Opinion
DOCKET NO. A-4493-11T3
07-18-2014
NORTH JERSEY MEDIA GROUP, INC., Appellant, v. BOARD OF REVIEW and MARCELA ARRUBLA a/k/a ELIANA TOMAYO, Respondents.
Gibbons P.C., attorneys for appellant (Thomas J. Cafferty, of counsel; Mr. Cafferty, Lauren James-Weir, and Nomi I. Lowy, on the briefs). John J. Hoffman, Acting Attorney General, attorney for respondent Board of Review (Lewis A. Scheindlin, Assistant Attorney General, of counsel; Alan C. Stephens, Deputy Attorney General, on the brief). Respondent Marcella Arrubla has not filed a brief.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano and Hayden.
On appeal from the Board of Review, Department of Labor, Docket No. 341,164.
Gibbons P.C., attorneys for appellant (Thomas J. Cafferty, of counsel; Mr. Cafferty, Lauren James-Weir, and Nomi I. Lowy, on the briefs).
John J. Hoffman, Acting Attorney General, attorney for respondent Board of Review (Lewis A. Scheindlin, Assistant Attorney General, of counsel; Alan C. Stephens, Deputy Attorney General, on the brief).
Respondent Marcella Arrubla has not filed a brief. PER CURIAM
North Jersey Media Group, Inc. (NJMG) appeals from the March 28, 2012 final agency decision of the Board of Review (the Board), which affirmed the September 14, 2011 decision of the Appeal Tribunal (the Tribunal) finding that claimant Marcela Arrubla was an employee, not an independent contractor, and therefore was eligible to receive unemployment benefits. In rendering its decision, the Board relied on Philadelphia Newspapers, Inc. v. Bd. of Review, 397 N.J. Super. 309 (App. Div. 2007), certif. denied, 195 N.J. 420 (2008). Because we find that NJMG failed to prove that Arrubla was an independent contractor under the three-prong standard of N.J.S.A. 43:21-19(i)(6) (the ABC Test), we affirm.
Pursuant to a written agreement between Arrubla and NJMG, Arrubla delivered newspapers and coupons from 2008 through August 24, 2010, when Arrubla's contract was terminated. While working for NJMG, Arrubla went to the company's warehouse on designated days twice a week to pick up the newspapers. She then separated the papers and placed them in individual plastic bags for delivery the following day. She used her boyfriend's automobile, and he sometimes accompanied her. NJMG required Arrubla to deliver the papers between 8 a.m. and 5 p.m. Her assigned routes took her three to four hours to complete. NJMG paid Arrubla approximately $220 per week based upon the number of papers delivered, and she reported any problems to her NJMG supervisor. Arrubla did not work for any other companies while employed with NJMG, did not own a business, received a paycheck without any payroll deduction through an IRS-1099 form, and paid her own taxes directly.
Arrubla had signed four different contracts entitled "Weeklies Independent Carrier Distribution Agreement[s]" while employed with NJMG. Each contract contained standard language designating Arrubla as a "carrier" picking up the "product" at a specified date and time and completing delivery by a specified date and time within a specific geographical area. The contracts provided for compensation on a per product bagged and delivered basis as well as on assembly for additional insert materials. The contracts automatically renewed, and a new contract was issued only when Arrubla's delivery route changed.
The contracts included an "Independent Contractor" clause stating that the "[c]arrier is, and shall remain an independent contractor, vested with all rights and powers to perform all acts and things which in his or her sole judgment and discretion he or she deems necessary or required in the performance of his or her Distributorship." The clause went on to specify that the carrier was to bear all costs and risks in distributing the newspapers, was to comply with all laws, pay any requisite taxes, and was free to engaged in outside business and employment so long as it did not interfere with the carrier's NJMG work. The clause concluded by emphasizing that the carrier was not an NJMG employee, could not make a claim against NJMG for workers' compensation, and would be solely liable for any third party damage or injury claims.
Arrubla filed her claim for unemployment benefits the week of November 14, 2010, and was granted benefits at a weekly rate of $118. On May 18, 2011, the Deputy Director for the Division of Unemployment Insurance (the Deputy) found that Arrubla was ineligible for the benefits she received because she "lacked sufficient base weeks or sufficient base year wages to establish a valid claim." The deputy demanded a refund of the $2950 in benefits Arrubla had received. She appealed to the Tribunal.
The Deputy's decision was not provided in the record.
