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Special Care of New Jersey, Inc. v. Board of Review

January 10, 2000


Before Judges Havey, Keefe and Lintner.

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


Submitted November 15, 1999

On appeal from a Final Decision of the Board of Review, Department of Labor.

Special Care is a companion sitting placement agency, which refers caregivers to elderly and disabled persons in need of non-medical services. The central issue raised by this appeal is whether a provision of the Federal Unemployment Tax Act (FUTA), 26 U.S.C.A. §§ 3301 to 3311, which exempts such agencies from payment of federal employer taxes, preempts New Jersey's Temporary Disability Benefits Law (TDBL), N.J.S.A. 43:21-25 to -66, which does not afford such an exemption. We agree with the Board of Review that FUTA does not preempt the State's TDBL, and accordingly affirm.

Special Care recruits caregivers through newspaper advertisements. A potential caregiver completes an application, provides references, and is interviewed by Special Care representatives. Upon finding the applicant to be qualified, the parties enter into a "Caregiver's Agreement," under which Special Care assigns clients in need of services to the caregiver. The caregiver is required to report his or her performed hours each week. Special Care fixes the fees to be charged by the caregivers, "commits to nothing and remains free to change wages and other working conditions without having to consult anyone . . . ." The agreement further provides that Special Care "continues to have the absolute power to fire anyone with or without good cause."

Caregivers file their hours with Financial Health Services, Inc. (FHS), a billing service retained by Special Care. FHS processes the invoices completed by the caregivers and submits them to, and receives payments from, third-party payors. It then pays the caregivers and forwards a fee to Special Care.

Claimant, Christine Reistle, worked as a caregiver for Special Care from April 22, 1994 until November 12, 1994, when she filed a claim for temporary disability benefits pursuant to the TDBL. Immediately prior to becoming disabled, Ms. Reistle provided services to an elderly client. The Gloucester County Office on Aging paid a total of $3,176.10 for these services and the client paid a portion of the expenses herself.

The Deputy Director found that Ms. Reistle was eligible for temporary disability benefits without disqualification and that Special Care was the chargeable employer. The Appeal Tribunal affirmed the Deputy's determination. Special Care appealed to the Board of Review, which remanded the matter to the Appeal Tribunal for a rehearing and a new decision, apparently because portions of the testimony from the Appeal Tribunal hearings were lost or not recorded. Following a rehearing, the Appeal Tribunal reaffirmed its determination that Ms. Reistle was entitled to benefits, finding that she was "considered to be an employee and not an independent contractor," as Special Care had argued.

Special Care filed a second appeal with the Board, arguing that its employer status must be determined in accordance with § 3506(a) of FUTA. Special Care reasoned that since it was not considered an "employer" under this provision of the federal Act, it could not be considered an "employer" under the TDBL. Alternatively, it argued that Ms. Reistle was not an "employee" because she had not been employed by a "covered employer," as defined under the TDBL.

The Board affirmed as modified the Appeal Tribunal's determination, finding that Ms. Reistle was an "employee" under the ABC test, N.J.S.A. 43:21-19(i)(6)(A)(B)(C). However, the Board did not specifically address whether Special Care was a "covered employer," as defined by N.J.S.A. 43:21-27(a)(1). Accordingly, in May 1996, Special Care appealed to us from the Board's determination. Pursuant to the Board's motion for a final remand in order to consider whether Special Care was a "covered employer," we dismissed Special Care's appeal and entered an order dated May 28, 1997, directing that "[t]he Board shall reconsider the matter and make its determination after remand within forty-five days."

On June 16, 1998, the Board affirmed the Appeal Tribunal's determination that Ms. Reistle was entitled to benefits, concluding that Special Care was a "covered employer" under the TDBL and that FUTA did not preempt state law.


Special Care first argues that the Board lacked jurisdiction when it issued its final determination more than eleven months after the forty-five day deadline mandated by our order of remand. Special Care maintains that the Board's failure to adhere to our order rendered its ...

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