"When positive statutory law exists, an equity court cannot supersede or abrogate it."
How later courts described this case
- "When positive statutory law exists, an equity court cannot supersede or abrogate it."
Written by the judges who cited it.
The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3773-22
JAMES GLUCK,
Petitioner-Appellant,
v.
BOARD OF TRUSTEES OF
THE PUBLIC EMPLOYEES'
RETIREMENT SYSTEM,
Respondent-Respondent.
___________________________
Argued September 8, 2025 – Decided September 24, 2025
Before Judges Natali and Walcott-Henderson.
On appeal from the Board of Trustees of the Public
Employees' Retirement System, PERS No. xx6053.
Michael P. DeRose argued the cause for appellant
(Crivelli, Barbati & DeRose, LLC, attorneys; Michael
P. DeRose, of counsel and on the briefs).
Jeffrey D. Padgett, Deputy Attorney General, argued
the cause for respondent (Matthew J. Platkin, Attorney
General, attorney; Sookie Bae-Park, Assistant Attorney
General, of counsel; Jeffrey D. Padgett, on the brief).
PER CURIAM
Petitioner James Gluck, Esq. appeals from a June 26, 2023 final
administrative determination of respondent, the Board of Trustees of the Public
Employees' Retirement System (Board), retroactively finding him ineligible for
retirement benefits from the Public Employees' Retirement System (PERS)
related to his service as legal counsel to the Beechwood Sewage Authority
(Authority). Petitioner argues he was at all times an employee of the Borough
of Beechwood (Borough) and Authority and the Board's retroactive
determination he was an independent contractor is arbitrary, capricious and
unreasonable. We disagree and affirm.
I.
The relevant facts are undisputed. Petitioner enrolled in PERS in 1998
after he was hired as a public defender for the Borough. In May 1999, petitioner
entered into a Professional Services Agreement (PSA) with the Authority to
serve as its counsel pursuant to Borough Resolution No. 05-19-99. The Borough
filed a Report of Transfer, dated May 21, 1999, transferring petitioner's
employment from the Borough to the Authority.
A-3773-22
2
On the same day, petitioner executed an enrollment application for PERS,
which also noted his service time as the Borough's public defender through May
14, 1999.
The PSA in pertinent part provided:
[Petitioner] shall furnish all equipment and materials
and shall perform the services as provided in this
Agreement and as awarded to it for a partial
consideration of Three Thousand [and] 00/100
($3,000.00) [dollars] per year commencing on February
1, 1999. Said sum shall be payable to [petitioner] as a
salaried employee of the Authority on a monthly basis
for legal services rendered in the position of Attorney
for the [Authority] for the fiscal year 1999 in strict
accordance with the contract as the word "contract" is
hereinafter defined and in accordance with all other
terms and provisions.
Thereafter, petitioner served as counsel to the Authority for successive
annual terms from 2000 through 2008. According to the Board
"[c]ontemporaneous with the passing of resolutions, the [Authority] entered into
[PSAs] with petitioner," that varied slightly from year to year.
The first PSA was between the Authority and petitioner, "of the firm of
James J. Gluck, P.A." The parties entered into the same PSA in 2000 and 2001,
although petitioner's firm changed to "Gluck & Allen, L.L.C." From 2002 to
2005, petitioner and the Authority entered into PSAs with similar overall terms
as in prior years, except for the additional language permitting a member of
A-3773-22
3
petitioner's firm "to act under the terms and conditions of this contract as an
alternate." This practice was repeated in 2006 and 2007 to permit another newly
added partner to the firm to act as an alternate counsel to the Authority in
petitioner's absence. Petitioner received an annual W-2 from the Authority for
the entirety of his tenure from 2002 to 2008. He contributed to PERS from 1999
until his resignation, effective February 29, 2008.
On December 15, 2009, petitioner returned to the Authority as its general
counsel under a new resolution, which stated the name of petitioner's firm as
"Gluck & Allen, L.L.C., Attorneys at Law." Petitioner remained employed as
general counsel from December 15, 2009 to June 21, 2022, wherein he was paid
monthly and received an annual W-2.
II.