On September 13, 2011, the Tribunal conducted a telephonic hearing in which Arrubla, an auditor for the Department of Labor (DOL), and the distribution operations manager for NJMG testified. The Tribunal reversed the decision of the Deputy, determining that Arrubla "was under the direction and control of" NJMG, and she "was not engaged in an independently established trade[.]" Thus, it concluded that she was not disqualified as an independent contractor under N.J.S.A. 43:21-19(i)(6), her earnings qualified her for benefits, and she was not liable for refunding the benefits she had received.
NJMG appealed the Tribunal's decision and moved to supplement the record with a March 25, 2009 distribution agreement between Arrubla and NJMG. On March 28, 2012, based upon a review of the record below and relying on Philadelphia Newspapers, supra, 397 N.J. Super. 309, the Board affirmed the Tribunal's decision and denied NJMG's motion to supplement the record. The Board determined there was no need for a further hearing as NJMG "was given a full and impartial hearing and a complete opportunity to offer any and all evidence[.]" This appeal followed.
On appeal, NJMG argues first that the Board erred in finding that Arrubla was an employee rather than an independent contractor under the ABC Test. We disagree.
Our scope of review of an agency decision is limited. In re Stallworth, 208 N.J. 182, 194 (2011) (citing Henry v. Rahway State Prison, 81 N.J. 571, 579 (1980)). In challenging an agency conclusion, the claimant carries a substantial burden of persuasion, and the determination of the administrative agency carries a presumption of correctness. Gloucester Cnty. Welfare Bd. v. N.J. Civil Serv. Comm'n, 93 N.J. 384, 390-91 (1983).
Further, "[w]e are obliged to defer to the Board when its factual findings are based on sufficient credible evidence in the record." Lourdes Med. Ctr. of Burlington Cnty. v. Bd. of Review, 197 N.J. 339, 367 (2009) (internal quotation marks and citations omitted). We also accord substantial deference to the agency's interpretation of a statute it is charged with enforcing. Bd. of Educ. of Neptune v. Neptune Twp. Educ. Ass'n, 144 N.J. 16, 31 (1996). We overturn an agency determination only if it is arbitrary, capricious, unreasonable, unsupported by substantial credible evidence as a whole, or inconsistent with the enabling statute or legislative policy. Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 71-72 (1985) (citing Gloucester Cnty. Welfare Bd., supra, 93 N.J. at 391).
"The New Jersey Unemployment Compensation Law (UCL), N.J.S.A. 43:21-1 to -71[,] is a remedial act, the 'primary objective of [which] . . . is to provide a cushion for the workers of New Jersey against the shocks and rigors of unemployment.'" Phila. Newspapers, supra, 397 N.J. Super. at 318 (second alteration in original) (quoting Carpet Remnant Warehouse v. N.J. Dep't of Labor, 125 N.J. 567, 581 (1991)). Because of the statute's remedial nature, "'its provisions [are to be] construed liberally, permitting a statutory employer-employee relationship to be found even though that relationship may not satisfy common-law principles.'" Id. at 319 (alteration in original) (quoting Carpet Remnant, supra, 125 N.J. at 581).
The UCL carries a "presumption . . . by statute that all services performed by an individual for remuneration constitutes employment for purposes of the UCL," unless the services satisfy an exception. Ibid. In the instant case, the relevant exception involves the three-prong ABC Test used for determining whether a worker is an independent contractor. See ibid. The ABC Test provides as follows:
Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter ([N.J.S.A.] 43:21-1 to -71]) unless and until it is shown to the satisfaction of the division that:
(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and[N.J.S.A. 43:21-19(i)(6).]
(B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.
Generally, the three prongs of the ABC Test refer to prong A as the "control test," prong B as the "course-of-business or location-of-work test" and prong C as the "independent-business test." Phila. Newspapers, supra, 397 N.J. Super. at 320. The party challenging the classification of a worker as an employee "must prove each of the three prongs of the ABC test." Ibid. Failure to satisfy any one of the prongs "results in an 'employment' classification." Ibid. (internal quotation marks and citation omitted). The ABC Test requires a fact sensitive analysis of the substance, not the form, of the working relationship. Ibid.
