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D'Annunzio v. Prudential Insurance Co. of America

February 23, 2006


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. MID-L-9342-00.

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



Argued December 5, 2005

Before Judges A.A. Rodríguez, C.S. Fisher and Yannotti.

In this appeal, we determine whether a chiropractor hired by an insurance company to review medical records is an employee entitled to the protection and remedies provided by the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. We conclude that CEPA's definition of "employee" turns on the employer's "control and direction" of the worker and, thus, does not foreclose the likelihood that a worker, who might be classified as an independent contractor at common law, may qualify as an employee for CEPA purposes. As a result, we reverse the summary judgment that dismissed plaintiff's CEPA claim.


Plaintiff George D'Annunzio, a licensed chiropractor, contracted with defendant Prudential Property and Casualty Insurance Company (PRUPAC) to work in PRUPAC's Personal Injury Protection (PIP) Department as a chiropractic medical director. After six months, PRUPAC terminated the agreement, asserting that plaintiff acted unprofessionally and failed to follow instructions.

Plaintiff filed suit against PRUPAC and various PRUPAC representatives, namely: Art Ryan, PRUPAC's chairman and chief executive officer, Roger Dejaron, PRUPAC's chief operations officer, Franklin Baggett, a PRUPAC vice-president, Tony LoCastro, director of PRUPAC's PIP department, Linda Fraistat, unit manager of the PIP department, Frank Hruska, PRUPAC's operations manager, and Kathy Savvas, a claims supervisor in PRUPAC's PIP department. Plaintiff asserted that PRUPAC and its representatives terminated him in violation of CEPA in retaliation for his complaints that PRUPAC took part in unethical and illegal practices. Plaintiff also alleged that in terminating their relationship, PRUPAC breached the contract.*fn1

PRUPAC moved for summary judgment, claiming (1) plaintiff was not eligible to commence a CEPA action because he was an independent contractor and not an employee, and (2) PRUPAC did not breach the contract. The trial judge agreed. An order memorializing the trial judge's oral decision was entered on December 21, 2004.

On appeal, plaintiff does not seek our review of the trial judge's ruling on his breach of contract claim. He does, however, contend that the trial judge erred in granting summary judgment on the CEPA claim. Specifically, plaintiff contends that the trial judge erroneously concluded that he was an independent contractor and not an employee for CEPA purposes, and that the judge mistakenly held that this distinction made a difference with regard to his ability to commence and maintain a CEPA action. We agree that the summary judgment entered in PRUPAC's favor must be reversed.


In resolving the parties' dispute about the scope of the term "employee" as it is defined in CEPA, our obligation is to ascertain the Legislature's intent. DiProspero v. Penn, 183 N.J. 477, 492 (2005); Young v. Schering Corp., 141 N.J. 16, 25 (1995). Naturally, in this process, we are initially required to search for the legislative intent in the wording of the statute. O'Connell v. State, 171 N.J. 484, 488 (2002). The language utilized by the Legislature, as the Supreme Court instructs, is generally "the best indicator" of the Legislature's intent. DiProspero, supra, 183 N.J. at 492.

CEPA defines "employee" as including "any individual who performs services for and under the control and direction of an employer." N.J.S.A. 34:19-2(b). In ascertaining the legislative intent, we conclude that CEPA's definition of "employee" does not necessarily exclude workers who might be classified at common law as independent contractors, and that CEPA's definition does not incorporate all the factors that define the term "employee" in other contexts. Instead, in outlining the parameters of the definition contained in CEPA, we hold that the primary focus is on the employer's "control and direction" of the worker's performance of services for the employer, and not on (1) the terms of compensation, (2) the extent to which the employer provides benefits to the worker, or (3) whether the worker provides services for a full week or only part of a week.

Despite the fact that CEPA's definition of "employee" does not expressly exclude independent contractors and despite the fact that CEPA defines "employee" differently than in other contexts, PRUPAC argues that we should follow Pukowsky v. Caruso, 312 N.J. Super. 171 (App. Div. 1998). In Pukowsky we poured content into the term "employee," for purposes of the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42, and determined that it excluded independent contractors.

