Opinion
DOCKET NO. A-1847-12T3
04-27-2016
ABS GROUP SERVICES, INC., Appellant, v. BOARD OF REVIEW and ROBERT PRICE, Respondents.
Robert A. Suarez (Ropers, Majeski, Kohn & Bentley), attorney for appellant. Alan H. Schorr & Associates, attorneys for respondent Robert Price (Jenelle L. Hubbard, on the brief). John J. Hoffman, Acting Attorney General of New Jersey, attorney for respondent Board of Review, Department of Labor and Workforce Development (Peter H. Jenkins, Deputy Attorney General, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino and Suter. On appeal from the Board of Review, Department of Labor and Workforce Development, Docket No. 338,577. Robert A. Suarez (Ropers, Majeski, Kohn & Bentley), attorney for appellant. Alan H. Schorr & Associates, attorneys for respondent Robert Price (Jenelle L. Hubbard, on the brief). John J. Hoffman, Acting Attorney General of New Jersey, attorney for respondent Board of Review, Department of Labor and Workforce Development (Peter H. Jenkins, Deputy Attorney General, on the brief). PER CURIAM
ABS Group Services, Inc. (ABS) appeals from a final agency decision of the Board of Review (Board) that found claimant Robert Price was an ABS employee, making ABS liable for charges to the State plan for Price's temporary disability claim. Because we agree with the Board that ABS failed to prove Price was engaged in an independently established trade, occupation, profession or business, we affirm.
I.
Claimant conducted inspections of boilers and pressure vessels. He was qualified to do so by the State, N.J.A.C. 12:90-3.12, and by the National Board of Boiler and Pressure Vessel Inspectors (National Board). This allowed him to conduct boiler and pressure vessel inspections under the ASME or National Board codes for third party entities that contracted with ABS. He performed audits "to make sure [the third parties] comply with the state laws, jurisdictional requirements for repairs and alterations, [and] . . . with the ASME Code" and worked "directly under [the] ABS Quality Control system manual." ABS is an "authorized inspection agency," meaning that it has "inspectors that are authorized . . . to inspect" boilers and pressure vessels. N.J.A.C. 12:90-2.1.
Individuals may be qualified and issued a commission by the National Board of Boiler and Pressure Vessel Inspectors after meeting certain testing, education, and experience requirements, as laid out in that organization's National Board Inspection Code. See also N.J.A.C. 12:90-2.1.
The "ASME Code" is a national code developed by its namesake the American Society of Mechanical Engineers (ASME) that addresses safety concerns with boilers and pressure vessels.
Price worked for ABS in the mid-1990s as an employee performing the same type of work. He left ABS, was employed by another authorized inspection agency for a few years and, after he was laid off by that agency, returned to ABS in March 2009. By then, ABS considered inspectors such as Price to be independent contractors rather than employees. Price signed an "Independent Contractor Agreement" with ABS under which he agreed to perform National Board and ASME inspections for ABS just as he had done during his first employment.
The agreement between ABS and Price referred to him as an independent contractor. He was to "comply with the requirements of ABS CONSULTING and all applicable laws, ordinances, rules and regulations . . . affecting the work[.]" He was to "report to, receive service orders from and be responsible for his performance and receive direction from the . . . ABS Consulting ASME manager." Price was bound by any "reasonable restrictions or conditions . . . in any [a]greement by and between ABS" and its clients.
These third party inspection services were for clients who were under contract with ABS. However, many clients had followed Price when he moved between authorized inspection agencies. Nevertheless, once Price began work for ABS again, those clients signed contracts with ABS that ABS prepared and executed.
Price was paid on an hourly basis by ABS, not by the clients. He submitted time sheets to ABS and then ABS generated an invoice to send to the clients. ABS also paid Price's expenses, such as meals, mileage, lodging and tolls. He was issued an ABS e-mail address and computer. ABS did not provide fringe benefits, paid vacation or sick leave, nor did Price have a pension or 401K plan through ABS. Price was required to obtain his own health, disability, unemployment, automobile and professional liability insurance. ABS provided Price with a 1099 form for tax-reporting purposes. Price oversaw other ABS inspectors and was available to ABS customers twenty-four hours per day.
