A “special agent” of a “general agent” selling insurance pursuant to an express independent contractor agreement satisfies New Jersey’s “ABC” test of independent contractor status, both by contract and in fact, so as to remove him from employee status under the New Jersey Wage Payment Law.
Walfish vs. Northwestern Mutual Life Insurance Company, et al., No. 2:16-4981 (D. N.J., 5/6/19).
Plaintiff, a non-exclusive “special agent” of an independent “general agent” for defendant insurance company, filed a one-count putative class action claiming that defendant’s classification of him and others as independent contractors and deduction of expenses violated the New Jersey Wage Payment Law (NJWPL). With the Court’s permission, the parties cross-moved for summary judgment prior to class certification. Finding that plaintiff’s relationship with defendant meets the “ABC” test for independent contractor status under New Jersey law, the Court grants defendant’s motion, denies Plaintiff’s cross-motion and dismisses the action.
Under the ABC test, an individual is presumed an employee, unless (1) such individual has been free from control or direction over performance of the service, both by contract and in fact, (2) such service is performed outside the usual course of the business or outside all places of business of the enterprise, and (3) such individual is customarily engaged in an independently established trade, occupation, profession or business. The Court finds plaintiff meets “Part A,” the “control test” both because the contract said he was “free to exercise his own judgment” in soliciting business and because he actually did so as to any client at any time and at any location, even going so far as to decline feedback on the subject from annual compliance meetings. That, as plaintiff argued, he was subject to defendant’s Compliance-enforced state and federally mandated regulatory guidance did not change this. To hold otherwise would preclude such businesses from ever engaging independent contractors.
Nor did sales minimums that did not necessarily result in termination, or exclusive dealing provisions that did not preclude significant income from non-Northwestern business, make a difference. Turning to “Part B,” because Northwestern does not “sell” insurance, and because plaintiff never spent time at, or even regularly reported to, any Northwestern office at a time during which he, in fact, sold insurance for approximately twenty other companies from his home or the homes or offices of his clients, the Court has little trouble concluding that the course-of-business and location-of-work components of Part B are satisfied.
With plaintiff conceding the independent business standard of “Part C,” the Court concludes that the undisputed facts demonstrate plaintiff was an independent contractor. The Court, therefore, need not address defendants’ other arguments that: (1) the NJWPL incorporates the insurance exception of the New Jersey Unemployment Compensation Act (“NJUCA”) and (2) plaintiff consented to the deductions he now claims were impermissible.
(SOLA Ref. No. 2019-24-06)
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