Employers use the ABC test to evaluate whether a worker is classified an independent contractor or an employee by federal and state laws. Employers are using the ABC test more and more as a result of workers shifting toward the per-gig economy.

An employer administers the test itself to determine whether employees qualify as independent contractors. Under state workers' compensation laws, all workers are considered employees and are eligible for benefits until they pass this test. There could be serious repercussions when the exam is not completed and/or if employees are incorrectly classified as independent contractors.

Workers' compensation benefits are significantly impacted by the classification of an individual as an employee vs an independent contractor. Businesses in New Jersey that even have one employee are required by law to provide workers' compensation benefits. The classification of the impact may also affect unemployment benefits and wage and hour laws.

If you have questions or find yourself in a dispute over workers compensation benefits in New Jersey, contact Brandon J. Broderick, Attorney at Law. Our employment law lawyers have extensive experience in helping workers navigate their workers comp benefits.

ABC Test: How It Works

Whether or not a worker should be classified as an employee is determined through the ABC test. Unless these conditions are met, all workers are considered employees by the IRS and state governments. In order to designate employees as independent contractors, employers must meet all three requirements of the test. This includes:

• A: The employee works independently of the employer's direct supervision. This could be an employee that doesn't report directly to a manager or does not have a regular work schedule.
• B: The job that the employee does is not carried out at the employer's site or is not a part of the employer's primary business offerings. An employee who works entirely remotely or someone employed to carry out a task that isn't a company service are examples of this.
• C: The employee is generally an independent contractor for various clients. The employee may be classified as an independent contractor if they consistently carry out the same tasks for different clients.

The law regarding a worker performing tasks outside the employer's primary services is a fairly new addition to New Jersey employment law. It can have significant ramifications for businesses that adhere to these laws.

These laws' primary goals are to protect employees' rights and draw a clear distinction between independent contractors and employees. If an employee is injured at work, employers that hire them and incorrectly classify them as independent contractors could be held legally responsible.

Why Classification Between Independent Contractor and Employee is Important

If your employer has misclassified you, you are missing out on benefits and employment protection to which you are legally entitled as an employee. The following benefits are granted to employees under federal and New Jersey law:

• Right to overtime pay for working more than 40 hours per week and minimum wage
• Right to workers' compensation benefits in the event of an occupational injury or illness
• Right to unemployment benefits, as well as earned sick leave, family leave, and temporary disability
• Right to family leave
• Right to organize via the National Labor Relations Act

On behalf of an employee, an employer is required to deduct federal income tax and make contributions to Social Security, Medicare, unemployment, temporary disability, earned sick leave, and family leave insurance.

The majority of independent contractors, LLCs, franchisees, and individuals who operate "off the books" are not eligible for these benefits and protections.

Injured and Have Questions About Your Employment Benefits? Brandon J. Broderick, Attorney at Law Can Help

If you sustain a serious injury at work, you could experience a lot of stress. However, in most cases, you are entitled to workers comp benefits in the state of New Jersey. However, if you are classified as an independent contractor, that isn't always the case.

The NJ workers comp lawyers at Brandon J. Broderick, Attorney at Law can help. We have decades of experience in New Jersey employment law. Let our lawyers assist you today.

To schedule a free consultation, please contact us today.