In 2007, the Legislature enacted significant and sweeping reforms to the
PERS. The enactment of Public Law 2007, L. 2007, c. 92 (Chapter 92), codified
at N.J.S.A. 43:15C-1 to -15, created the Defined Contributions Retirement
Program (DCRP), as an alternative to PERS, and became effective on July 1,
2007. Through this system, the Legislature hoped to "encourag[e] qualified
individuals to enter and remain in public service." Ibid. (quoting Masse v. Bd.
of Trs., Pub. Emps. Ret. Sys., 87 N.J. 252, 261 (1981)).
A-3773-22
4
The Chapter 92 reforms also included the enactment of related statutes
directed to modify PERS. Relevant here, N.J.S.A. 43:15A-7.2 changed
eligibility rules for pension participation by individuals serving in certain
government positions pursuant to professional service contracts or as
independent contractors, and states in relevant part:
Any person becoming an employee of the State or other
employer after January 2, 1955 . . . and other than those
whose appointments are seasonal, becoming an
employee of the State or other employer after such date,
including a temporary employee with at least one year's
continuous service. The membership of the retirement
system shall not include those persons appointed to
serve as described in paragraphs (2) and (3) of
subsection a. of [N.J.S.A. 43:15C-2], except a person
who was a member of the retirement system prior to the
effective date [July 1, 2007] of sections 1 through 19 of
[Chapter 92] ([N.J.S.A.] 43:15C-1 through [N.J.S.A.]
43:15C-15, [N.J.S.A.] 43:3C-9, [N.J.S.A.] 43:15A-7,
[N.J.S.A.] 43:15A-75 and [N.J.S.A.] 43:15A-135) and
continuously thereafter.
[(Second alteration in original).]
Further, N.J.S.A. 43:15A-7.2(b) precludes any person who qualifies as an
independent contractor from PERS membership after December 31, 2007,
stating:
A person who performs professional services for a
political subdivision of this State or a board of
education, or any agency, authority or instrumentality
thereof, shall not be eligible, on the basis of
A-3773-22
5
performance of those professional services, for
membership in [PERS], if the person meets the
definition of independent contractor as set forth in
regulation or policy of the federal Internal Revenue
Service [(IRS)] for the purposes of the Internal
Revenue Code [(I.R.C.)]. Such a person who is a
member of the retirement system on the effective date
of [Chapter 92] shall not accrue service credit on the
basis of that performance following the expiration of an
agreement or contract in effect on the effective date.
Following the enactment of N.J.S.A. 43:15A-7.2(b), on or about May 6,
2008, the Authority received notice from John Megariotis, then-Deputy Director
of Finance, concerning pension eligibility for employees that perform services
under PSAs. Megariotis stated, "a full-time, in-house counsel, however, may be
eligible to continue in PERS if the counsel was a member of PERS prior to July
1, 2007, the employment is not tied to a professional services contract, and the
individual does not meet the independent contractor test." He further advised
that all questions concerning PSAs and independent contractors should be
forwarded to the Division of Pension and Benefits (Division) in writing for
clarification.
Approximately seven years after the enactment of N.J.S.A. 43:15A-7.2(b),
on November 7, 2014, Susan Grant, then-acting director of the Pension Fraud
and Abuse Unit (PFAU), informed petitioner in writing he was ineligible for
enrollment in PERS after December 31, 2007—the effective date of Chapter 92
A-3773-22
6
—because he should have been classified as an independent contractor for the
entirety of his service with the Authority.
However, on April 27, 2015, the Division advised petitioner by letter that
he was "eligible to purchase" thirty-eight months of former membership service
related to his prior government employment for $1,644.43. Petitioner paid the
requested amount to buy back the thirty-eight months of former membership
service time and the Division accepted his payment.1
On July 31, 2016, Grant reevaluated petitioner's service and again
determined petitioner was ineligible for service credit specifically from
February 1, 2002, not 1999, as previously determined. She noted the
modification was due to petitioner's 2002 PSA, which provided that members of
petitioner's firm could assume his duties as counsel to the Authority. Grant
based her determination on the IRS twenty-factor test and information from
petitioner's law firm's website, which showed that petitioner openly advertised
his services to other clients and public entities.
