313 A.3d 864
N.J.2024Background
- James Kennedy, II, a real estate salesperson, worked for Weichert Co. in New Jersey from 2012 to 2018, under written agreements identifying him as an independent contractor.
- Kennedy filed a putative class action claiming Weichert misclassified him and others as independent contractors to avoid the Wage Payment Law (WPL) and unlawfully deducted fees from their commissions.
- The trial court denied Weichert’s motion to dismiss, applying the ABC test for employment classification under the WPL.
- The Appellate Division affirmed but held that recent legislative amendments to the Brokers Act allowed for independent contractor status if elected in writing, though initially only prospectively.
- The New Jersey Legislature subsequently amended the Brokers Act to make the independent contractor provision retroactive and enforceable for written agreements, leading to appeals considering the impact of these legislative changes on the dispute.
Issues
| Issue | Kennedy's Argument | Weichert's Argument | Held |
|---|---|---|---|
| Does a written agreement classifying a real estate salesperson as an independent contractor exclude them from WPL protection? | The ABC test from Hargrove should apply regardless of any agreement, as there is no Brokers Act exception. | The legislative amendments make the agreement dispositive; WPL does not apply. | The agreement is dispositive; independent contractor status applies, and WPL does not cover Kennedy. |
| Do the amendments to the Brokers Act apply retroactively to existing agreements? | Only prospective application; retroactive enforcement not justified absent clear legislative intent. | The amended law is expressly retroactive, enforcing past written agreements. | The 2018 and 2022 amendments are retroactive as to written agreements. |
| Is the ABC test or another standard appropriate for classifying real estate salespeople under the WPL? | The ABC test is generally applicable and should govern classification. | The ABC test is incompatible; the agreement alone should control. | The ABC test does not apply; the written agreement governs status in real estate context. |
| Is the employment relationship determined solely by contract, or is it only one factor? | Contract is only a factor; courts should look beyond its terms. | The statute mandates that the contract is dispositive in real estate. | The contract is dispositive under the amended Brokers Act for real estate salespersons. |
Key Cases Cited
- Hargrove v. Sleepy's, LLC, 220 N.J. 289 (2015) (adopting the ABC test for employment status under the WPL)
- Re/Max v. Wausau Ins. Cos., 162 N.J. 282 (2000) (real estate salespersons are employees for Workers Compensation Act under prior definition)
- MacDougall v. Weichert, 144 N.J. 380 (1996) (an individual may be an employee for some purposes and an independent contractor for others)