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Conley v. Oliver and Company

December 31, 1998


Before Judges Havey, Skillman and Lesemann.

The opinion of the court was delivered by: The opinion of the court was delivered by Skillman, J.A.D.

[9]    Submitted December 7, 1998

On appeal from Division of Workers' Compensation.

This is an appeal from an order of the Division of Workers' Compensation which dismissed petitioner's claim for benefits on the ground that he was an independent contractor rather than an employee.

The relevant facts are undisputed. Petitioner earns his livelihood by performing temporary services as an insurance claims adjuster for insurance companies and claims adjustment companies when a catastrophe such as a hurricane generates so many claims that a company's regular employees are unable to handle all its work. In the claims adjustment field, such persons are called "storm troopers."

In December of 1992, shortly after a severe wind storm struck the New Jersey coast causing damage to a substantial number of homes, petitioner entered into an agreement with respondent, an independent insurance adjusting company, to work on evaluating and adjusting property damage claims resulting from the storm. Respondent agreed to pay petitioner 60% of the fees received for claims he processed. Although petitioner was responsible for paying most of his own business expenses, respondent provided him with office space and a telephone. Respondent treated petitioner as an independent contractor and did not withhold income tax or deduct social security from the amounts paid to him.

When petitioner began this work, respondent gave him a schedule of prices of materials, which he was required to use in evaluating claims. Each morning, petitioner began his work day by driving to respondent's office to deliver claim forms that he had completed the day before, to make appointments with the claimants whose houses he planned to inspect that day, and to discuss with his superiors, Chad Oliver and Richard Vitullo, any questions concerning the claims assigned to him. In addition, petitioner would generally call Oliver or Vitullo at least once during the afternoon to discuss any problems that arose during the day. When petitioner completed work on a claim, he was required to submit the file to Oliver for review. If Oliver had any questions, he would discuss them with petitioner, and if Oliver approved a proposed settlement, he would transmit the claim forms to the insurance company. The insurance companies generally would communicate with Oliver or Vitullo rather than petitioner if they had any question regarding the proposed settlement of a claim.

From December 21, 1992 until May 6, 1993, the day of the accident which resulted in his workers compensation claim, petitioner worked full-time for respondent. During this period, he processed approximately 350 claims, for which he was paid a total of $45,190.50. Although respondent disputed petitioner's assertion that there is an unwritten rule that a "storm trooper" only works for one adjusting company at a time, respondent admitted that it gave petitioner so many files during the first three months after the storm that he would not have had time to work for anyone else.

The procedures petitioner followed in evaluating and adjusting claims were essentially the same as those of the claims adjusters respondent employs on a regular basis. However, the regular employees handled a smaller volume of claims than petitioner and were paid a fixed salary rather than a percentage of the fees they generated. In addition, respondent's regular employees work on various types of claims while petitioner worked almost exclusively on claims arising out of the December 1992 storm.

In ruling that petitioner was an independent contractor rather than an employee, the Judge of Compensation concluded that petitioner was not subject to respondent's control in handling the claims assigned to him. The Judge also concluded that even though petitioner's work as a claims adjuster was an integral part of respondent's [regular] business, he did not have a substantial economic dependence upon respondent. We reverse.

Under the Workers' Compensation Act, the term "employee" is defined as "synonymous with servant, and includes all natural persons ... who perform service for an employer for financial consideration, exclusive of ... casual employment." N.J.S.A. 34:15-36. "This is a broad definition which includes relationships not ordinarily considered to constitute employment." Hannigan v. Goldfarb, 53 N.J. Super. 190, 195 (App. Div. 1958). Thus, the Workers' Compensation Act "is construed to bring as many cases as possible within its coverage." Ibid.

Our courts have utilized two tests to determine whether a person is an employee or an independent contractor: (1) the "right to control" test and (2) the "relative nature of the work" test. Caico v. Toto Bros., Inc., 62 N.J. 305, 309 (1973). "These two tests are basically designed to draw a distinction between those occupations which are properly characterized as separate enterprises and those which are in fact an integral part of the employer's regular business." Pollack v. Pino's Formal Wear & Tailoring, 253 N.J. Super. 397, 407 (App. Div.), certif. denied, 130 N.J. 6 (1992). In recent years "[t]he courts have placed greater reliance upon the relative nature of the work test" than upon the control test. Ibid.; see Kertesz v. Korsh, 296 N.J. Super. 146, 154 (App. Div. 1996); Hannigan v. Goldfarb, supra, 53 N.J. Super. at 204-06.

Both the "right to control" and the "relative nature of the work" tests point strongly to the Conclusion that petitioner was respondent's employee rather than an independent contractor.

The "right to control" test may be satisfied even though the employer does not control the details of an employee's performance of his or her work. As Judge Conford pointed out in his Dissenting opinion in Marcus v. Eastern Agric. Ass'n, Inc., 58 N.J. Super. 584, 596-605 (App. Div. ...

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