The Board accepted Grant's 2016 determination and retroactively
terminated petitioner from PERS from February 1, 2002 to February 2, 2008
1
Petitioner later argues that the Division's advice to purchase service credit or
buy back time is indicative of the reasonableness of his belief he was a
participant in the pension system.
A-3773-22
7
under N.J.S.A. 43:15A-7.2(b), as he was considered an independent contractor,
and from December 1, 2008 through to the then-present date of 2016, citing that
he was retained pursuant to a PSA and thus is ineligible for PERS enrollment
under N.J.S.A. 43:15A-7.2(a).
Kristin Conover, Grant's successor, undertook an additional review of
petitioner's eligibility for PERS in April 10, 2019, following our January 2019
remand in a case addressing a similar issue.2 After applying the IRS twenty-
factor test, however, Conover reached the same conclusion as her predecessor
and denied eligibility.3 Thereafter, on July 8, 2019, the Board notified petitioner
it was adopting the Division's determination.
Petitioner appealed and the matter was transmitted to the Office of
Administrative Law (OAL) for a hearing as a contested case before an
Administrative Law Judge (ALJ).
2
Cohen v. Board of Trustees of the Public Employees Retirement System, No.
A-1219-16 (App. Div. Jan. 24, 2019).
3
Conover also cited to the IRS twenty-factor test and information concerning
petitioner's law firm, including that petitioner's law firm had provided a
substitute for him eleven times between December 2009 and July 2018.
A-3773-22
8
Conover, petitioner, and petitioner's accountant testified at the OAL
hearing. At the conclusion of the case the ALJ issued a thorough and well-
reasoned written initial decision summarizing his findings as follows:
[Petitioner] was assigned tasks by the [Authority]
commissioners via email, cell phone or office line and
could not perform any work without their direction. He
had a supervisor who was the chairman of the
[Authority]. Although there was no training directly
from [Authority], he received training through the Bar
Association on public entity law. Most of the work he
did himself but sometimes he had individuals from his
firm cover for him in his absence. The [Authority] did
supply some clerical support and supplies, and there
were at least two letters sent out on [firm] letterhead.
But that was not the norm. [Petitioner] did not have any
ability to hire or fire or supervise any employees from
[Authority], he was an at will employee and
interestingly, never shared any income derived from the
[Authority] with [his law firm].
The ALJ concluded that applying the IRS twenty-factor test, petitioner
was an independent contractor, not an employee of the Authority for the relevant
time periods. Petitioner filed exceptions to the ALJ's determination, which were
considered by the Board along with the ALJ decision and exhibits.
The Board adopted the ALJ's decision with one modification, finding
factor sixteen (Realization of Profit Loss) supported a characterization of
petitioner as an employee, but noted that this change did not alter the overall
finding of ineligibility for PERS benefits from February 1, 2002 through
A-3773-22
9
February 29, 2008, and December 1, 2009 through the present. The Board issued
its final administrative decision on June 26, 2023. This appeal followed .
III.
Our review of decisions by administrative agencies is limited. Russo v.
Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011); McKnight v.
Bd. of Rev., Dep't of Lab., 476 N.J. Super. 154, 162 (App. Div. 2023). We
generally "recognize that agencies have 'expertise and superior knowledge . . .
in their specialized fields.'" Hemsey v. Bd. of Trs., Police & Firemen's Ret.
Sys., 198 N.J. 215, 223 (2009), overruled in part on other grounds, 198 N.J. 215
(2009) (omission in original) (quoting In re License Issued to Zahl, 186 N.J.
341, 353 (2006)). As a result, we will sustain an administrative agency's
decision "unless there is a clear showing that it is arbitrary, capricious, or
unreasonable, or that it lacks fair support in the record." McKnight, 476 N.J.
Super. at 162 (quoting In re Herrmann, 192 N.J. 19, 27-28 (2007)). We only
determine:
(1) whether the agency decision follows the law; (2)
whether the decision is supported by substantial
evidence in the record; and (3) whether in applying the
law to the facts, the administrative agency "clearly
erred in reaching a conclusion that could not reasonably
have been made on a showing of the relevant factors."
A-3773-22
10
[Allstars Auto Grp., Inc. v. N.J. Motor Vehicle
Comm'n, 234 N.J. 150, 157 (2018) (quoting In re
Stallworth, 208 N.J. 182, 194 (2011)).]
