aggressive on this issue. The Commissioner of Labor has asserted that misclassification “robs” the State of revenue streaming into the unemployment compensation fund. To add to this stance, Governor Murphy has stated he will foster a bill to allow the NJDOL to halt work at construction sites when allegedly “sufficient violations” are found relating to worker misclassification.

Jersey Shore argued that it satisfied the so-called A-B-C test for the determination of independent contractor status. The Company also argued that a 2009 amendment to the UI law that made court reporter-type employees ineligible for unemployment compensation and therefore exempt from contributing to the UI coffers was dispositive. The DOL did not answer that contention but mechanically asserted in a brief that the reporters did not meet the statutory A-B-C test.

There is a definite preference for the NJDOL to classify people as employees observed Ian Meklinsky, co-chair of Fox Rothschild’s labor and employment department and the administrative hearing process makes it tough for an employer to prevail. This is because the findings of the Administrative Law Judge are “nonbinding recommendations that state agencies can choose to accept or reject,” Meklinsky said. “That means an agency essentially has the final say on its own determination.” He added that “I personally don’t think it is, or should be, appropriate for the head of an administrative agency to overturn the decision of an Office of Administrative Law judge.”

The Takeaway

The problem is that, in reality, people who are classified as independent contractors truly want to be and in fact consider themselves as such. The State is taking, as this court reporter decision (and a host of others) demonstrates, a draconian position, painting with the broadest brush possible on who is and who is not an independent contractor.

An individual’s preference should count for something…