• Did You Really "Hire" the Hired Help?
  • December 26, 2012
  • Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Cherry Hill Office
  • Key Points:

    • Two distinct legal tests determine whether a petitioner is eligible for compensation as an employee or ineligible as an independent contractor: (1) the "control test" and (2) the "relative nature of the work test."
    • Under the "control test," courts consider several factors in assessing the presence or absence of control, including right of termination, furnishing of equipment, evidence of the right to control and method of payment.
    • The right to control the work is more determinative than actual control.
    • Under the "relative nature of the work test," an employer-employee relationship exists if the evidence establishes an employee's substantial economic dependence upon the employer and a functional integration of the employer's and employee's respective operations.

    When Luz Lukasik decided to hire a housekeeper in December 2006, he probably never imagined it would result in a judgment for over $22,000. However, that's exactly what happened. Luckily for Mr. Lukasik, the appellate court reversed the decision in Luz Lukasik v. Marguerite Hollowa, Robert M. and Marilyn Nini, A-5913-10T3. On appeal, the appellate court only addressed one issue, which led to a full reversal of the case: "Whether the petitioner, who was hired to clean respondents' house, was their employee or an independent contractor."

    The relevant facts were undisputed, and the only two witnesses who testified at trial were the petitioner and her daughter. In December 2006, the respondents contacted the petitioner after receiving her business card advertising cleaning services from an acquaintance. At that time, the petitioner was cleaning five or six other homes and one office building on a regular basis. The petitioner and her daughter went to the respondents' home and gave an estimate for their cleaning services based on the size of the home and the services required. The petitioner told the respondents what services she would provide and what services she would not provide. Specifically, she would not do laundry. It was agreed that the petitioner would clean the respondents' home one day per week for $100, beginning on a date to be determined by the respondents. The specific day of the week was not discussed. Several weeks later, the respondents contacted the petitioner and arranged for her to do the first cleaning on January 16, 2007. She came to the home with a friend and began cleaning, using supplies provided by the respondents. She was not given specific instructions about where to start or how to clean. Within the first hour, the petitioner fell from a stool while dusting and injured her hand.

    In the days after the accident, the petitioner resumed her cleaning services at other properties. Later, she made arrangements to return to the respondents' home and continue her cleaning services. She told the respondents that she needed to purchase supplies, and the respondents agreed to reimburse her for the cost of the supplies. She came to the respondents' home on one other occasion. She brought her daughter and a friend with her to perform the actual cleaning services because of the injury to her hand. She supervised her daughter and the friend as they performed the cleaning work. The respondents failed to pay her for the cleaning services. They also failed to reimburse her for the cleaning supplies.

    Subsequently, the petitioner filed a claim with the Division of Workers' Compensation on March 27, 2007, alleging a work-related injury to her hand, arm and nervous system as a result of the fall on January 16, 2007. The respondents denied the claim and specifically denied an employer-employee relationship. The Workers' Compensation Judge bifurcated the issues of liability and compensability. After trial, the judge concluded that the petitioner was an employee of the respondents under the "control test": the respondents set the day for her to clean their house; they expected her to provide services on a regular basis; and, they had the ability to direct her cleaning work, although they did not actually control how she went about cleaning the house. The respondents appealed.

    The appellate court conducted its own analysis of the undisputed facts as they related to the issue of whether an employer-employee relationship was established. The court noted that there are two distinct legal tests used to determine whether a petitioner is eligible for compensation as an employee or ineligible as an independent contractor: (1) the "control test" and (2) the "relative nature of the work test." Under the "control test," courts typically consider several factors in assessing the presence or absence of control, including right of termination, furnishing of equipment, evidence of the right to control and method of payment. One doesn't actually have to exercise control over the manner the work is done, the mere right to control the manner the work is done is enough. Under the "relative nature of the work test," an employer-employee relationship exists if the evidence establishes a substantial economic dependence of the employee upon the employer and a functional integration of the employer's and employee's respective operations.

    The appellate court reasoned that, in the present case, the respondents retained some control of the petitioner's cleaning services, such as when she would begin the cleaning work, but they did not control how she would do the cleaning, what supplies she would use or, in fact, who would do the cleaning. The petitioner dictated what work she was willing to do, what supplies and equipment she would use, and she had the ability to bring others to the job to perform the actual cleaning services. An employee would not have the option to produce helpers or a substitute to do their work. Further, the respondents agreed to pay a set price of $100 per cleaning rather than wages to each of the persons performing the cleaning work, which evidenced an independent contractor relationship, rather than an employer-employee relationship. In addition, the fact that the petitioner provided her services to others was strongly indicative of her role as an independent contractor, rather than an employee. The appellate court concluded that the control test did not establish an employer-employee relationship.

    The appellate court also applied the "relative nature of the work test" to the undisputed facts and found that it, likewise, did not support a finding that the petitioner was an employee. The evidence did not establish "substantial economic dependence" because the petitioner had other clients and continued to clean their premises and earn income from them. Further, the petitioner's cleaning of the respondents' home was not an integral part of the "regular business" of the respondents. The respondents were homeowners who were clients of the petitioner's cleaning business. Ultimately, they did not hire the hired help.