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International Schools Services, Inc. v. New Jersey Dep't of Labor and Workforce Development

July 10, 2009

INTERNATIONAL SCHOOLS SERVICES, INC., PLAINTIFF-APPELLANT,
v.
NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE AND NEW JERSEY COMPENSATION RATING AND INSPECTION BUREAU, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1133-07.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Submitted May 12, 2009

Before Judges Wefing, Parker and Yannotti.

Plaintiff International Schools Services, Inc. (ISS) appeals from an order entered on June 20, 2008 declaring that plaintiff, a New Jersey employer, is required to provide workers' compensation insurance to its overseas employees pursuant to the New Jersey Workers' Compensation Act (the Act), N.J.S.A. 34:15-1 to -142.

The facts relevant to this appeal are as follows. ISS is a non-profit organization headquartered in Princeton. It employs 163 teachers in overseas schools under annual renewable contracts, which are often renewed for several years at a time. The overseas employees work entirely overseas and not in New Jersey.

In 2006, plaintiff's overseas employees were stationed in eight Asian countries and one South American country. Administrators in the foreign countries direct the overseas employees on a day-to-day basis. Of these employees, 108 were United States citizens, and 55 were foreign nationals. None of the United States citizens are New Jersey residents.

Plaintiff's overseas employees do not come to plaintiff's New Jersey headquarters to sign their contracts; rather, they mail the signed contracts to the United States or to their posts overseas. Even if an overseas employee is hired at a job fair, none of those job fairs are held in New Jersey.

Plaintiff issues paychecks to its overseas employees from its New Jersey offices and pays payroll and unemployment taxes as well as temporary disability benefits for those who are United States citizens. Plaintiff retains the authority to hire, discharge, and determine the salary and benefits for its employees stationed abroad.

In its contracts with foreign schools, plaintiff agrees to maintain all insurance required by law, including workers' compensation insurance for its overseas employees. Plaintiff passes the costs of such insurance onto the schools it serves.

Prior to 2003, plaintiff was able to obtain foreign voluntary workers' compensation coverage for its overseas employees with "state of hire" and/or "country of hire" terms and conditions. In 2003, however, following a number of workers' compensation claims, plaintiff's insurer declined to provide voluntary coverage for employees working in certain countries.

Plaintiff's other insurers indicated that they would only cover some overseas employees based on where they were employed. Plaintiff was unable to find an insurance carrier in the voluntary market that would provide workers' compensation insurance for all of its overseas employees.

Plaintiff initially contacted the New Jersey Compensation Rating and Inspection Bureau (CRIB) in August 2003 to obtain workers' compensation coverage for all of its overseas employees through the assigned market. CRIB assigned Continental Casualty Insurance Co. (CNA) to provide coverage, but CNA returned to plaintiff that portion of plaintiff's premium representing workers' compensation coverage for the overseas employees. ...


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