Further, "'[a]n administrative agency's interpretation of a statute it is
charged with enforcing is entitled to great weight.'" In re Eligibility of Certain
Assistant Union Cnty. Prosecutors to Transfer to PFRS under N.J.S.A. 43:16A1
et seq., 301 N.J. Super. 551, 561 (App. Div. 1997) (quoting In re Saddle River,
71 N.J. 14, 24 (1976)); accord In re Freshwater Wetlands Prot. Act Rules, 180
N.J. 415, 431 (2004). "'[W]e must give great deference to an agency's
interpretation and implementation of its rules enforcing the statutes for which it
is responsible.'" St. Peter's Univ. Hosp. v. Lacy, 185 N.J. 1, 13 (2005) (quoting
In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 488-89 (2004)). Our
courts have extended this level of deference to state agencies that administer
pension statutes. See, e.g., Richardson v. Bd. of Trs., Police & Firemen's Ret.
Sys., 192 N.J. 189, 196 (2007).
"This deference comes from the understanding that a state agency brings
experience and specialized knowledge to its task of administering and regulating
a legislative enactment within its field of expertise." In re Election L. Enf't
Comm'n Advisory Op. No. 01-2008, 201 N.J. 254, 262 (2010) (citing Kasper v.
Bd. of Trs. of the Teachers' Pension & Annuity Fund, 164 N.J. 564, 580-81
A-3773-22
11
(2000)). However, "we are 'in no way bound by the agency's interpretation of a
statute or its determination of a strictly legal issue[.]'" Utley v. Bd. of Rev., 194
N.J. 534, 551 (2008) (quoting Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85,
93 (1973)). Our review of a "strictly legal issue" is de novo. In re Langan Eng'g.
& Env't Servs., Inc., 425 N.J. Super. 577, 581 (App. Div. 2012) (citing Utley,
194 N.J. at 551).
The party challenging the administrative action bears the burden of
showing that the agency's decision did not meet that standard. Lavezzi v. State,
219 N.J. 163, 171 (2014). However, we do not defer to an agency's conclusions
on "strictly legal issue[s]." Hemsey, 198 N.J. at 224 (quoting In re Carter, 191
N.J. 474, 483 (2007)).
To determine whether an individual who provides professional services is
employed as an employee or as an independent contractor, and thus ineligible
for PERS participation under N.J.S.A. 43:15A-7.2(b), our court has endorsed
the application of the twenty-factor test. See Rev. Rul. 87-41 at 11- 18; see also
Francois v. Bd. of Trs., Pub. Emps.' Ret. Sys., 415 N.J. Super. 335, 350-51 (App.
Div. 2010); Hemsey v. Bd. of Trs., Police & Firemen's Ret. Sys., 393 N.J. Super.
524, 542 (App. Div. 2007), rev'd on other grounds, 198 N.J. 215 (2009); Stevens
v. Bd. of Trs. of the Pub. Emps.' Ret. Sys., 294 N.J. Super. 643, 653 n.1 (App.
A-3773-22
12
Div. 1996). "The degree of importance of each factor varies depending on the
occupation and the factual context in which the services are performed." Rev.
Rul. 87-41 at 10-11.
The twenty factors under the IRS test are:
1. INSTRUCTIONS. A worker who is required to
comply with other persons' instructions about when,
where, and how he or she is to work is ordinarily an
employee. This control factor is present if the person
or persons for whom the services are performed have
the right to require compliance with instructions.
2. TRAINING. Training a worker by requiring an
experienced employee to work with the worker, by
corresponding with the worker, by requiring the worker
to attend meetings, or by using other methods, indicates
that the person or persons for whom the services are
performed want the services performed in a particular
method or manner.
3. INTEGRATION. Integration of the worker's
services into the business operations generally shows
that the worker is subject to direction and control.
4. SERVICES RENDERED PERSONALLY. If the
Services must be rendered personally, presumably the
person or persons for whom the services are performed
are interested in the methods used to accomplish the
work as well as in the results.
