Exclusions from the definition of "employment" under the New Jersey Workers' Compensation Act: "casual employees" and "independent contractors."

The petitioner, a tree service technician, was a full-time employee of a tree service company who occasionally did subcontracting work for the respondent. During a long period of time during which the employer had no work, the petitioner solicited work for himself directly from the respondent. The respondent was generally unable to assist the petitioner in this regard as his business was small and tree service was not part of his day-to-day operations. However, on January 26, 2008, the respondent contacted the petitioner to advise that the respondent's neighbor required the removal and trimming of some trees on their property. The petitioner agreed to perform the work. The petitioner and the respondent did not speak about compensation or from whom the petitioner was to receive payment. On the scheduled day, the petitioner met at the respondent's home. The petitioner brought with him his own professional equipment including a saddle, a body lanyard, climbing line, lowering line, snaps and a handsaw. The respondent provided the petitioner with a chainsaw. The respondent accompanied the petitioner to his neighbor's residence and explained to the petitioner the work he was to perform. The respondent then left the premises. Shortly after beginning work, the petitioner fell from the tree and sustained injuries. The petitioner filed a claim with the Division of Workers' Compensation naming the respondent as his employer. The respondent filed an answer and simultaneously moved for dismissal of the petitioner's claim, denying that the petitioner was their employee and instead asserting that the petitioner was either an independent contractor or a casual employee excluded from coverage under the New Jersey Workers' Compensation Act. The judge of compensation granted the respondent's motion and dismissed the petitioner's claim. The petitioner appealed. In affirming the judge of compensation's dismissal, the Appellate Division determined that the petitioner was, indeed, a casual employee under the terms of the Act. To obtain benefits pursuant to the Act, a petitioner must prove that he is an employee within the meaning of the Act. N.J.S.A. 34:15-36 broadly defines an employee as being "all natural persons . . . who perform service for an employer for financial consideration." The Act expressly exempts from its definition "casual employment," which it defines as employment: "[1] if in connection with the employer's business, as employment the occasion for which arises by chance or is purely accidental; or [2] if not in connection with any business of the employer, as employment not regular, periodic or recurring[.]" Here, tree services were not part of the respondent's business, and the petitioner's employment was neither regular, periodic or recurring. Further, the Appellate Division reasoned that even if tree services were part of the respondent's ordinary business, the respondent's hiring of the petitioner was, as the judge of compensation had described it, akin "to an instance in which you bring in a person with special expertise to fix a plumbing or toilet problem." In light of its analysis, the Appellate Division concluded that the petitioner was a casual employee as defined by N.J.S.A. 34:15-36 and, thus, excluded from receiving workers' compensation benefits under the Act. In finding that the petitioner was also an independent contractor, the Appellate Division relied primarily on Lesniewski v. W.B. Furze Corp., 308 N.J. Super. 270 ( App. Div. 1998). In Lesniewski, the Appellate Division utilized two different tests – i.e., the "control test" and the "relative nature of the work test" – to determine whether a petitioner qualified as an independent contractor. The control test focuses on four factors: (1) the degree of control exercised by the employer over the means of completing the work; (2) the source of the worker's compensation; (3) the source of the worker's equipment and resources; and (4) the employer's termination rights. Here, the Appellate Division found the record devoid of any evidence that the respondent either controlled or had the right to control the manner of completing the tree work, retained any right to terminate the petitioner or intended to compensate the petitioner in any way. The Appellate Division found unconvincing the petitioner's argument that he was under the respondent's control because the respondent provided the petitioner with a chainsaw as the majority of the professional equipment used on the job was owned by the petitioner himself. The Appellate Division's analysis of the "relative nature of the work test" yielded similar findings. As illustrated in Lesniewski, the relative nature of the work test examines the extent of the economic dependence of the worker upon the business he serves and the relationship of the nature of his work to the operation of that business. If the petitioner is financially dependent on the respondent and plays an active role in the respondent's business, an employer-employee relationship will be said to exist. Here, the Appellate Division found that the petitioner could satisfy neither of these standards. As the respondent did not perform tree services as part of its day-to-day business, the work that the petitioner performed could not be characterized as an integral part of the respondent's ordinary business. Further, as the respondent neither agreed to compensate the petitioner nor did the petitioner receive any compensation from the respondent, it could not be said that the petitioner was economically dependent on the respondent in any significant way. As such, the Appellate Division determined that application of the relative nature of the work test required a finding that the petitioner was indeed an independent contractor exempted from coverage under the Act.

Case Law Alert - 2nd Qtr 2011