Price was permitted to conduct inspections that were not governed by the National Board or ASME codes and although he also performed these types of inspections for ABS, he did not perform them for any other agency. Price testified he had to be employed by an authorized inspection agency to obtain a commission card that then enabled him to perform inspections under the National Board or ASME codes. If he left that employment, he had to "turn that card in, or [the] card is invalid." The ABS representative acknowledged these requirements, testifying that Price "needed at the time an agency to work with and we gave him that."
However, both sides testified that the rules had changed subsequently to now permit an inspector to become his "own authorized inspection agency." To do so, an inspector had to "start [a] company, as an accredited authorized inspection agent . . . that complies with the ASME and National Board" and obtain professional liability insurance that was "quite expensive."
Since at least 1995, see N.J.A.C. 12:90-10.1 (incorporating the 1995 National Board Inspection Code), an inspector may operate as his or her own authorized inspection agency by becoming qualified as an owner-user agency. See N.J.A.C. 12:90-2.1.
Price had not become his own authorized inspection agency because according to his testimony, he was "at [the] twilight of [his] career" and he observed, "it's a little more complicated than just starting a company[.]" Price did not own or operate his own business. Since February 2013, he had been working for another company performing National Board and ASME inspections for many of the same third parties.
Price filed for temporary disability benefits in March 2010. ABS appealed the Deputy's determination that he was eligible to receive benefits and a hearing was held in May 2012. Later that year, the Board of Review affirmed the Appeal Tribunal's decision that the services performed by Price for ABS were employment, although ABS had proven to the satisfaction of the Board that Price was free from direction and control by ABS. In agreeing with the Appeal Tribunal, the Board noted additionally that Price "used a computer provided by the employer and serviced clients who were contracted with the employer, albeit that he brought those clients to the employer." ABS appealed the final agency decision.
Pursuant to N.J.S.A. 43:21-37, temporary disability benefits provided by the State plan are available to a "covered individual who on the date of the commencement of a period of disability is not entitled to disability benefits under an approved private plan[.]" --------
That first appeal was decided by us in June 2014. We reversed the Board's finding that ABS had failed to prove any of the three essential criteria for independent contractor status set forth in N.J.S.A. 43:21-19(i)(6)(A) through (C). In particular, we determine that ABS had established "the alternative that Price performed the service he rendered for remuneration outside of all the places of business of ABS" which is one of the two alternative criteria within factor (B) of N.J.S.A. 43:21-19(i)(6). ABS Groups Services, Inc. v. Bd. of Review, Dep't. of Labor, No. A-1847-12 (App. Div. June 20, 2014) (slip op at 4). However, because the Board's findings were not otherwise adequate for our review, we remanded the matter to the Board for further consideration, including reopening the record at the Board's discretion, but we retained jurisdiction. Id. at 6.
The Board then remanded the case to the Appeal Tribunal. Following a second hearing in October 2014, the Appeal Tribunal again found that Price was an employee of ABS. The Appeal Tribunal found that Price was free from control and direction "only to a certain degree" because it was the clients who needed the third party inspections and who set the work schedule, not ABS or Price. The Appeal Tribunal determined that Price only "remotely created his own schedule of work." The fact that Price invoiced the employer was not enough "on its own" to show he was not an employee. It is not entirely clear whether the Appeal Tribunal concluded from these particular findings that ABS had shown Price was free of its control or direction.
As for whether under factor (C) Price was engaged in an "independently established trade, occupation, profession or business," see N.J.S.A. 43:21-19(i)(6)(C), the Appeal Tribunal noted that clients compensated ABS, not Price, for inspection services. The Appeal Tribunal noted that had Price operated his own business, there would have been no need for ABS to exist as an intermediary between Price and the clients. Although Price may have had his own customer base, that did not establish he had his own business. The Appeal Tribunal thus concluded that Price's services performed for ABS were employment, within the meaning of N.J.S.A. 43:21-19(i)(6), and that he consequently was eligible for unemployment benefits in light of that status.
The Board of Review affirmed the Appeal Tribunal, concluding not to provide any further hearing because a "full and impartial hearing" had been provided. ABS appealed the Board's decision.