5. HIRING, SUPERVISING, AND PAYING
ASSISTANTS. If the person or persons for whom the
services are performed hire, supervise, and pay
assistants, that factor generally shows control over the
workers on the job. However, if one worker hires,
A-3773-22
13
supervises, and pays the other assistants pursuant to a
contract under which the worker agrees to provide
materials and labor and under which the worker is
responsible only for the attainment of a result, this
factor indicates an independent contractor status.
6. CONTINUING RELATIONSHIP. A continuing
relationship between the worker and the person or
persons for whom the services are performed indicates
that an employer-employee relationship exists. A
continuing relationship may exist where work is
performed at frequently recurring although irregular
intervals.
7. SET HOURS OF WORK. The establishment of
set hours of work by the person or persons for whom
the services are performed is a factor indicating control.
8. FULL TIME REQUIRED. If the worker must
devote substantially full time to the business of the
person or persons for whom the services are performed,
such person or persons have control over the amount of
time the worker spends working and impliedly restrict
the worker from doing other gainful work. An
independent contractor on the other hand, is free to
work when and for whom he or she chooses.
9. DOING WORK ON EMPLOYER'S PREMISES. If
the work is performed on the premises of the person or
persons for whom the services are performed, that
factor suggests control over the worker, especially if
the work could be done elsewhere.
10. ORDER OR SEQUENCE SET. If a worker must
perform services in the order or sequence set by the
person or persons for whom the services are performed,
that factor shows that the worker is not free to follow
the worker's own pattern of work but must follow the
A-3773-22
14
established routines and schedules of the person or
persons for whom the services are performed.
11. ORAL OR WRITTEN REPORTS. A requirement
that the worker submit regular or written reports to the
person or persons for whom the services are performed
indicates a degree of control.
12. PAYMENT BY HOUR, WEEK, MONTH.
Payment by the hour, week, or month generally points
to an employer-employee relationship, provided that
this method of payment is not just a convenient way of
paying a lump sum agreed upon as the cost of a job.
Payment made by the job or on straight commission
generally indicates that the worker is an independent
contractor.
13. PAYMENT OF BUSINESS AND/OR
TRAVELING EXPENSES. If the person or persons for
whom the services are performed ordinarily pay the
worker's business and/or traveling expenses, the worker
is ordinarily an employee. An employer, to be able to
control expenses, generally retains the right to regulate
and direct the worker's business activities.
14. FURNISHING OF TOOLS AND MATERIALS.
The fact that the person or persons for whom the
services are performed furnish significant tools,
materials, and other equipment tends to show the
existence of an employer-employee relationship.
15. SIGNIFICANT INVESTMENT. If the worker
invests in facilities that are used by the worker in
performing services and are not typically maintained by
employees (such as the maintenance of an office rented
at fair value from an unrelated party), that factor tends
to indicate that the worker is an independent contractor.
On the other hand, lack of investment in facilities
A-3773-22
15
indicates dependence on the person or persons for
whom the services are performed for such facilities and,
accordingly, the existence of an employer- employee
relationship.
16. REALIZATION OF PROFIT OR LOSS. A worker
who can realize a profit or suffer a loss as a result of
the worker's services (in addition to the profit or loss
ordinarily realized by employees) is generally an
independent contractor, but the worker who cannot is
an employee.
17. WORKING FOR MORE THAN ONE FIRM AT A
TIME. If a worker performs more than de minimis
services for a multiple of unrelated persons or firms at
the same time, that factor generally indicates that the
worker is an independent contractor. However, a
worker who performs services for more than one person
may be an employee of each of the persons, especially
where such persons are part of the same service
arrangement.
18. MAKING SERVICE AVAILABLE TO
GENERAL PUBLIC. The fact that a worker makes his
or her services available to the general public on a
regular and consistent basis indicates an independent
contractor relationship.
19. RIGHT TO DISCHARGE. The right to discharge
a worker is a factor indicating that the worker is an
employee and the person possessing the right is an
employer.
20. RIGHT TO TERMINATE. If the worker has the
right to end his or her relationship with the person for
whom the services are performed at any time he or she
wishes without incurring liability, that factor indicates
an employer-employee relationship.
A-3773-22
16
[Rev. Rul. 87-41, 1987-1 C.B. 296.]
IV.
