This administrative agency case concerns the application of the so-called "ABC Test," N.J.S.A. 43:21-19(i)(6) (A), (B), and (C), in classifying whether drywall installers utilized by appellant at various installation sites are either its employees or, conversely, independent contractors, for purposes of liability for contributions to the state unemployment and temporary disability compensation (“UCL”) fund, N.J.S.A. 43:21-7.
Following a review of records, an auditor from the Department of Labor and Workforce Development concluded that about half of the drywall installers who provided services for appellant during the pertinent years had been improperly classified as independent contractors rather than as appellant’s employees. As to those particular installers, the auditor assessed appellant for unpaid contributions to the fund. Appellant disputed those findings of misclassification, and an administrative hearing ensued.
After the hearing, an administrative law judge (“ALJ”) applied the ABC factors and concluded three of the individual installers had been misclassified as independent contractors. However, the ALJ found that certain other installers who had formed and operated bona fide corporations or limited liability companies ("LLCs") during the audit period and should not be deemed appellant’s employees in this regulatory context.
On further review, the Commissioner of the Department issued a final agency decision reinstating in full the auditor's findings. Applying the ABC Test, this court affirms the Commissioner’s decision in part as to certain installers and reverses in part as to others. In particular, the evidence supports the ALJ’s decision that part A (insufficient control of the work) and part B (work performed away from appellant’s business office) of the ABC test were fulfilled. The evidence concerning part C (independent operation of a business) varies by installer and requires partial reversal of the Commissioner’s decision.
In the course of its analysis, this court rejects the Commissioner’s reliance on an income tax statute, N.J.S.A 42:2C-92, as grounds to “disregard” in this UCL contribution context the entity status of single-member LLCs, as opposed to the statute's applicability to income tax scenarios.
This court also rejects the Commissioner’s mistaken reliance on a regulation, N.J.A.C. 12:16-11.2, that concerns the obligation of single-member LLCs as employers to make UCL contributions for their own workers, and which does not resolve whether the LLC’s member is another company’s employee.
