On-demand services seem to be all the rage. You’ve probably heard of, if not used, Uber, the on-demand taxi service.  With Uber, you can have a driver at your service, when and where you need a ride. This is becoming popular not just in Manhattan, but also in Montclair, where parking can be tight. Other novel on-demand services include Handybook, Mechancial Turk and TaskRabbit. With Handybook, you can schedule a housekeeper on a whim, or keep her or him coming back on a regular basis. TaskRabbit can connect you with someone to assemble your furniture, help you move, or do your errands. And with Mechanical Turk, you can find someone, or many people, to perform “human intelligence tasks” for you. The amazing thing with all of these services is that you get someone to do what you want, when you want it done, without having to go through the hassle of finding and hiring an employee.

On-call workers seem to be a new hybrid in the labor marketplace. In terms of employment rights and responsibilities, they fall somewhere between employees and independent contractors. New Jersey employees have certain rights in the workplace, and employers must pay them a minimum wage, pay taxes, provide worker’s compensation coverage, and possibly — with the onset of Obamacare — provide medical insurance. Employees have a regular income, and can rely on continued employment, but in exchange, they must be reliable, perform work to the standards of their employer, and work the schedule dictated by the employer. Independent contractors, on the other hand, have the freedom to set their own hours and be their own boss, but generally cannot rely on a regular paycheck (with taxes already taken out), and must obtain their own insurance, etc.

As opposed to employees and independent contractors, some on-call workers seem to have the worst of both worlds: they have to be at their employer’s beck and call, and perform work to the employer’s specifications (sometimes even wearing uniforms), but they cannot rely on a regular paycheck, and their employer does not take taxes out of their pay, or provide insurance coverage. These workers may have freedom, in the sense that they have some free time between gigs, but they do not get to decide when that free time is, and when and where their jobs will be.

To get their work done and make a profit, business owners have to make many decisions, including whether to hire employees or independent contractors. An on-call workforce might seem ideal to business owners, allowing them to avoid all the difficulties of actually employing people. However, the decision of hiring employees or using independent contractors requires a balancing of some of the factors above.

In New Jersey, employers should also take into account the ABC test, which is contained in the Unemployment Compensation Law. Under New Jersey Unemployment Compensation law, “Services performed by an individual for remuneration,” are presumed to be employment. The individual who performs services for pay can be considered an independent contractor only if all three requirements of the ABC test are met:

Using this test, many on-call workers would be deemed employees. Some on-call workers are now complaining that they are not treated fairly or paid adequately, and that their employers exercise so much control over their work schedule and duties that they should be considered employees, not independent contractors. It remains to be seen how these cases will turn out, and how Uber and other on-call services respond.

The above blog post was written over one year ago. The information in this blog post may not be current due to changes in the law or recent case decisions. We encourage you to contact our firm, at 973-509-8500, for information on this particular post and to make sure the content is still current.

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