In Philadelphia Newspapers, we reviewed an unemployment claim by a "home delivery newspaper person." Id. at 312. Periodically, the claimant signed an "Independent Home Delivery Service Contractor Agreement," memorializing a contract for him to deliver various publications. Id. at 312-13. The contract contained multiple clauses establishing the claimant as an independent contractor. See ibid. The claimant agreed to lawfully maintain his own automobile, and use it to deliver newspapers by a set deadline. Id. at 313. He did not receive a salary, and instead received a fixed fee per newspaper delivered. Id. at 314. When the company terminated the claimant, he filed for unemployment benefits, and the Board found him eligible for benefits as neither prong A nor prong C of the ABC test was satisfied. Id. at 315.
On appeal, we held that, while the newspaper company satisfied the first prong of the ABC Test, it failed to prove the final prong. Id. at 320. We concluded
that the record is devoid of evidence demonstrating that [the] claimant was customarily engaged in an independently established trade or activity from the mere delivery of [the company's] newspapers at the time of rendering the service involved. [The c]laimant never engaged in delivery services prior to commencing his delivery of newspapers for [the company], nor has he engaged in similar services since his termination from employment. Moreover, on termination from employment, [the] claimant joined the ranks of the unemployed. Accordingly, Prong (C) was not satisfied.As the newspaper company was unable to satisfy their burden under the ABC Test, we affirmed the claimant's eligibility for benefits. Id. at 324.
[Id. at 323 (internal quotation marks and citation omitted).]
Applying our highly deferential standard of review, we find no occasion to interfere with the Board's decision here. The record amply supports the Board's conclusion that Arrubla was an employee and not an independent contractor because she did not have an independently established business. Indeed, the record leaves no doubt that NJMG did not and cannot satisfy the independent-business test, prong C of the ABC Test. See N.J.S.A. 43:21-19(i)(6)(C). Since all three prongs of the ABC Test must be satisfied, and we find the record supports the finding that NJMG failed to satisfy prong C, we need not reach the issue of whether the Board was correct on prong A. See State v. Harris, 181 N.J. 391, 476 (2004) (noting, where both prongs of a two prong test were required, there was no need to address second prong when first prong was not satisfied), cert. denied, 545 U.S. 1145, 125 S. Ct. 2973, 162 L. Ed. 2d 898 (2005).
In the instant case, the facts mirror those in Philadelphia Newspapers. It is undisputed that Arrubla did not deliver papers before she started delivering them for NJMG, she worked solely for NJMG, her termination rendered her unemployed, and she has not delivered newspapers since her termination. If, as here, "the claimant is 'dependent on the employer, and on termination of that relationship would join the ranks of the unemployed, the [Prong (C)] standard is not satisfied.'" Phila. Newspapers, supra, 397 N.J. Super. at 323 (alteration in original) (quoting Carpet Remnant, supra, 125 N.J. at 585-86). Satisfaction of prong C requires a clear showing that a viable independent business exists apart from the particular contractual relationship at issue. Carpet Remnant, supra, 125 N.J. at 592. The record here contains no evidence purporting to make this showing.
NJMG also argues that the hearing before the Tribunal was procedurally flawed because the claims examiner improperly permitted the DOL's auditor to testify, question Arrubla, and give his opinion on whether her work met the ABC Test, and because much of the auditor's testimony was marked inaudible in the transcript. Further, NJMG contends that the Board incorrectly prohibited NJMG from supplementing the record to add an additional distribution contract from 2009. We find these arguments to be without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Suffice it to say, concerning the testimony of the DOL's auditor, the hearings conducted by the Board are not subject to the same rules and procedures to which trial courts are bound. See N.J.S.A. 43:21-6(f). The auditor's testimony also appears to have been cumulative. More importantly, even if the auditor had not testified, the undisputed evidence in the record still leads to the inescapable conclusion, under the statute and applicable case law, that Arrubla was not engaged in an independently established business that existed independently from the instant relationship and continued to exist when it terminated.
We also reject NJMG's argument that the additional contract should have been admitted as it showed that in 2009 Arrubla listed her boyfriend as working for her, which NJMG contends is sufficient by itself under the New Jersey Guidelines for Audits of Newspaper Deliverers to prove prong C. As we previously held, "[b]ecause the Guidelines only represent a form of informal guidance to the newspaper industry, we determine the Guidelines [are] not binding." Phila. Newspapers, supra, 397 N.J. Super. at 324 n.1. Hence, the Board's failure to admit the additional distribution contact allegedly addressing a prong C factor under the Guidelines was not prejudicial to NJMG.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION