The New Jersey independent contractor test is one of the toughest for a putative employer to prevail upon. So, when an employer does do that, it is a great day for the employer community and that is what has happened in the case of a law firm who fought the UI claim of its paralegal, lost before the agency and prevailed before the Appellate Division. The case is entitled Law Office of Gerard C. Vince, LLC v. Board of Review and issued from the New Jersey Appellate Division.

The worker filed for unemployment benefits after she was terminated. She had been engaged to integrate the law firm’s files into a web-based computer software system known as “LEAP.” The law firm would identify the files to be integrated into LEAP, but provided no instruction on how the person would actually do this integration. The parties entered into a consulting agreement, a temporary agreement (3-6 months). The worker would not be paid for any expenses, had to take care of her own taxes and recited that she was an independent contractor.

The Board of Review, the final agency tribunal, found, under Part A of the “famous” A-B-C in the statute (N.J.S.A. 43:21-19(i)(6)) that “[a]lthough the claimant had some flexibility as to when and where the work was performed, it was the employer who assigned specific tasks to the claimant.” Under part “B”, the Board found that the worker “was performing paralegal work for a law firm,” and she was an employee “as the work performed by the claimant was essential to the services provided by that type of business.” The Board found there was no need to look at the third prong, the independent business component, because the first two prongs had not been satisfied.

The Appellate Division reversed, finding that the employer satisfied the ABC test. There was no showing that the employer exercised control beyond that required by a Rule of Professional Conduct. The law firm did not control the manner or means as to how she performed the work. Any lawyer would have to maintain some level of control for client relations and protection. Thus, some modicum of direction and control was required or the paralegal would be engaging in the unauthorized practice of law. The Court pointed out that under the agency’s view, a paralegal could never be an independent contractor because of the ethically required control that an attorney must exercise.

As to part B, there was no dispute that the work could have been performed at any location and the facts showed some work performed away from the firm. On the independent business prong, the Court noted that the Board did not even examine that but there was a showing that the worker was a certified paralegal who received income from other similar businesses and that she also, importantly, advertised her services as a certified paralegal.

The Takeaway

A person is presumed to be an employee unless the employer satisfies each part of the ABC test. This case shows that under the right set of circumstances, an employer can prevail. What I find most interesting and encouraging is that the Court did not seem to focus on whether the plaintiff derived 28% of her income from other sources, which is the ironclad, golden rule of the Department of Labor.

It’s a start…