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Is a Worker an Employee or Independent Contractor?

Understanding the differences between independent contractors and employees is important. Issues such as those of taxation and liability stem from the relationship between an employer and a contractor or employee.

In New Jersey, the Department of Labor sets out an ABC test for determining responsibility for unemployment and hour and wage requirements. The test is as follows:

  • Is the individual free from control and direction over the performance of services, under any contract for the service and in actuality
  • Does the service rendered occur outside the usual course or location of the business? Is the contractor working in your office or at another place?
  • Is the worker engaged in an independently established profession or business or is this the only job that the individual performs?

The burden is on an employer to prove that an individual worker is an independent contractor and not an employee.

Misclassification of employees as independent contractors can be expensive. Should an employer misclassify an employee, the employer may have to do the following:

  • Reimburse the individual for wages they are entitled to under the Fair Labor Standards Act, including the minimum wage and overtime for the position
  • Arrange for payment of back taxes and penalties for federal and state income taxes, Medicare, Social Security, and any unemployment benefits
  • Pay workers compensation benefits of any misclassified employee
  • Provide a misclassified employee with all benefits such as health insurance and retirement plans.

A skilled NJ wage and hour attorney can assist you with making a determination of whether you have an employee or independent contractor relationship.

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Neil H. Deutsch
Senior Partner

About Neil H. Deutsch has been practicing law for over 35 years and is known as a skilled negotiator in employment and discrimination law. He believes in a bottom-line approach of risk analysis and cost effectiveness for his clients. "Case evaluation is something we take seriously," says Mr. Deutsch who seeks top net dollar for…

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Bruce L. Atkins
Senior Partner

About Bruce L. Atkins is regarded as one of New Jersey's premiere practitioners of employment and civil litigation. Mr. Atkins has also been included in the Thomson Reuters list of New Jersey Super Lawyers* in Employment Litigation since 2005. Mr. Atkins believes employees have rights that should be aggressively pursued when an employer has wrongfully dealt…

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Adam J. Kleinfeldt
Partner

About Adam J. Kleinfeldt joined Deutsch Atkins, P.C. in March of 2015.  He primarily represents individuals in employment litigations such as discrimination, retaliation, and whistle blowing matters.  He has extensive experience in all phases of the litigation process. Adam has obtained significant results for some of his clients, including a $525,000 jury verdict in a…

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Robert J. Pantina
Attorney

About Robert J. Pantina joined the firm in 2018. Mr. Pantina received his B.A. from Rider University in 2008. He received his J.D. from the Elisabeth Haub School of Law at Pace University in 2017. While in law school, Mr. Pantina interned for the Hon. Bonnie J. Mizdol, Assignment Judge of the Superior Court of…

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Diane Englander Peyser
Attorney

About Diane Englander Peyser joined Deutsch Atkins, PC in September 2018 where she represents employees in wrongful termination, retaliation, harassment, and discrimination matters. Prior to joining Deutsch Atkins, PC, Diane represented clients in all aspects of employment law on behalf of employees involving unemployment appeals, claims of sexual harassment, LGBT discrimination, disability discrimination, FMLA, New…

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