Legal landscape note: This article was originally published in 2015 and describes the law as it stood at that time. New Jersey law changes frequently.
Independent Contractor or an Employee? New Jersey Supreme Court’s Important Decision
By Michael Gorny, Esq.
You are paid in cash, no taxes are withheld, and no paperwork says whether you are an employee or an independent contractor. If you are hurt on the job, that unanswered question can determine everything: whether you are limited to workers' compensation benefits or free to sue in civil court, where recoveries can be far larger. An important New Jersey Supreme Court decision, Estate of Kotsovska v. Liebman, shows just how much can turn on it.
In the case, Myroslava Kotsovska was hired as a live-in home health aide for an 89 year old man, Mr. Liebman, who needed help with everyday living. Ms. Kotsovska was not authorized to work in the United States and her payments were unreported, an illegal but common practice. Ms. Kotsovska was accidentally killed by being struck by a car driven by Mr. Liebman.
In New Jersey, employees are generally barred from suing their employer for injuries sustained on the job. Instead, they are entitled to benefits provided by Worker’s Compensation insurance. However, this only applies to employees; it does not apply to independent contractors. When there is a dispute as to whether an individual is an employee or independent contractor, the New Jersey Labor Department has been the decision maker. Yet, the Supreme Court found that in Ms. Kotsovska’s case, a civil jury could make the decision as to whether she was an employee or an independent contractor. Long story short, by allowing the jury to decide she was an independent contractor, they awarded her over $500,000 for her injuries in a civil lawsuit against Mr. Liebman.
Worker classification determines whether a claim belongs in workers' compensation court, civil court, or potentially both. The work arrangement, control, payment records, and the law in effect at the time all matter to that decision.