PRUPAC's argument that we should follow the LAD's approach, however, is misplaced. The LAD prohibits discrimination by an "employer," N.J.S.A. 10:5-5(e), and, in defining "employee," states only that the term "does not include any individual employed in the domestic service of any person," N.J.S.A. 10:5-5(f). Certainly, the LAD's express definition of "employee" is broad, but its scope was also tempered by similar federal statutes and prior interpretations. That is, in light of federal decisions that interpreted Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. §§ 2000e to 2000-17, and federal decisions that interpreted not only the LAD but similar anti-discrimination laws enacted in other states, we determined in Pukowsky that "independent contractors are not to be considered 'employees' within the meaning of the LAD, and are therefore not entitled to avail themselves of its protections." 312 N.J. Super. at 180. Since our Supreme Court has held that the construction given to Title VII of the Civil Rights Act represents "a key source of interpretive authority" for construing the terms of the LAD, Grigoletti v. Ortho Pharm. Corp., 118 N.J. at 89, 97 (1990), in staking the parameters of the LAD's definition of "employee" in Pukowsky we adopted the test that appears to have originated in Spirides v. Reinhardt, 613 F.2d 826, 832 (D.C. Cir. 1979); see also EEOC v. Zippo Mfg. Co., 713 F.2d 32, 37 (3rd Cir. 1983); Franz v. Raymond Eisenhardt & Sons, Inc., 732 F. Supp. 521, 528 (D.N.J. 1990), and held that the following factors should be weighed in determining whether a worker is an employee within the meaning of N.J.S.A. 10:5-5(f):

(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. [Pukowsky, supra, 312 N.J. Super. at 182-83.]

In Chrisanthis v. County of Atlantic, 361 N.J. Super. 448, 456 (App. Div. 2003), we followed Pukowsky in considering plaintiff's status and right to pursue a discrimination claim, but emphasized that the test required "more than the listing of factors on either side of the ledger with victory going to the side garnering the most factors." Instead, we said that "[a] 'principled application' of the factors and a consideration of which factors are more important under the peculiar circumstances of each case are required." Ibid. PRUPAC argues that the Pukowsky factors should be utilized in determining whether a worker is an "employee" within the meaning of CEPA. The trial judge agreed with this approach, but we do not.

In rejecting the use of the Pukowsky test for CEPA purposes, we initially recognize that the wording of the LAD's definition of "employee" contained in N.J.S.A. 10:5-5(f) varies from the wording of CEPA's definition of "employee" contained in N.J.S.A. 34:19-2(b). In addition, our interpretation of the LAD's definition in Pukowsky was also tempered by the prior federal history of this and other anti-discrimination laws. CEPA, on the other hand, has no federal antecedents that represent a source of interpretive authority. CEPA was intended to vindicate different public interests than the LAD, so it does not necessary follow that CEPA's definition of "employee" should follow in lock-step with the definition contained in the LAD.

In focusing on the main question posed by this appeal --whether "independent contractors" may also fall within CEPA's definition of "employee" -- we observe that the Legislature did not expressly exclude independent contractors. This fact has particular significance because, as a matter of statutory construction, we are to assume that the Legislature is cognizant of its laws as well as the tools of construction employed by courts. See, e.g., Brewer v. Porch, 53 N.J. 167, 174 (1969); Matawan Borough v. Monmouth County Tax Bd., 51 N.J. 291, 299-300 (1968). In following that approach, we observe that our Legislature has shown its ability to unambiguously exclude independent contractors from persons defined as employees in other contexts. For example, the term "employee" was defined in the Tort Claims Act as one who works for another "provided, however, that the term does not include an independent contractor." N.J.S.A. 59:1-3. It logically follows that if the Legislature had intended to exclude independent contractors from N.J.S.A. 34:19-2(b), it likely would have adopted language identical or similar to that employed in N.J.S.A. 59:1-3. The Legislature's determination not to utilize the wording contained in N.J.S.A. 59:1-3 when it described the scope of N.J.S.A. 34:19-2(b) -- like the dog that did not bark in the night*fn2 -- is persuasive evidence that the Legislature did not intend, for CEPA purposes, to exclude all independent contractors from its protection.

Instead, we conclude that CEPA's definition of "employee" not only has the capacity to include workers who may be classified at common law as independent contractors but that the definition should be construed broadly and principally focus on the "control and definition" factor expressly mentioned in N.J.S.A. 34:19-2(b). In short, in staking N.J.S.A. 34:19-2(b)'s parameters, we have endeavored to harmonize the Legislature's precise wording of the statute with CEPA's purposes. Service Armament Co. v. Hyland, 70 N.J. 550, 558-59 (1976); Petition of Singer Asset Finance Co., 314 N.J. Super. 116, 119 (App. Div. 1998); see also N.J.S.A. 1:1-1 ("In the construction of the laws and statutes of this state . . . words and phrases shall be read and construed with their context. . . ."). In considering the Legislature's chief reasons for adopting CEPA, we reject PRUPAC's argument because we can find no reason to interpret the term "employee" narrowly or to exclude all independent contractors from its scope.

