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New Jersey Appellate Division Rules that Limo Diver is an Independent Contractor

To have a Worker’s Compensation claim in New Jersey, an injured worker must show that their significant and permanent injuries arose from the course of their employment. One of the defenses to Worker’s Compensation is that the injured worker was an independent contractor, and thus, the employer is not responsible for their injuries. The New Jersey Appellate Division recently ruled in a case named Babekr v. XYZ Two Way Radio that a limousine driver that was not an employee following a car accident. This is a unique and interesting case as the driver worked under an arrangement similar to the popular car service named Uber, which has been the subject of much legal debate as to whether Uber drivers are employees of the company. Here, the injured worker worked for the company since 1988 doing overnight shifts. He used his own car and paid for the insurance. The company gave him a computer, and when he logged in he would receive offers to pick up passengers. Passengers had accounts with XYZ and paid fares directly to the company, and then the company paid a percentage back to the drivers. At the end of the year, he would get a 1099 form.

As this is an ever-evolving area of the law, the Appellate Division relied upon a recent New Jersey Supreme Court case from 2015, named Kotsovka v. Liebman (2015), which really synthesized the way that lawyers in New Jersey are to look at the independent contractor versus employee debate. In that case, the Court made a 12-part test, which included, 1) the employer’s right to control the means and manner of the worker’s performance; (2) the kind of occupation — supervised or unsupervised; (3) skill; (4) who furnishes the equipment and workplace; (5) the length of time in which the individual has worked; (6) the method of payment; (7) the manner of termination of the work relationship; (8) whether there is annual leave; (9) whether the work is an integral part of the business of the “employer”; (10) whether the worker accrues retirement benefits; (11) whether the “employer” pays social security taxes; and (12) the intention of the parties.”

In regard to the Babekr case, the Appellate Court felt that XYZ had little control over the passengers and trips Babekr chose to accept. They felt that he could not really be terminated from this “job.” He really did not receive wages, but a percentage of fares. There were no retirement benefits nor other benefits provided by the company. Finally, they looked back at the language of Kotsovka to determine that the injured worker was never intended to be an employee but part of a group of subcontractors and was not an essential part of XYZ’s business. Accordingly, the Appellate Division agreed with the Judge of Worker’s Compensation that Babekr was not entitled to benefits.

This is an interesting decision since other States, like California, have ruled that Uber drivers are employees of the company and not independent contractors. It remains to be seen if the New Jersey Supreme Court will have the opportunity to further refine the tests for what makes up employment for Worker’s Compensation purposes in our State.

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