The GigReporter

A recent case from the New Jersey Supreme Court shows how hostile many judges are to the idea of favoring independent contractor status. Even with clear statutory language allowing parties to select independent contractor status through contract, the intermediate appellate court refused to enforce such language, requiring the Supreme Court to overrule it and order the trial court to dismiss it.

Kennedy v. Weichert Co., 2024 N.J. LEXIS 379 (May 13, 2024), concerns real estate brokers, specifically an addition to the Brokers Act enacted in 2018. N.J. Stat. § 45:15-3.2(b), providing that “[n]otwithstanding . . .any other law, rule, or regulation to the contrary, a business affiliation between a broker and a broker-salesperson or salesperson may be that of an employment relationship or the provision of services by an independent contractor. The nature of the business affiliation shall be defined in the written agreement required pursuant to subsection a. of this section.”

The plaintiff, a real estate broker, sued the defendant Weichert Co. in 2019 for unlawful expense deductions, arguing he should have been classified an employee despite a written agreement to work as an independent contractor. The Defendant moved to dismiss, but the trial court and the Appellate Division (New Jersey’s intermediate appellate court) denied, reasoning that the statute was not retroactive, that only a small portion of the plaintiff’s work was performed after it entered into force, and that the standard ABC test used for determining employee status on the state’s wage and hour laws should be used to determine his status.

While on appeal to the New Jersey Supreme Court the legislature amended the Brokers Act to expressly make its 2018 changes retroactive. The Supreme Court remanded the case for reconsideration, and again the Appellate Division refused to dismiss the case, finding, despite the statutory language, that the written agreement was only an element to be considered but not dispositive, and that while the ABC test did not apply, some other method of determining the plaintiff’s status should be found.

On appeal the New Jersey Supreme Court reversed, finding that the plain language of the statute made the written agreement’s status determination dispositive: “If a written agreement entered into pursuant to N.J.S.A. 45:15-3.2 states that the broker-salesperson or salesperson is an independent contractor, a court must enforce its terms.” The Supreme Court remanded the case to the trial court with specific directions to dismiss the complaint, not the usual “further proceedings not inconsistent with this opinion”, perhaps out of worry that the lower courts would find some way to extend proceedings if they were given more vague instructions.

These events make clear that judges in some states are biased against making pro-independent contractor decisions. It’s extremely rare for classification laws of any type to grant so much deference to written contracts, and even that wasn’t enough for many of these judges to rule in favor of independent contractor status. Consider how difficult it would be to win a favorable ruling from such courts under neutral or unforgiving classification standards.