On appeal, ABS contends the Board's most recent decision is arbitrary, capricious and unreasonable because it ignored certain facts and misapplied the law. Because Price performed inspections as an independently certified inspector, ABS contends he was "entirely free from control, supervision and direction" by ABS in conducting ASME and National Board inspections of third parties. Because he was free to perform other inspections not conducted under the National Board or ASME codes, while he was performing ASME and National Board inspections for ABS, ABS contends Price is engaged in an inspection business, which satisfies the "independent-business test." Price counters by emphasizing that because his work also was performed under the ABS quality control systems manual and he did not operate independently as an authorized inspection agency, he remained an employee of ABS, not an independent contractor.
II.
We review the March 3, 2015 decision by the Board to determine whether it is supported by substantial credible evidence on the record. Phila. Newspapers, Inc. v. Bd. of Review, 397 N.J. Super. 309, 318 (App. Div. 2007), certif. denied, 195 N.J. 420 (2008). We will not overturn the Board's decision unless it is so wide of the mark as to be arbitrary, capricious or unreasonable. Brady v. Bd. of Review, 152 N.J. 197, 210 (1997). Our review of the record shows ample support for the Board's conclusion Price was an employee of ABS.
The New Jersey Unemployment Compensation Law (UCL), N.J.S.A. 43:21-1 to -71, is remedial legislation to "provide a cushion for . . . workers . . . 'against the shocks and rigors' of unemployment." Phila. Newspapers, Inc., supra, 397 N.J. Super. at 318 (quoting Carpet Remnant Warehouse v. N.J. Dep't of Labor, 125 N.J. 567, 581 (1991)). It is liberally construed to permit "a statutory employer-employee relationship to be found even though that relationship may not satisfy common-law principles." Id. at 319 (quoting Carpet Remnant Warehouse, supra, 125 N.J. at 581). Under the statute, where the claimant is engaged in employment and there is no statutory exclusion, the claimant is presumed to be an employee. Ibid. ABS contends the Board erred in finding that Price was an employee rather than an independent contractor.
The UCL provides a three prong test, known as the "ABC test," to determine if a worker is an employee or independent contractor. N.J.S.A. 43:21-19(i)(6). This test provides:
Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter ([N .J.S.A. 43:21-1 to -71]) unless and until it is shown to the satisfaction of the division that:
(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
(B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.
[Ibid.]
Part A is referred to as the "control test," Part B as the "course-of-business or location-of-work test," and Part C as the "independent-business test." Phila. Newspapers, Inc., supra, 397 N.J. Super. at 320. A party who is challenging a worker's classification "must prove each of the three prongs of the ABC test," and if each element is not met, then the claimant is an employee and is not an independent contractor. Ibid.
Price concedes that Part B is met because the services he performed for ABS were all outside of the employer's places of business and occurred at the location of the third parties that were being inspected.
It is not clear whether the Board or the Appeal Tribunal in their most recent decisions made an actual finding under Part A of the test. Under Part A, the entity challenging employment must prove the claimant "has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact[.]" N.J.S.A. 43:21-19(i)(6)(A). Factors to consider include "whether the worker is required to work any set hours or jobs, whether the enterprise has the right to control the details and the means by which the services are performed, and whether the services must be rendered personally." Carpet Remnant Warehouse, supra, 125 N.J. at 590. "[I]t is not necessary that the employer control every aspect of the worker's trade; rather, some level of control may be sufficient." Hargrove v. Sleepy's, LLC, 220 N.J. 289, 305 (2015).
In undertaking this analysis, we are not limited to the terms of the contract. Phila. Newspapers, Inc., supra, 397 N.J. Super. at 321. This is a "fact-sensitive" analysis where the substance, not the form of the relationship, is reviewed. Carpet Remnant Warehouse, supra, 125 N.J. at 581. We have no difficulty in now concluding, contrary to the Board, that ABS satisfied the control test of Part A because it did not direct when or how Price performed the National Board or ASME code inspections.
In Philadelphia Newspapers, Inc., we found the control test was satisfied where a home delivery newspaper person signed an independent contractor agreement. Phila. Newspapers, Inc., supra, 397 N.J. Super. at 312, 323. Like Price, the newspaper person could perform his work by any means and in any sequence he choose. Id. at 313. He was free to deliver papers for competitors. Ibid. He received a 1099 tax form and he was paid on a per delivery basis. Id. at 316. On those facts, we found the employer had proven lack of control. Id. at 323.
