Posted on Tuesday, January 7th, 2020.
As New Jersey’s Department of Labor increases its enforcement of independent contractor classifications, Trimboli and Prusinowski has been asked what criteria needs to be met for an individual to be classified as an IC.
The test for ICs is known as the ABC test:
A: The individual must be free from control or direction over the performance of the service;
For instance, if the company does not set the individual’s schedule; the individual does not use the company’s tools, equipment and resources; or the company does not oversee the individual’s work, then the person may meet this element of the test.
B: The service is either outside the usual course of business for the company engaging the individual or the service is performed outside all of the places of business the company utilizes;
For instance, a manufacturing company engages a bookkeeper who comes to the office one-day a week would perform work or business that is outside the usual course of the company’s. If the one of the individuals designs the products the company will make or use as molds performs the work from his/her home, then that person may meet this element
C: The individual is customarily engaged in independently established trade, occupation profession or business.
For instance, if the person has other clients and will not need to seek unemployment benefits if the relationship with the business terminates, then the individual may meet this element.
To be an independent contractor, the individual must meet all three of the criteria. If any one element is not met, then the individual will not be classified as an independent contractor by the Department of Labor.
If you classify individuals as independent contractors or would like to start using independent contractors and want to confirm that they are or would be properly classified, then contact Trimboli & Prusinowski for assistance. Trimboli & Prusinowski has extensive experience representing businesses and employers against the DoL and is ready to assist you and your business to minimize liability related to use of ICs.