The test for independent contractor is often a tough one to meet. Especially in New Jersey which has (as do many other States), the famous (or infamous) A-B-C test. The courts also support this test as is again evidenced by the NJ Supreme Court’s refusal to take a case challenging a ruling under that test. That ruling found exotic dancers (i.e. strippers) to be employees under the state Unemployment Insurance law. The case is entitled Dance Inc. v. New Jersey Department of Labor and Workforce Development, and had been submitted to the New Jersey Supreme Court, which denied certification.
The Appellate Division had ruled in 2017 that these dancers were employees. A panel of two Judges rejected the contention they were independent contractors. The appellate panel ruled that the club had made a “frivolous” argument by asserting that “the work of exotic dancers is marginal, rather than integral, to its business.” The Court stated that this “contention is belied by petitioner’s corporate name, its website, and the description of the club’s operation.”
The DOL Commissioner had held that “the dancers were presumed to be employees because they worked for tips.” Thus, they did not meet the stringent statutory test which mandates that the alleged independent contractors: 1) be free from control or direction over the services they render; 2) the services rendered must either be outside the usual course of the business or “performed outside of all the places of business of the enterprise;” and, 3) the individuals must be “customarily engaged in an independently established trade, occupation, profession or business.” It is this last prong, the independent business prong, which makes most of these cases go south for the putative employer.
The business herein sought to demonstrate that the dancers were not employees by mandating that they execute a “stage rental/license agreement.” That document stated that they were independent contractors and that they had to “rent” their use of the stage. There was, however, no rental fee set forth in the agreement and it was in English. Unfortunately, the dancers only spoke Spanish or Portuguese.
The Club claimed that it exercised no control by claiming the dancers took no direction from the owner or manager, the dancers came and went as they pleased and were not ordered to work any set schedules. The actions of the club, however, belied this contention, as noted by the Judges. In this regard, the website showed photos of “dozens of scantily-dressed women, under the web page heading ‘Our Girls.'” The website also reflected the dancers’ schedules who danced every day at the club.
The Takeaway
The lesson here is to be very careful about if/when to classify someone as an independent contractor. As this ABC test is one of the strictest, I submit that every employer in whatever jurisdiction it is situate and whatever particular statute it is dealing with, should test the putative contractor’s status against this stringent ABC test. That way, if the contractor passes that smell test, the employer can feel better about the independent contractor status.
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