In New Jersey employment is favored heavily over independent contractor status. Proof of this rule is Johantgen v. Brandywine Senior Care Center, A-4883-09T1 (App. Div. October 31, 2011).
Diane Johantgen provided hairstyling and grooming services once per week to residents of a long-term nursing home. She fell from a chair and fractured her wrist while hanging Christmas decorations in the area where she did her hairstyling work and filed a workers’ compensation claim against Brandywine Senior Care Center. For its part, Brandywine denied the claim and asserted that Johantgen was an independent contractor.
The nursing home had a room next to the nurse’s station where petitioner performed her services. Petitioner’s name appeared only on the inside of the room next to the frame displaying her hairdresser license. Petitioner furnished some of her supplies, including permanent waves, hair dye, scissors, and most of her own shampoo which she purchased from cosmetology suppliers. The nursing home provided the chairs, hairdryers, a sink, and a cabinet for supplies, as well as some medicated shampoos provided by the nursing staff when required.
Petitioner worked alone when she did hairdressing in the salon. Residents’ family members were also permitted to work in the salon as well. Appointments with petitioner were made through the nursing home. The facility transported the residents to petitioner in the salon and on occasion petitioner served residents in their rooms.
The financial arrangements were much more like those of an independent contractor. The facility set the fee schedule for petitioner’s services. Petitioner would submit a list of residents she served and then would prepare a bill from which the Senior Care Center would deduct 15 % and pay petitioner 85%.
Petitioner also worked for other senior nursing centers. She had a similar arrangement with Liberty Royal Care Center. There she received 100% of the fees paid by the residents for her services. At Liberty, however, there were no appointments and residents would be served in the order they attended.
Petitioner had a 12-year relationship with respondent. She also washed hair on Saturdays at a friend’s salon.
Petitioner contended that she was treated just like other employees in that she was required to get a tuberculosis test every two years, a hepatitis B shot, and proof that she had gotten a physical. She was never asked to submit a certificate of workers’ compensation coverage, only personal liability insurance. However, she received a 1099 from respondent and in the year of her accident she earned $7,795.07 from the respondent.
Respondent produced Ray Medina as its witness. He was the administrator of the facility and said that petitioner was considered an independent contractor. He likened her services to that of the landscaper and snack vendors. He said the soda and snack vendors had the same 85%-15% arrangement and he said that the 15% deduction was for use of respondent’s space. He admitted that the gardeners were not required to receive immunizations.
The judge of compensation found that petitioner was an employee of the salon, and the Appellate Division affirmed. The court focused mostly on Brower v. Rossmy, 63 N.J. Super 395 (App. Div. 1960), certif. denied. 34 N.J. 65 (1961). That case involved a petitioner who performed facials in a salon in a house owned and renovated by respondent. The court in that case used the relative nature of the work test in finding that petitioner was an employee. That test looks at the relationship between the parties and a mutual economic dependency between them.
In this case the court found that the petitioner satisfied both tests, including the control test. The respondent, Senior Care Center, controlled her hours and appointments and dictated where she would work. It paid petitioner and both parties supplied the equipment. Further the respondent reserved the right to terminate petitioner and did in fact terminate her services following this accident. It also found that there was an economic dependency in this case. “The petitioner established her economic dependence on the respondent because she depended on the respondent for all customer contacts, and her activities were in large measure an integral part of the respondent’s business.”
The case provides an important lesson for employers, namely that it is truly a rare case where independent contractor status will be found in New Jersey. Courts do not pay much attention to how employees are paid, and 1099 status is virtually meaningless in reported decisions. The courts look at the real relationship between the parties and all doubts are resolved in favor of employment status. The only way, practically speaking, that true independent contractor status can be assured is by means of a workers’ compensation policy insuring the service provider. Very seldom, however, do service providers actually obtain a workers’ compensation policy due to the cost involved.