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Dezsofi v. Csura

A-1572-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

WORKERS COMPENSATION; INDEPENDENT CONTRACTOR—Even though an individual may have a regular and frequent working arrangement with a contractor, if that individual derives substantial income from unrelated construction projects, the relationship is that of independent contractor and is akin to that of a contractor and its subcontractor.

A man operated a dry wall business as a sole proprietor. The business also engaged others when needed for various aspects of a project. Over the years the business owner had trained a particular dry wall finisher. The finisher owned his own business and his own son-in-law worked as his employee. Nonetheless, the man frequently worked for the dry wall company on an “as needed” basis, working approximately twice a month. He was paid a gross amount per day. No taxes were deducted. Each year, he received a form 1099-MISC reporting the gross payments for the prior year. The individual’s 1999 tax return showed that he had about $95,000 of gross receipts for his own business, of which the first dry wall company accounted for about ten percent.

The man with his own dry wall business had a workers’ compensation insurance policy. One day, when the finisher was working for the dry wall company at the standard daily rate, his son-in-law fell backwards from a scaffold. He requested workers compensation benefits from the dry wall business because “the accident his [sic] happened on [the dry wall business’s] job. ... Then his insurance covered it. If [it] happened [on] my job, and [the man who owned the dry wall business] fell off, then my insurance covered it.” The injured man also wrote a statement to the dry wall business’s workers compensation carrier saying that he was “self-employed” as an independent contractor,” but although he worked for the dry wall company, he did not work as an employee. The wall finishing company stated that the injured man “was an independent contractor at the time of this incident,” and “was a subcontractor” at that time.

This set of facts required the Appellate Division to determine whether at the time of the accident the injured man was an employee of the dry wall contractor or an independent contractor. Under the workers’ compensation law, “an ‘employee’ includes all natural persons ... who perform services for an employer for financial consideration… .” Under case law, the term “employee” is to be “defined liberally in order to bring as many cases as possible within the scope of the Workers Compensation Act.” On the other hand, an “independent contractor” has been defined as: “one who, carrying on an independent business, contracts to do a piece of work according to his own methods, and without being subject to the control of his employer as to the means by which the result is to be accomplished, but only as to the result of the work.” Further, “[a]n independent contractor is usually hired to do a single project, rather than recurring employment.” Two tests “have evolved to determine whether a worker is an employee or independent contractor, the ‘control’ and the ‘relative nature of the work’ tests.” First, courts look to the control test. This test “considers whether the employer has the right to direct the manner in which the work is performed and the result to be accomplished. ... The factors [that are considered] in applying the control test are: the right of control, the right of termination, furnishing of equipment, and method of payment. ... The test is satisfied even where ‘the employer may not exercise actual control over the worker.’” In situations “where a skilled worker does not need much supervision, a more appropriate standard is the relative nature of the work test. ... This test requires [a] court ‘to analyze the nature of the employer’s business’ and decide whether ‘the work done by [the worker] was an integral part of the regular business of [the employer], “as well as whether the worker is economically dependent upon the employer.” Just because an employee furnishes his or her own equipment “is not by itself fatal to the finding of employee status.”

The Court applied those tests and held that the finisher had “a regular and frequent working arrangement” with the dry wall company, but the injured man was “an independent contractor and not an employee.” It ruled this way because the bulk of the injured man’s income was derived primarily from sources other than the dry wall company for whom he was doing work at the time. The dry wall company did a number of projects in which the injured worker was not involved. “Their relationship [was] no different from that of a contractor and subcontractor working at the same site.” The fact that they worked on “the same projects regularly and frequently [did not] alter the nature of the relationship and convert them into an employer and employee.” Finding that the injured man was an independent contractor meant that he could assert a tort claim against the dry wall company, presumably based upon some defect in the scaffold or in the way in which it was erected or guarded.


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