Current Events

When one is determining a worker’s status, labels of “independent contractor” or “employee” can be illusory as opposed to illuminating. As discussed in the last article, NJ workers who have been classified by their employers as “Independent Contractors” but who are essentially “Employees”, ask if proposed legislation as to a legal definition for what comprises an “employee” as distinct from an “Independent Contractor”, will offer them protection from retaliation if they whistleblow on their employer’s illegal acts. This proposed legislation was written for application to wage and hour laws, not discrimination and whistleblower laws. Therefore, although time will reveal how courts may apply, if they do apply, these new definitions to whistleblower and discrimination statutes, this proposed legislation possibly will not make a difference as to whistleblower claims.

The Evolution of NJ Law in Cases Brought under NJ’s Whistleblower Statute

The evolution of the law by the NJ courts in determining cases brought under NJ’s whistleblower statute, The Conscientious Employee Protection Act, “CEPA” has been though “case law”, i.e., how the Courts have decided and set precedents to be followed by later courts as to application of appropriate legal definitions. The law evolves as the society changes. The law evolves over time, and a brief summary of the evolving definitions of “independent contractor” and “employee” as applied to NJ whistleblower cases will be discussed here and in the next article.

An Employer’s Labels Can Be Illusory as Opposed to Illuminating When Taken out of Context.

When New Jersey's Conscientious Employee Protection Act (CEPA), N.J.S.A. §§ 34:19-1 to -8, is applied in the setting of  professional persons, such as high-end IT managers or individuals providing specialized services in white collar or certain blue collar professions allegedly as an independent contractors, the court looks to factors in the day-to-day reality of the work performed and beyond the label attached to the employee or alleged independent contractor relationship.

Pukowsky v. Caruso, 312 N.J. Super. 171 (1998)

The test for determining whether one is in reality as opposed to a labeled employee or independent contractor and which explores aspects of the work relationship was set out in Pukowsky v. Caruso. Pukowsky was a New Jersey Law Against Discrimination case of alleged sexual harassment, but a later case, D’Annunzio, relied on this case in determining the standard to be applied in CEPA cases as to what comprises an employee relationship to be given whistleblower protection, regardless of the employer’s labels.

In Pukowsky, a skating coach held skating lessons at a skating rink and she alleged that defendant owner sexually harassed her. Pukowsky filed a claim under the Law Against Discrimination (NJLAD), N.J. Stat. Ann. § 10:5-1to -42. The trial court found that Pukowsky was an independent contractor and not an employee and therefore she was not covered by NJLAD. The trial court entered a directed verdict in favor of the defendants under N.J. Ct. R. 4:37-2(b). Pukowsky then sought review by the Appellate Division of the directed verdict entered by the Superior Court, Law Division against her in favor of the skating rink and owner, on her claim of sexual harassment under the New Jersey Law Against Discrimination.

The Appellate Court held that the trial court did not abuse its discretion in entering the directed verdict. They found that Pukowsky was an independent contractor and was not considered to be an employee within the meaning of the NJLAD, and Pukowsky was therefore not entitled to avail herself of the protection of the NJLAD. Her testimony, viewed in the light most favorable to her, supported the trial court's factual findings that no reasonable jury could find that Pukowsky was an employee, but that she was an independent contractor. The NJLAD was intended to prohibit discrimination in the context of an employer and employee relationship; thus, Pukowsky was not protected from sexual harassment and discrimination prohibited in the employer and employee relationship under the NJLAD.             

The Appellate Division in Pukowsky v. Caruso in 1998, applied a twelve-part "totality of the circumstances test" that was established in a earlier 1990 federal case, Franz v. Raymond Eisenhardt & Sons, Inc., to determine if the plaintiff was an employee or independent contractor.

However, Pukowsky was a New Jersey Law Against Discrimination case (NJLAD), not a Whistleblower CEPA case. Both of these tests are substantially similar to the test which was developed by the Third Circuit in another federal case in 1983, E.E.O.C. v. Zippo Mfg. Co., 713 F.2d 32, 37 (3d Cir.1983)(discussing independent contractor status with regard to the ADEA) and applied in another earlier case in 1988 Carney v. Dexter Shoe Co., 701 F. Supp. 1093, 1100-03 (D.N.J. 1988).The Franz test requires a court to determine a worker's status through consideration of the following factors: