A Capehart Scatchard Blog

Independent Contractor – Re/Max v. Wausau Ins. Cos.

By on July 7, 2008 in Key Defenses with 0 Comments

The independent contractor test was thoroughly analyzed by the Supreme Court in Re/Max v. Wausau Ins. Cos., 162 N.J. 282 (2000). In that case Re/Max argued that all of its real estate agents were independent contractors. They signed agreements to that effect. While most of the real estate agents worked full time, they did not have to spend any particular amount of time in the office. They chose their own hours of work. They furnished their own vehicles and controlled their own advertising (although the Re/Max logo had to be included in advertising). Re/Max advertised that agents are “in business for yourself but not by yourself.” Re/Max allowed its agents to retain the entire sales commission earned from any sale, but the agents had to pay to the broker certain fees and expenses, including a security deposit, an initiation fee, and a monthly management fee for use of the office.

The Supreme Court held that under both the control test and the relative nature of the work test, the real estate agents were employees. On the control test, the court noted that agents had to comply with many guidelines and quality controls. Further, real estate agents are an integral part of the business activity of the company. Sales agents are economically dependent upon Re/Max because the broker provides the listings, the office, the equipment, and the support staff. Agents also work exclusively for Re/Max. Thus, the Supreme Court used the test of functional integration or economic dependence in order to invalidate the argument that the agents were independent contractors. “We hold that the innovative structure created by the Re/Max agreement is simply another sophisticated attempt to thwart the employer-employee relationship. . . .” Id. at 288.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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