As a preliminary matter, we recognize petitioner's service as counsel for
the Authority began in 2002 and required his enrollment in PERS. Moreover, it
is undisputed that throughout his service, petitioner made regular contributions
to PERS. Nevertheless, with the enactment of N.J.S.A. 43:15A-7.2(b) and the
application of the IRS twenty-factor test, we are satisfied that the Board's final
decision, adopting the ALJ's findings and conclusion that petitioner met the
definition of an independent contractor and is therefore retroactively ineligible
for PERS benefits, is firmly rooted in the law, and thus, is not arbitrary,
capricious or unreasonable. In re Stallworth, 208 N.J. at 194; Henry v. Rahway
State Prison, 81 N.J. 571, 579 (1980).
Before us, petitioner principally argues the Board's final decision was
arbitrary, capricious and unreasonable as the record demonstrates that he was an
employee of the Authority for the relevant time periods. He specifically disputes
the ALJ's determination of several of the pertinent IRS factors, and relying on
Mastro v. Retirement System, 266 N.J. Super. 445 (App. Div. 1993), he urges
us to consider how "[c]ase law . . . has confirmed the possibility of the existence
of both an employee and/or an independent contractor status for a municipal
A-3773-22
17
attorney." Our holding in Mastro, decided in 1993, however, is not instructive
because of the sweeping changes in the law following the 2007 enactment of
Chapter 92. We, therefore, address petitioner's arguments regarding the ALJ's
consideration of the IRS factors. Additionally, we address whether the doctrines
of equitable estoppel and laches require reversal of the Board's retroactive
determination petitioner is ineligible for PERS benefits related to his sixteen
years of service as counsel to the Authority.
First, petitioner concedes the ALJ's use of the IRS twenty-factor test in
determining an employee's eligibility for PERS while simultaneously urging us
to consider as an alternative, the definition of employee in I.R.C. § 3121(d)(2).
He maintains, "[f]or employment tax purposes, an employee is defined by
[I.R.C. §] 3121(d)(2) as 'an individual who, under the usual common law rules
applicable in determining the employer-employee relationship, has the status of
an employee.'"
We reject petitioner's invitation to adopt an alternative test to the IRS
twenty-factor test relied on by the ALJ on the pivotal question whether he is an
employee or independent contractor eligible for PERS benefits. We do so based
on the express language of N.J.S.A. 43:15A-7.2(b), which requires an analysis
of whether the "person meets the definition of independent contractor as set forth
A-3773-22
18
in regulation or policy of the federal [IRS] for the purposes of the [IRC]," and
case law which has long recognized the use of the IRS twenty-factor test under
Revenue Ruling 87-41 as a guide. See Francois, 415 N.J. Super. at 350-51.
Specifically addressing the IRS factors, petitioner asserts the ALJ failed
to consider "numerous indicators of an employer-employee relationship in the
underlying record for both time periods in question that apply to other relevant
factors at issue, such as [f]actors one (Instructions), three (Integration), and eight
(Full-time Required)," gave undue weight to the firm aspects of his relationship
with the Authority, and that the Board failed to consider the totality of the
circumstances. Petitioner does not dispute the ALJ's findings as to all of the
factors.
Petitioner's arguments are belied by the record, which shows the ALJ
reviewed petitioner's contractual obligations and separately addressed each of
the applicable IRS factors. As to factor one (Instructions), the ALJ determined
that although the Authority scheduled its meetings and prepared the agenda, it
"did not direct how nor where [petitioner] completed the request[ed]" work, and
that "all of the resolutions and/or work completed by [petitioner] was either at
his home or in his firm."
A-3773-22
19
In discussing factor two (Training), petitioner contends this factor "should
also be weighed in favor of deeming [him] an 'employee' because he was
required to remain current on local government law." The ALJ concluded
"[petitioner], as an attorney at law, did not require training from the township."
For this factor, the ALJ relied on credible evidence establishing that the
Authority did not require petitioner to complete the same general workplace or
human resources trainings required of its regular employees, a point petitioner
does not dispute. Petitioner's argument ignores the undisputed fact that he held
himself out as counsel for other government agencies and private clients that
had nothing to do with the Authority — entities where he presumably would
have had to rely on the same skills. Thus, his training and attendance at the
League of Municipalities and continuing legal education classes, not specifically
required or provided by the Authority are not indicative of his status as an
employee entitled to PERS benefits.
