ABC test doesn’t apply in determining real estate agent’s employment status

In a recent decision, the New Jersey Appellate Division concluded the “ABC test” under the Unemployment Compensation Law (UCL) is inapplicable in determining a real estate salesperson’s status as an independent contractor under the Wage Payment Law (WPL).

Facts

James Kennedy II was a fully commissioned real estate salesperson with licensed real estate broker Weichert Company. He alleged, on behalf of himself and a class of others similarly situated, that Weichert had violated a provision of the WPL that generally prohibits an employer from withholding or diverting any portion of an employee’s wages.

Kennedy claimed Weichert violated the WPL by deducting marketing, insurance, and other expenses from his wages without authorization. The company asked the court to dismiss the complaint for failure to state a claim and argued that fully commissioned real estate salespersons are independent contractors, whom the WPL doesn’t cover.

The trial court denied Weichert’s request to dismiss and declared the UCL’s ABC Test is the proper test to determine a real estate salesperson’s status as an independent contractor under the WPL.

Company appeals

Weichert appealed the trial court’s decision, arguing the ABC Test didn’t apply to fully commissioned real estate salespersons because the UCL expressly exempts them. The company also asserted the ABC Test was inconsistent with the Real Estate Brokers and Salesmen Act.