Who is an employee? (New Jersey)
Who is an employee? A person working for another person or a business firm for wages or salary or any monetary means.
Who is an employer? A person or business that employs one or more people, especially for wages or salary: a fair employer.
What is a business? Miriam Webster defines it as: the activity of making, buying, or selling goods or providing services in exchange for money.
A business is an individual, sole proprietorship, partnership, LLC, Corporation, etc.
Every business in NJ needs to carry workers compensation if they have employees. (A business can self-insure but it is virtually impossible unless there are thousands of employees!)
Corporations MUST carry workers compensation insurance because all officers are employees. Officers are not owners. Officers are employees.
A statement made by the head WC judge of NJ recently stated about employees. “I have never seen anyone who was not an employee” With a statement like this workers compensation is absolutely needed by all employers.
- A friend helping out is an employee
- An illegal alien is an employee
- A person helping in the church is an employee
- A person who receives no salary but is paid in lower rent is an employee
- Volunteers are employees
NJ WORKERS COMPENSATION ACT DEFINITION OF AN EMPLOYEE
The NJ WC Act is liberally interpreted with respect to an “employee” and is broader than the IRS Code and Unemployment Compensation Statute. A variety of working relationships have been determined of an employer-employee relationship.
A contract or agreement determining whether is or is not an employee is not binding.
There are two tests the NJ courts use. “Control Test” and “Relative nature of work test”
The relationship between a business and the individual is reviewed. There is employment if the business retains the right to supervise the individual and control what is done as well as how it shall be done.
RELATIVE NATURE OF WORK TEST
There is employment if an individual relies on income from the business and the work performed by the individual is an integral part of the activities of the business.
If both of these tests are met, an employee-employer relationship is established, therefore workers compensation insurance is needed.