On appeal from final decision of the Commissioner, Department of Labor.
Furman, Dreier and Stern. The opinion of the court was delivered by Stern, J.A.D.
Petitioner corporations appeal from a determination of the Commissioner of Labor concluding that each was an "employer" within the meaning of the Unemployment Compensation Law, N.J.S.A. 43:21-1 et seq., and therefore liable to contribute to the unemployment compensation fund for wages received by individuals assigned by Mutual Benefit Life Insurance Company (hereinafter MBL) to perform work for petitioners. Petitioners are all wholly owned subsidiaries of MBL and argue that the parent was the real employer and thus the only entity obligated to make the contributions.
The Division of Unemployment and Disability Insurance (hereinafter Division) filed liability assessments against each of the petitioners demanding payment of delinquent unemployment compensation contributions for 1983 and, in the cases of five of the petitioners, for some additional years as well. A hearing officer concluded that an employment relationship existed between the petitioners and the persons who earned the wages and therefore each petitioner was liable for the assessed contributions.
The director of the Division, in essence, adopted the decision of the hearing officer. The director concluded that "[t]he relationship of statutorily covered employment exists between each of the 6 corporate petitioners and the individuals in question,"
that "[t]here is no statutory authority for adoption of the common paymaster concept to this State's Unemployment Compensation Law" and that "[e]ach corporate petitioner is separately liable for tax contributions based upon earnings attributed from each of them by the individuals in question." The Commissioner of Labor (Commissioner) thereafter adopted the opinion and decision of the director.
The central facts are undisputed.
MBL is a multi-line insurance carrier which, during the years in question, owned or controlled, directly or indirectly, all six petitioners. While all six petitioners engaged in business in New Jersey, all claimed to have no employees in New Jersey and only two had employees anywhere else. Pursuant to an agreement between MBL and each petitioner, MBL provided services to petitioners by hiring employees and assigning them from time to time to do work for one or more of the petitioners. For accounting purposes, MBL's employees were required to keep careful records of the time they spent working for each petitioner. The employees were paid by MBL, which in turn billed each petitioner for its share of the employee's salary and benefits. Each petitioner reimbursed MBL for the salary and benefits, and employees received their federal W-2 forms from MBL. At all times the power to hire and fire the employees resided in MBL. All employees performed their services for petitioners in MBL's home office.
Petitioners' principal argument is that the Commissioner erred in finding that a statutory employment relationship existed between each petitioner and the employees in question, such that each petitioner was liable for unemployment tax contributions based on wages paid to the employees. They insist that the only employment relationship was between the employees and the parent company, MBL, and that only MBL was liable for the contributions. It is undisputed that MBL has already
paid the tax attributable to the wages paid to all the employees if MBL is the "employer."*fn1
An employer is required to contribute to the Unemployment Compensation Fund at a designated rate based on wages paid to "individuals in his employ." N.J.S.A. 43:21-7(a)(1). "Employer" is defined in several ways pursuant to N.J.S.A. ...