As to factor three (Integration), the ALJ concluded that because petitioner
was appointed for a yearly term by vote and resolution and there was no
continuing relationship with the Authority that "militates towards an
independent contractor." Petitioner argues that the ALJ's decision insufficiently
assessed this factor as the record shows, his use of substitute counsel was limited
A-3773-22
20
to those occasions where he had a conflict or was incapacitated due to illness,
and his PSAs expressly provided for substitutions. He concludes by arguing
"there is no support in the record for the assertion that [he] 'was not restricted
from delegating his duties.'"
Again, petitioner's argument is belied by the express language of the PSAs
in effect at the time, which unequivocally permitted him to use alternate counsel
from his firm from 2002 through at least 2007, "to act under the terms and
conditions of this contract as an alternate." Against this backdrop, we disagree
with petitioner's contention the ALJ insufficiently or incorrectly assessed this
factor.
Petitioner further argues the ALJ's finding he was appointed on a yearly
basis by vote and resolution and thus there is "no continuing relationship" with
the Authority under factor six (Continuing Relationship) is contrary to the
record, which shows he was only appointed on a yearly basis during the first
time period from 2002 to 2008, not after becoming general counsel in 2009.
We agree with petitioner that in assessing this factor, the ALJ did not
differentiate between these timeframes; nevertheless, we discern any such error
was not capable of producing an adverse result. R. 2:10-2 ("Any error or
omission shall be disregarded by the appellate court unless it is of such a nature
A-3773-22
21
as to have been clearly capable of producing an unjust result.") when viewed as
a whole with the other IRS factors. Accordingly, we are satisfied the ALJ's
incomplete analysis of this factor does not warrant reversal of the Board's
decision. Additionally, we note that when petitioner was rehired in 2009 to
serve as general counsel nothing about his actual duties with the Authority
changed. He remained a partner in his law firm and continued to provide legal
services to the Authority on a part-time basis.
As to factor eight (Full-time Required), petitioner argues his "undisputed
testimony demonstrated that his job duties and responsibilities for the two (2)
relevant time periods effectively remained the same," and the Authority
"expected him to be on-call [twenty-four]-hours per day." As to this factor, the
ALJ reasoned petitioner characterized his position as part-time and was free to
conduct business outside the scope of his position as counsel for the Authority.
Here, the ALJ correctly concluded petitioner was not a full-time employee,
which is not in dispute and that his work with the Authority accounted for seven
to ten percent of his income, which militated towards his status as an
independent contractor.
Additionally, in weighing the remaining applicable factors, the ALJ found
factors ten and eleven, (Order or Sequence Set) and (Oral or Written Reports)
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respectively, suggestive of an employer-employee relationship. The ALJ noted
the township clerk scheduled all meetings and prepared the agenda. As to factor
eleven (Oral or Written Reports), the ALJ relied on the evidence showing
petitioner was not required to provide reports to the Authority on a regular basis
and instead provided information as needed, which militated towards an
employer-employee relationship.
Petitioner further argues he should not be disqualified from PERS for the
period from 2002 to 2008 while working under a PSA or based on N.J.S.A.
43:15A-7.2(b) for the period from 2009 to 2016 because he was a W-2 employee
of the Authority. On this point, we discern no error on the part of the Board in
accepting the ALJ's analysis of this factor as the Authority's issuance to
petitioner of a W-2 is not dispositive on the issue of employment for PERS
purposes. Moreover, N.J.S.A. 43:15A-7.2(b) expressly prohibits a person who
serves pursuant to PSAs from eligibility for PERS benefits, if the person is
defined as an independent contractor as set forth in the IRS factors.
Additionally, based on this record, petitioner's relationship with the Authority
was functionally unchanged during both timeframes as he continued to perform
the same duties with no substantive changes in job responsibilities.
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With respect to factors thirteen (Payment of Business and/or Traveling
Expenses), seventeen (Working for More Than One Firm at a Time), and
eighteen (Making Service Available to General Public), the ALJ reasonably
determined that the Authority did not compensate petitioner for business or
travel expenses. Likewise, the ALJ found credible evidence that petitioner bore
the costs and expenses of his own legal practice and performed similar legal
services to the firm's public and private clients. The Board, however, modified
the ALJ's decision as to factor sixteen (Realization of Profit or Loss), concluding
it "supports a characterization of the member as an employee."
