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The ABC Test is a standard used to determine if a worker is an employee or an independent contractor. The test consists of three parts: (A) the worker must be free from the control and direction of the hiring entity in the performance of the work, (B) the work must be performed outside the usual course of the hiring entity’s business, and (C) The worker must be customarily engaged in an independently established trade, occupation, or business. If all three criteria are met, the worker is considered an independent contractor. In the case of Kennedy v. Weichert Co., this concerns the classification of a real estate salesperson as an independent contractor or an employee. The plaintiff, James Kennedy, claimed that the defendant, Weichert Company, violated the state’s Wage Payment Law (WPL) by deducting marketing, insurance, and other expenses from his wages without authorization. The defendant argued that fully commissioned real estate salespersons are independent contractors and thus not covered by the WPL.
The court denied the defendant’s motion and declared that the ABC test under the Unemployment Compensation Law would determine the real estate salesperson’s status as an independent contractor under the WPL. The defendant appealed the decision and argued that the ABC test did not apply to fully commissioned real estate salespersons and was inconsistent with the Real Estate Brokers and Salesmen Act. The court rejected the defendant’s arguments and concluded that the ABC test could be used to determine a real estate salesperson’s independent contractor status under the WPL. Despite the court’s earlier decision to reject the defendant’s arguments, it reversed the decision and settled that the ABC test does not apply to determine whether the plaintiff was the defendant’s employee for purposes of the WPL. The court came to the verdict to decline to announce a test for determining the plaintiff’s employment status, as a more complete record is needed for a proper exposition of the parties’ business relationship. The parties will address this in future motion practice.