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Conley v. Oliver and Co.

A-901-97T5, 1998 N.J. Super. LEXIS 517 (N.J. Super. App. Div. 1998)

EMPLOYER-EMPLOYEE; WORKER’S COMPENSATION—A temporary worker performing substantially equivalent duties to those done by a company’s full-time employees and in a substantially similar fashion even for a limited period of time and even if paid on a contingency basis, can be classified as an employee for worker’s compensation purposes.

Following a severe storm, an independent insurance adjustment agency engaged an individual to perform temporary services as a claims adjuster. It agreed to pay this individual 60% of the fees for claims he processed. The temporary worker was responsible for paying most of his own business expenses but the company provided him with office space and a telephone. The company treated the worker as an independent contractor and did not withhold income taxes or deduct social security from the amounts paid to him. Over about six months, the worker processed the claims on a full-time basis, for which he was paid $45,000. The company gave the worker so many files during the first three months after the storm that he did not have any time to work for anyone else. The procedures employed by the worker in evaluating and adjusting claims were essentially the same as those of the claims adjusters employed by the company on a regular basis. In fact, the regular employees handled a smaller volume of claims than the temporary worker and were paid a fixed salary rather than a percentage of the fees they generated. The question raised was whether the worker was an independent contractor or an “employee” for Workers’ Compensation purposes.

The Court utilized two tests to determine the worker’s status: (1) the “right to control” test and (2) the “relative nature of the work” test. These two tests are basically designed to draw a distinction between those occupations which are properly characterized as separate enterprises and those which are in fact an integral part of the employer’s regular business. According to the Court, both tests pointed strongly to the conclusion that the worker was an employee rather than an independent contractor. The Court found that here, where the worker was experienced and required little supervision over details, a degree of supervision no greater than that which was normally consistent with an independent contractor might be equally consistent with an employment relationship. Although the worker generally had his own schedule and determined which claimants’ homes he would inspect each day and the amount of time required to evaluate a claim, the company provided him with price schedules to use in evaluating claims and the company’s supervisory employees reviewed his claim forms and his tentative agreements with claimants before sending them to the insurance companies for final approval and payment. Moreover, the worker was required to spend time in the company’s office each morning and would communicate by telephone with supervisors at other times of the day. Significantly, the company exercised substantially the same supervision over the worker as it did over its regularly employed claims adjusters. It was also clear to the Court that the “relative nature of the work” done by the worker was the same as that done by the full-time claims adjusters employed by the company. His work was clearly an integral part of the company’s regular business and he performed his work in essentially the same manner as the company’s regular salaried employees, even sharing office space and participating in meetings with those employees. Further, the worker had substantial economic dependence upon the company for the four and one-half months that the worker was engaged exclusively for the company. The money he received from the company represented his sole means of support during that period. In conclusion, the Court felt that even though the worker maintained some of the trappings of an independent contractor during the time he worked for the company, his work was an integral part of the company’s regular business and he had substantial dependence upon the company. Consequently, the Court found him to be an employee for purposes of the Workers’ Compensation Act.


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