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Independent Contractor or Employee? Understanding the New Jersey ABC Test

Being labeled an independent contractor can cost you overtime pay, unemployment benefits, workers compensation, and protections that employees take for granted. The label your employer puts on you does not control the answer. New Jersey uses a strict standard called the ABC test, and many workers treated as contractors are actually employees under it.

The three parts of the ABC test

To classify you as an independent contractor, a New Jersey employer has to satisfy all three of the following:

You are free from the company's control over how you do the work, in fact and under your agreement
The work you do is outside the usual course of the company's business, or performed away from its places of business
You are customarily engaged in an independently established trade or business of the same type

Why it is hard to meet

Because the employer has to satisfy every prong, misclassification is common. A delivery driver for a delivery company usually fails prong B, because driving is the heart of the business. A worker who depends on one company for nearly all income and has no separate business of their own usually fails prong C.

What misclassification costs you

Unpaid overtime and minimum wage protections
Employer contributions to Social Security and Medicare
Eligibility for unemployment and workers compensation
Coverage under wage, leave, and anti discrimination laws

Remedies

Workers found to be misclassified can recover unpaid wages and overtime, and New Jersey has stepped up enforcement against employers who get this wrong. The state can impose penalties, and affected workers can pursue back pay.

If you think you are misclassified

Save your contracts, pay records, and anything showing how closely the company controls your work. An attorney can apply the ABC test to your situation and tell you whether you have a claim for the wages and protections you were denied.

At John J. Zidziunas & Associates, LLC, our employment lawyers represent employees in New Jersey and throughout the New York City area. To talk through your situation with an attorney, call (212) 516-1868 or reach out to us for a free, confidential consultation. We work on a contingency fee basis, so you pay nothing unless we recover for you.

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