CEPA was enacted to provide "broad protections against employer retaliation" for workers whose whistle-blowing actions benefit the health, safety and welfare of the public, Mehlman v. Mobil Oil Corp., 153 N.J. 163, 179 (1998), and, as remedial legislation, must be "construed liberally to effectuate its important social goal," Abbamont v. Piscataway Tp. Bd. of Educ., 138 N.J. 405, 431 (1994). In Higgins v. Pascack Valley Hospital, 158 N.J. 404, 420-21 (1999), the Court recognized that CEPA had been liberally construed so as to prohibit employer retaliation against an employee who objects to an employer practice that violates a foreign country's public policy, as expressed in an industry safety guideline, even if the employee is unaware of the precise source of the public policy, Mehlman, supra, 153 N.J. at 188-90; protects an employee who reports an illegal act of a minority partner, even if the partnership did not exist at the time of the wrongdoing, [citing Barratt v. Cushman & Wakefield, 144 N.J. 120, 128-30 (1996)]; and permits an employee to pursue a common-law tort or contract claim that is distinct from the CEPA claim, Young, supra, 141 N.J. at 25-26.

The Court added to this list of holdings, all of which were inspired by the broad purposes of CEPA, by determining in Higgins that CEPA permits a claim against an employer where an employee reports the misconduct of co-employees. 158 N.J. at 421. The Court further explained CEPA's overarching intent to provide broad protection to workers who report unlawful activities in the workplace by referring, in Higgins, to Governor Kean's statement when he signed the original CEPA bill into law:

It is most unfortunate -- but, nonetheless true -- that conscientious employees have been subjected to firing, demotion or suspension for calling attention to illegal activity on the part of his or her employer. It is just as unfortunate that illegal activities have not been brought to light because of the deep-seated fear on the part of an employee that his or her livelihood will be taken away without recourse.

[158 N.J. at 420 (quoting Office of the Governor, News Release at 1 (Sept. 8, 1986)).]

In considering the scope of N.J.S.A. 34:19-2(b) against this backdrop, we conclude that the term "employee" should not be diluted by the Pukowsky test because many of the Pukowsky factors have no relevance when compared to CEPA's purposes. In addition, we observe that Pukowsky's test is not in harmony with the simple definition provided by the Legislature in N.J.S.A. 34:19-2(b), particularly when a consideration of that definition is illuminated by the goals the Legislature sought to vindicate in enacting CEPA. That is, when considering the need for protecting employees from retaliation when they engage in the important activity of blowing the whistle on illegal activities in the workplace, it seems readily apparent that many of the Pukowsky factors should be disregarded, particularly those factors that relate only to the terms of compensation.

Take for example a worker, whose function is to sweep the floors of a drug manufacturer's plant, and who witnesses a foreman instruct other workers to dump buckets of potentially harmful materials into substances from which edible products are made. Is it likely that the Legislature intended that this worker should not be entitled to CEPA's protections merely because the drug manufacturer reported its weekly payments to that worker on an IRS 1099 form instead of a W-2? When considering the primary goals of CEPA, is it likely that the Legislature meant to exclude from CEPA's protection such a worker because sweeping the floors is not "an integral part" of the employer's business, or because the employer has chosen not to allow that worker to accrue retirement benefits, or because the drug manufacturer does not pay social security taxes on behalf of that worker? Should it matter that the sweeper only works part-time? We can find nothing in CEPA's provisions, or in the reasons that generated its enactment, that would suggest the Legislature meant to create an environment that would chill such workers, whose terms of employment are marked by such features, from reporting unlawful activities in the workplace.

The Pukowsky factors we alluded to in the above example, if applied, would conflict with the legislative intent by unduly limiting the class of workers who may rely upon the protections of CEPA.*fn3 In its wisdom, the Legislature defined the scope of those workers entitled to CEPA's protections not by reference to the mode and manner of compensation but by requiring only proof that the worker "performs services for and under the control and direction of an employer." N.J.S.A. 34:19-2(b). We conclude that this broad description of protected workers should not be narrowed by judicially appending a test that excludes those who would be defined, at common law, as independent contractors, or by appending other discordant and disqualifying aspects of the worker's relationship to the employer that have no bearing on the "control and direction" requirement contained in N.J.S.A. 34:19-2(b). As a result, we hold that independent contractors are not necessarily excluded and that only the first ("the employer's right to control the means and manner of the worker's performance"), second ("the kind of occupation -- supervised or unsupervised") fourth ("who furnishes the equipment ...

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