New Jersey’s Appellate Division recently analyzed whether three individuals were employees or independent contractors for purposes of the New Jersey Law Against Discrimination (LAD). The Court ruled that since there is a factual dispute whether they were employees or independent contracts, the question has to be answered by a jury. The issue is important since the court also concluded the LAD only protects employees, but not independent contractors, from hostile work environment sexual harassment cases. As discussed in a previous article, Sexual Harassment of Independent Contractor Can Violate New Jersey Law Against Discrimination when it results in the contractor losing her job because the LAD prohibits companies from refusing to contract with someone based on their sex.
The case involved three women, Janet Rowan, Kathleen Lownes, and Nancy Heidler, who worked for a group of companies owned by the same two individuals, Joseph Samost and Iva Samost. They alleged Joseph Samost created a sexually hostile work environment for them in violation of the LAD. The trial judge concluded the three women were independent contractors rather than employees, and as a result dismissed their claims.
However, last month in Rowan v. Hartford Plaza LTD., LP, New Jersey’s Appellate Division reversed that decision. It explained there are twelve factors to consider when deciding if someone is an employee or an independent contractor under the LAD. It found three of those factors, the employer’s right to control the worker’s performance, whether the work is supervised or unsupervised, and the level of skill required for the work, supported finding the women were employees since Joseph Samost supervised their work, and their jobs primarily involved unskilled clerical and office work such as filing faxing, copying, and making telephone calls. Similarly, it found another factor, whether the work is an integral part of the business of the company, was supported by the fact that the type of work they performed is necessary to any business. It also noted the fact that they were allowed to work from home did not suggest they were independent contractors since it is common for employees to work from home.
The appellate court found two additional factors, the length of time the individual has worked for the company and the way the work relationship ended, could support finding the women were employees since two of them were told they were fired due to a “restructuring” of the office rather than because of the completion of a particular job assignment. Similarly, it found two other factors, the method of payment and whether the company paid social security taxes were neutral, since the company paid the women “off the books” without issuing a W2 (which would have suggested they are employees) or a 1099 (which would have suggested they were independent contractors). Finally, the Court was unable to determine which position was supported by the last factor, the intent of the parties, since each side gave self-serving testimony in that regard.
As a result, the Appellate Division concluded that a jury has to decide whether the women were employees who are protected from hostile work environment sexual harassment, or independent contractors who are not.