Employee v. independent contractor: use of the "control test" and the "relative nature of the work test" to determine if a worker is eligible for benefits.

In December of 2006, the respondent contacted the petitioner after receiving the petitioner's business card advertising cleaning services. At that time, the petitioner was cleaning six other houses and an office building on a regular basis. The petitioner visited the respondent's home to provide an estimate for her cleaning services based on the size of the house and the services required. The petitioner told the respondent what services she would and would not provide. They agreed that the petitioner would clean the respondent's house one day per week for $100 starting on a date to be set by the respondent. The specific day of the week was not discussed by the parties.

The respondent contacted the petitioner several weeks later and arranged for her to do her initial cleaning on January 16, 2007. The petitioner arrived at the respondent's home on that date with a friend who assisted her in performing her cleaning services. The petitioner and her friend used cleaning supplies provided by the respondent. The petitioner was given no specific instruction on how to do the cleaning. Within the first hour, the petitioner fell from a stool while dusting and injured her hand and was taken to the hospital by ambulance.

In the weeks after the accident, the petitioner returned to the respondent's home on one other occasion. Although the petitioner's injury prevented her from doing any actual cleaning at that time, she did supervise while her friend cleaned the respondent's home.

On March 27, 2007, the petitioner filed a claim with the Division of Workers' Compensation alleging injury to her hand as a result of her January 16, 2007, fall while cleaning the respondent's home. The respondent denied liability on the basis of her assertion that the petitioner was not her employee. Following a bifurcated trial on the issue of employment only, the Judge of Compensation concluded that the petitioner was an employee of the respondent under the so-called "control test." As basis for his decision, the Judge cited the fact that the respondent set the day for the petitioner to clean her house, had an expectation that the petitioner would provide her cleaning services on a regular basis and had the ability to direct the petitioner's work if she so chose.

In reversing the Judge's ruling, the Appellate Division relied on Lesniewski v. W.B. Furze Corp., 308 N.J. Super. 270 (App. Div. 1998), in which the court adopted two distinct legal tests to be applied in workers' compensation cases to determine whether a claimant is eligible for compensation as an employee or ineligible as an independent contractor—i.e., the "control test" and the "relative nature of the work test."

Under the control test, an employer-employee relationship exists when the employer retains the right to control not only what work is done but how the work is done. Although the respondent did retain some control of the petitioner's performance of cleaning services, such as when she would begin the cleaning work, the Appellate Division found that "[Respondent] did not control how [Petitioner] would do the cleaning, what supplies she would use, or, in fact, who would do the cleaning. Petitioner was not even required to clean the house personally but had the ability to bring other workers to the job to perform the cleaning services."

The Appellate Division found that the respondent did not control the petitioner's work to the extent that an employer controls the work of an employee. As such, the Appellate Division concluded that the control test in the instant matter did not establish an employer-employee relationship.

The Appellate Division also found that the relative nature of the work test did not support a finding that the petitioner was an employee. Under the relative nature of the work test, an employer-employee relationship exists if the evidence establishes a substantial economic dependence of the employee upon the employer and a functional integration of the employer's and employee's respective businesses. As the Appellate Division reasoned, "Petitioner had other clients and continued to clean their premises and earn income from them. Furthermore, Petitioner's cleaning of Respondent's home was not an integral part of the regular business of Respondent."

Rather, the Appellate Division found that the respondent was simply a homeowner who was a client of the petitioner's business services and that the petitioner was an independent contractor responsible only for the results of her labor. Accordingly, the petitioner was not entitled to benefits under the New Jersey Workers' Compensation Act.

Case Law Alert - 1st Quarter 2013