JAMES KENNEDY, II VS. WEICHERT CO. (L-2266-19, ESSEX COUNTY AND STATEWIDE)
A-0518-19
| N.J. Super. Ct. App. Div. | Jul 2, 2021Background
- Plaintiff James Kennedy II worked as a wholly commissioned real estate salesperson for Weichert from August 8, 2012 to November 6, 2018 and was classified by Weichert as an independent contractor.
- Kennedy alleged Weichert required or deducted numerous business-related expenses (marketing, MLS and association fees, insurance, etc.) from his commission payments in violation of the Wage Payment Law (WPL), N.J.S.A. 34:11-4.4.
- Weichert moved to dismiss, arguing Kennedy was an independent contractor as a matter of law and the WPL therefore did not apply; it also argued the ABC test should not govern because real estate salespersons are exempt under the Unemployment Compensation Law (UCL) and the Brokers Act governs broker-salesperson relationships.
- The trial court denied the motion, ruling that the UCL’s ABC test (N.J.S.A. 43:21-19(i)(6))—endorsed for WPL/WHL questions in Hargrove v. Sleepy’s—governs employee status under the WPL.
- On appeal the Appellate Division affirmed as modified: the ABC test applies to determine WPL employee-status for the period before August 10, 2018; for the period after August 10, 2018 (when the Brokers Act was amended to expressly permit independent-contractor relationships) the appropriate standard must be decided after a fuller factual record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ABC test governs whether wholly commissioned real estate salespersons are "employees" under the WPL | Kennedy: Hargrove applies; ABC test controls WPL determinations and shows these workers may be employees | Weichert: Hargrove shouldn’t extend to real estate salespersons; they are independent contractors under Brokers Act and exempt from UCL | ABC test governs WPL status for period before Aug. 10, 2018; court affirmed denial of dismissal on that basis |
| Whether the UCL exemption for wholly commissioned real estate salespersons prevents ABC-test application to WPL claims | Kennedy: UCL exemption does not control other statutes; a worker can be an employee for WPL even if exempt from UCL | Weichert: UCL explicitly excludes these salespersons, so ABC-test (a UCL construct) shouldn’t apply | Court: UCL exemption does not preclude using the ABC test for WPL employee-status determinations |
| Whether the Brokers Act (and its 2018 amendments) precludes use of the ABC test or makes parties’ written agreements dispositive | Kennedy: Brokers Act historically supported employee characterization; parties’ labels don’t control | Weichert: 2018 amendments expressly authorize independent-contractor relationships and thus should govern status; they may be retroactive/correct prior law | Court: 2018 amendments are prospective; they became effective Aug. 10, 2018 and may affect post-Aug. 10 relationships—resolution requires more factual development |
| Whether dismissal was appropriate on pleadings | Kennedy: factual allegations show control/deductions raising plausible WPL claim | Weichert: legal status as independent contractor defeats WPL claim | Court: denied dismissal; ABC test applies pre-Aug. 10, 2018; post-Aug. 10, 2018 status requires record development |
Key Cases Cited
- Hargrove v. Sleepy's, LLC, 220 N.J. 289 (2015) (adopted ABC test to determine employee vs. independent contractor for WPL/WHL claims)
- Re/Max of N.J., Inc. v. Wausau Ins. Cos., 162 N.J. 282 (2000) (interpreted Brokers Act as creating an employer-employee relationship between brokers and salespersons pre-amendment)
- D'Annunzio v. Prudential Ins. Co. of Am., 192 N.J. 110 (2007) (status as employee may vary by statute; courts must analyze purpose of the governing statute)
- MacDougall v. Weichert, 144 N.J. 380 (1996) (an individual can be an employee for some purposes and an independent contractor for others)
- Estate of Kotsovska v. Liebman, 221 N.J. 568 (2015) (discussion of traditional control and hybrid tests in employment-status contexts)