Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Licensed professionals working as independent contractors are eligible for protection under New Jersey’s whistle-blower statute, says the state Supreme Court in two rulings relevant to the age of outsourcing. Contract workers can sue if there is a “functional integration” of their activities with the employer’s business, the justices said Wednesday in cases of a lawyer working for Camden and a doctor working for Prudential Insurance Co. Both professionals had yearly contracts and kept private practices, but their contractual tasks were controlled by the employers and were integral and essential to the operations, the Court found. In the case of the lawyer, former Camden Municipal Public Defender Elliot Stomel, his exercise of unfettered control over his cases, his maintenance of a private practice did not disqualify him as a potential whistle-blower under the Conscientious Employee Protection Act. Because he worked on a “regular and continuous basis” at a job that was essential to the city, he was an “employee” eligible to pursue a claim against the city for blowing the whistle in 1999 on shenanigans by the administration of Mayor Milton Milan, the Court ruled. In both cases, trial judges had conceded that the definition of “employee” in CEPA could be interpreted broadly to cover independent contractors. They had found, however, that the definition was not broad enough to cover professionals making judgments their employers could not control. They granted summary judgment to the employers. But the Supreme Court said licensed professionals may very well be cogs in an enterprise, even though they are exercising independent judgments about the substance of their work and are identified as independent contractors. “Taken out of context, labels can be illusory as opposed to illuminating,” Justice Jaynee Lavecchia wrote in the 5-1 opinion in D’Annunzio v. Prudential Insurance Co. , A-119-2005. “When CEPA or other social legislation must be applied in the setting of a professional person or an individual otherwise providing specialized services allegedly as an independent contractor, we must look beyond the label attached to the relationship.” Justice Roberto Rivera-Soto was the lone dissenter in that case and its companion, Stomel v. City of Camden , A-45/46, decided 6 to 1. He said the Legislature has expanded the definition of employee to include independent contractors in dozens of laws, but not in CEPA, so the courts have no power to take an expansive view of who is protected by the whistle-blower law. The cases are important because trial courts are called upon to define the term “employee” in a host of statutes at a time when creative work arrangements are eroding America’s 9-to-5, clock-punching traditions. A 2006 report by the Government Accountability Office said there were 18 million per diem employees, day laborers, independent professionals and other contract workers in America � 13 percent of the workforce. In 2000, Prudential contracted with licensed chiropractor George D’Annunzio to review medical plans submitted by Personal Injury Protection claimants. The work was billed to his professional association and he kept his private practice. But he was required to do his work in Prudential’s offices from 8 a.m. to noon on weekdays and follow a number of Prudential’s work rules, including directions for how he was to review the claims. These tasks, “appeared to D’Annunzio to be designed to make him, essentially a cog in the machinery of Prudential’s PIP department,” the opinion said. After he was given a notice of termination under his contract in September 2000, he filed a CEPA claim, alleging he was let go for complaining of what he called a “lack of regulatory and contractual compliance.” Prudential was prepared to defend itself vigorously against the charges, spokesman Robert DeFillippo says. But even before discovery on the substance, Middlesex County Superior Court Frank Ciuffani granted summary judgment to the defense on the employee definition issue. An appeals court reversed him and Wednesday’s Supreme Court decision allows D’Annunzio to pursue his claim. The decision reminds trial judges that the way to tell whether an independent contractor qualifies to file a CEPA claim is to apply the 12-prong test in a Law Against Discrimination case on the subject, Pukowsky v. Caruso, 312 N.J. Super. 171 (App Div. 1998). The test helps determine how much control the employer has over the independent contractor’s work and the extent of their economic interdependence. One of the questions when professionals are involved is whether they perform administrative duties. “If so, an employer-employee relationship more likely has been established,” the Court said. In the Camden case, Stomel was the municipal public defender for 17 years until 1999. That’s when he testified during a federal court trial that his job was not secure without a $5,000 contribution to Mayor Milan’s re-election campaign. Ten days after Stomel testified, Milan told him he was being replaced, prompting Stomel to file CEPA and civil rights claims against Milan and the city. A jury awarded Stomel $316,000 for the civil rights allegations, but the CEPA claim did not go to trial because Camden County Superior Court Judge John Mullaney ruled Stomel was not an employee under CEPA. An appeals court disagreed and so did the Supreme Court. The majority said it was true that the city had no control over his professional judgments or his representation of his clients and that he maintained a private law firm. But he was fulfilling a municipal duty required by the Municipal Public Defender Act on a regular and continuous basis. “This was not the situation of local firms being handed out cases on an intermittent basis, paid by the day or the hour for the spot work assigned,” the Court said. The decision was doubly good for Stomel. Not only can he pursue the CEPA claim, he can sue the city for the $316,000 civil rights judgment against Milan, who spent five years in jail and cannot pay. The appeals court ruled that the city had no responsibility for Milan’s dismissal of Stomel because the decision was not ratified by the City Council, but the justices said the council had given Milan de facto authority, and remanded the case for fact-finding that could make the city responsible for paying the judgment. Justice Helen Hoens did not participate in D’Annunzio.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.