In Carpet Remnant Warehouse, one of the claimants was a carpet installer who worked for four or five different retailers. Carpet Remnant Warehouse, supra, 125 N.J. at 575. He advertised for his services and submitted invoices directly to Carpet Remnant Warehouse, which also guaranteed his work for a year. Id. at 574. Although that isolated factor suggested a modicum of control, the Court found the commissioner's decision on control was not supported by sufficient credible evidence on the record because Carpet Remnant Warehouse did not control the installations and the installers were free to accept or reject any job posted and could work for competitors. Id. at 590-91.
In Trauma Nurses, Inc. v. Bd. of Review, N.J. Dep't of Labor, 242 N.J. Super. 135, 137 (App. Div. 1990), we concluded the nurses were not employees. Trauma Nurses, Inc. (TNI) supplied hospitals with nurses on a temporary basis. Ibid. The absence of control over the nurses was shown because the nurses chose which hospitals they wished to work at and which shift. Id. at 143-45. They could work as much or little as they wanted. Id. at 144. They were not obligated to comply with any rules, practices or procedures set by TNI in performing their professional duties. Ibid. TNI exercised no supervisory control over the nurses. Id. at 145. There were no fringe benefits, sick pay, vacations, pensions or bonuses. Ibid.
We recognize under Price's contract with ABS that he received service orders from ABS, could "receive direction from ABS" and was audited at least once. But on a day-to-day basis, ABS exercised limited or no control over Price, especially when he was conducting inspections under the National Board or ASME codes for ABS. Price performed work at his own discretion, setting his own schedule. ABS did not control or direct the details or the means by which Price conducted the ASME or National Board inspections. He was not paid a salary. He received a 1099 form for taxes. He had to obtain his own insurances. He was not paid fringe benefits and did not participate in ABS's pension or 401K plans. Looking at this in substance, ABS demonstrated under Part A of the test Price was free from control or direction under the contract and in fact.
That said, however, we find no error in the Board's decision that ABS did not satisfy the independent-business test of Part C. That test requires ABS to prove that Price "is customarily engaged in an independently established trade, occupation, profession or business." N.J.S.A. 43:21-19(i)(6)(C). This refers to "an enterprise that exists and can continue to exist independently of and apart from the particular service relationship." Carpet Remnant Warehouse, supra, 125 N.J. at 585 (quoting Gilchrist v. Div. of Emp't Sec., 48 N.J. Super. 147, 158 (App. Div. 1957)). There must be a "viable, independent [enterprise] which would withstand the termination of the relationship in question." Id. at 592. If the claimant is "dependent on the employer, and on termination of that relationship would join the ranks of the unemployed, the . . . standard is not satisfied." Id. at 585-86.
In Philadelphia Newspapers, Inc., we found Part C was not satisfied because, just like here, the record was devoid of any evidence the claimant was engaged in a business. Phila. Newspapers, Inc., supra, 397 N.J. Super. at 323. The claimant there had not delivered papers before or after and upon termination of employment, he would join the ranks of the unemployed. Ibid.
In Gilchrist, salesmen, who sold baby carriage chairs, operated from their homes and had no separate business establishments, offices or equipment. Gilchrist, supra, 48 N.J. Super. at 152. In finding against the employer, the court noted an "absence of any form of independently established business customarily engaged in by petitioners' salesmen." Id. at 158. Their livelihood "depended upon their continued connection with Gilchrist or the successor company." Id. at 159. "If that relationship terminated, so did their means of livelihood, at least until they secured other employment selling or performing some other type of service for another employing unit." Ibid.
Price was dependent upon ABS and did not have his own business or enterprise. Tellingly when his ABS employment ended, he sought other employment with another authorized inspection agency. Although an inspector could now form an authorized inspection agency on his own, the parties acknowledged this was not the case when Price commenced his relationship with ABS and that he had never done so throughout the course of his employment.
Price's situation then is not like the nurses in Trauma Nurses, Inc., where they worked for other brokers, hospitals and health care institutions. It is more like the salesmen in Gilchrist and the delivery person in Philadelphia Newspapers, Inc., where, realistically, the claimant had no independently established business to fall back on nor, given his circumstances, any meaningful opportunity to do so. On these facts then, the Board did not err in concluding the independent-business test was not met by ABS.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION