## Facts

- Re/Max of New Jersey, Inc. operated a real estate brokerage business and engaged licensed real estate salespersons to work with Re/Max offices.
- Each salesperson signed a written agreement stating the salesperson was an independent contractor.
- The salespersons were paid only by commission and, under the arrangement described in the record, the agents received the full commission generated from a transaction.
- The agents generally set their own work hours and performed their own marketing, but did so within Re/Max rules and office practices.
- Agents paid Re/Max a monthly fee for use of office space and services and also covered certain expenses such as postage and advertising.
- Re/Max required agents to meet quality standards, including standards tied to professional conduct and personal appearance.
- The agreement gave Re/Max the right to supervise and control an agent’s performance and permitted termination for cause.
- New Jersey law did not allow real estate salespersons to collect commissions directly; commissions were collected by the broker, connecting the agents’ earnings to the broker’s business operations.
- Re/Max’s workers’ compensation carriers (including Employers Insurance of Wausau and other insurers) audited Re/Max and treated the agents as employees for workers’ compensation premium purposes, increasing premiums accordingly.
- Re/Max filed a declaratory judgment action in the Chancery Division seeking a determination that the agents were independent contractors and should not be included in the workers’ compensation premium base.

## Issues

1. Whether Re/Max’s licensed real estate salespersons were employees or independent contractors under the New Jersey Workers’ Compensation Act for purposes of calculating workers’ compensation insurance premiums.
2. Whether the insurers could include the agents’ remuneration (or an audit basis attributed to their services) in premium calculations despite agreements labeling the agents as independent contractors and paying by commission.

## Decision

- The Chancery Division ruled for the insurance carriers.
- The court held that Re/Max’s real estate salespersons were employees, not independent contractors, for workers’ compensation purposes.
- The court concluded the carriers properly adjusted Re/Max’s workers’ compensation premiums to account for the agents.

## Legal Principles

- Employee status for workers’ compensation is determined by the actual working relationship, not by contract labels such as “independent contractor.”
- New Jersey courts evaluate worker status under the Workers’ Compensation Act using the control test (the right to direct and supervise) and the relative-nature-of-the-work test (whether the work is a regular part of the business and whether the worker depends on the putative employer rather than operating an independent enterprise).
- Commission-only compensation and flexible hours do not, by themselves, establish independent-contractor status when the broker retains supervision rights, enforces rules, and can terminate for cause.
- When workers perform the core service the business sells (here, real estate sales activity for a brokerage) and rely on the business’s office structure, listings, and operating systems to perform that work, the relative-nature-of-the-work test favors employee status.
- Statutory limits in the real estate licensing framework—such as requiring commissions to be collected by the broker—may support a finding that agents are functionally tied to the brokerage for workers’ compensation purposes.
- Workers’ compensation laws are read broadly to provide coverage; close cases tend to be resolved in favor of employee status and inclusion in the premium base.

## Conclusion

The Chancery Division held that Re/Max’s real estate salespersons, though labeled independent contractors and paid solely by commission, were employees under the Workers’ Compensation Act because Re/Max retained meaningful supervisory rights and the agents’ work was central to, and dependent on, Re/Max’s brokerage operations; the insurers therefore could include the agents in workers’ compensation premium audits.


Re/Max of New Jersey, Inc. v. Wausau Insurance Companies, 697 A.2d 977, 304 N.J. Super. 59 (1997)