Petitioner next contends his position with the Authority is contemplated
by statute, explaining N.J.S.A. 40:14A-5(e) provides that:
[E]very sewage authority may also, without regard to
the provision of Title 11 of the Revised Statutes,
appoint and employ a secretary and such professional
and technical advisers and experts and such other
officers, agents and employees as it may require, and
shall determine their qualifications, terms of office,
duties and compensation.
[N.J.S.A. 40:14A-5(e).]
Petitioner's argument does not establish his eligibility for pension
benefits. Rather, the statute merely authorizes the appointment and employment
of various professionals.
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Additionally, petitioner asserts that his earnings were PERS-eligible
based exclusively on the method in which he was compensated, citing Fasolo v.
Bd. of Trs., 181 N.J. Super. 434 (App. Div. 1981). Petitioner's reliance on
Fasolo, like Mastro wholly ignores the current state of the law and our required
analysis subject to Chapter 92 as Fasolo was decided approximately twenty-six
years before Chapter 92 became effective.
Accordingly, having considered petitioner's arguments in the context of
our deferential standard of review and the applicable law, we are satisfied that
the ALJ's findings, as adopted and modified by the Board, are supported by the
record and warrant our deference.
V.
We next turn to petitioner's argument the Board's decision retroactively
finding him ineligible for PERS is unreasonable and inequitable given his
longstanding, compulsory membership and his reliance on the pension system.
He argues that when he was hired by the Borough, he was compelled to
contribute to PERS as a condition of employment, and "to then state, in 2015,
that he was not eligible for almost the entirety of that period, is unconscionable ."
He maintains the Division's April 2015 correspondence advising him that he was
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eligible to purchase service credit, which he paid, is indicative of the Division's
misinformation that he relied on to his detriment.
For its part, the Board asserts that it is vested with the general
responsibility for the proper operation of the retirement system under N.J.S.A.
43:16A-13(1), including the responsibility to correct errors. It maintains that
"[a]n individual who is 'eligible for benefits' is entitled to a liberal interpretation
of the pension statute, but 'eligibility [itself] is not to be liberally permitted.'"
Kraynick v. Bd. of Trs., Pub. Emps.' Ret. Sys., 412 N.J. Super. 232, 237 (App.
Div. 2010) (emphasis added). They further maintain the doctrine of equitable
estoppel is "rarely invoked against governmental entities" and "there is no
remedy to be gained from PERS, which is statutorily obligated to make these
determinations."
There is no doubt petitioner worked for over sixteen years under the
impression that he was a member of PERS and entitled to a retirement pension.
It is also undisputed that he purchased service credit long after the enactment of
Chapter 92 and the Division accepted his payment. Nevertheless, in addressing
plaintiff's equitable claims, we are reminded "[in] all cases, equity follows the
law." Berg v. Christie, 225 N.J. 245, 280 (2016). "Equity will generally
conform to established rules and precedents, and will not change or unsettle
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rights that are created and defined by existing legal principles." W. Pleasant-
CPGT, Inc. v. U.S. Home Corp., 243 N.J. 92, 108 (2020) (quoting Dunkin'
Donuts of Am., Inc. v. Middletown Donut Corp., 100 N.J. 166, 183 (1985)).
Thus, the enactment of N.J.S.A. 43:15A-7.2(b), barring independent contractors
from participating in PERS both prospectively and retroactively, forecloses
plaintiff's claims for equitable relief. See, e.g., In re Quinlan, 137 N.J. Super.
227, 261 (Ch. Div. 1975), modified and remanded on other grounds, 70 N.J. 10,
(1976) ("When positive statutory law exists, an equity court cannot supersede
or abrogate it.").
Notwithstanding petitioner's arguments regarding the deleterious impact
of the Board's decision on his personal finances, we are constrained to conclude
the Board acted consistent with the applicable law and its decision is therefore
neither arbitrary, capricious or unreasonable. McKnight, 476 N.J. Super. at 162
(quoting Herrmann, 192 N.J. at 27-28).
Affirmed.
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