Carpet Remnant Warehouse, Inc. v. N.J. Dep't of Labor

Carpet Remnant Warehouse, Inc. v. N.J. Dep't of Labor

Opinion

 [*571]  [**1179]   The opinion of the Court was delivered by

STEIN, J.

The issue in this appeal is whether carpet installers who provided services for Carpet Remnant Warehouse, Inc. (CRW) are employees or independent contractors for purposes of the Unemployment Compensation Law, N.J.S.A. 43:21-1 to -24.4 (UCL). Pursuant to the UCL, the carpet installers are deemed employees unless they are able to satisfy the criteria of the socalled "ABC test," N.J.S.A. 43:21-19(i)(6)(A), (B), (C). If the installers are unable to meet the ABC test's criteria, then CRW is liable for unpaid unemployment compensation and [***2]  temporary-disability contributions attributable to those installers. Although the Office of Administrative Law (OAL) determined that the installers are independent contractors, the Commissioner of the New Jersey Department of Labor (Commissioner) ruled that the installers did not satisfy the ABC test and therefore are employees. The Appellate Division affirmed in  [*572]  an unreported  [**1180]  opinion. We granted certification, — N.J. — (19  ), and now reverse.

In July 1986, the New Jersey Department of Labor (Department) conducted a "routine, periodic test audit" of CRW. The Department auditor, Dudley Wilson, reviewed CRW's individual wage records, periodic payroll records, cash disbursements, tax returns, and related bookkeeping records for the calendar years 1982, 1983, 1984, 1985, and the first quarter of 1986. In the course of the audit, the auditor interviewed Raymond Schienholtz, CRW's president; Norman Cohen, CRW's accountant; and Wayne Neill, one of the carpet installers who provided services to CRW. The Department concluded that thirty-nine of the carpet installers who had provided services to CRW for the audit period were "non-bonafide independent contractors" or,  [***3]  more precisely, employees pursuant to the UCL. Accordingly, the Department demanded that CRW pay an assessment of $16,276.50 plus interest for delinquent unemployment and disability contributions due for the audit period and attributable to those installers. ] Ordinarily, both the employer and the employee make contributions to the Unemployment Compensation Fund, the employee's share being deducted from his wages. N.J.S.A. 43:21-7. However, if the employer fails to deduct the employee's share of contributions, the employer alone is liable for those contributions. N.J.S.A. 43:21-7(d)(1)(D).

CRW disputed the assessment, and the Department referred the matter to the OAL for disposition as a contested case. At the OAL hearing in January 1988, CRW attempted to prove that the carpet installers were independent contractors under ] the ABC test, which provides:

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