                                NOT FOR PUBLICATION WITHOUT THE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-4561-18T1

ALFRED J. PETIT-CLAIR, JR.,

          Petitioner-Appellant,

v.

BOARD OF TRUSTEES, PUBLIC
EMPLOYEES' RETIREMENT
SYSTEM,

     Respondent-Respondent.
______________________________

                   Argued March 10, 2020 – Decided July 27, 2020

                   Before Judges Ostrer and Susswein.

                   On appeal from the Board of Trustees of the Public
                   Employees' Retirement System, Department of the
                   Treasury, Docket No. 2-882337.

                   Alfred J. Petit-Clair, Jr., appellant, argued the cause pro
                   se.

                   Jeffrey David Padgett, Deputy Attorney General,
                   argued the cause for respondent (Gurbir S. Grewal,
                   Attorney General, attorney; Melissa H. Raksa,
                   Assistant Attorney General, of counsel; Jeffrey David
                   Padgett, on the brief).
PER CURIAM

      Alfred Petit-Clair's appeal from the denial of certain retirement pension

service credits returns to us after remand. See Petit-Clair v. Bd. of Trs., Pub.

Emp. Ret. Sys., No. A-2048-16 (App. Div. Mar. 1, 2018) (Petit-Clair I). We

assume the reader's familiarity with the factual and legal discussion in our

previous opinion.    In brief, the Board of Trustees (Board) of the Public

Employees' Retirement System (PERS) denied Petit-Clair pension service

credits upon finding that, as attorney for the Perth Amboy Zoning Board of

Adjustment (ZBA), Petit-Clair served as an independent contractor and not an

employee. We affirmed the Board's factual findings regarding the nature and

circumstances of Petit-Clair's work, but held, as a legal matter, that the Board

erred in relying on an Employee/Independent Contractor Checklist (Checklist)

that the Division of Pensions and Benefits (Division) prepared, to determine

Petit-Clair's employment status. We held that N.J.S.A. 2A:15A-7.2(b) obliged

the Board to look to regulations or policy of the Internal Revenue Service in

determining Petit-Clair's employment status.        As the Checklist did not

"accurately distill IRS regulation or policy," we remanded for the Board to issue

a decision "expressly moored to IRS authority." Petit-Clair I, slip op. at 26-27.




                                                                         A-4561-18T1
                                       2
         As the Board adhered to our directive, and reached a decision that

warrants our deference, we affirm.

         On May 16, 2019, the Board issued its final administrative determination

on remand, and again concluded that Petit-Clair was ineligible for the contested

pension service credits because he was an independent contractor. The final

decision followed the Division's post-remand ineligibility determination, the

Board's adoption of it, and Petit-Clair's administrative appeal. In response to

our directive that the Board moor its decision to IRS regulation or policy, the

Board applied the twenty factors set forth in Rev. Rul. 87-41, 1987-1 C.B. 296,

1987-23 I.R.B. 7 (Rev. Rul. 87-41), and aspects of Dep't of the Treasury Internal

Revenue Service, Publication 963, Federal-State Reference Guide (Publication

963).1

         With respect to the twenty-factor test, the Board found a "strong

independent contractor indication." The Board determined that the following

weighed in favor of independent contractor status: (1) "instructions,"2 because



1
  We summarized the twenty factors in Petit-Clair I, slip op. at 17, and quoted
them verbatim in an appendix, id., slip op. at 28-33. We also reviewed
Publication 963. Id., slip op at 19-22.
2
  The Board quoted the headings for the twenty factors found in Rev. Rul. 87 -
41.
                                                                          A-4561-18T1
                                         3
the City lacked "the right to 'control, supervise or direct' [Petit-Clair's] work as

to the result, but also as to how the tasks are to be performed"; (2) "training,"

since he was not required to attend training "typically required of employees,

such as sexual harassment or ethics training"; (3) "integration," because Petit-

Clair did not report to any individual supervisor nor was there "a record of

attendance or timekeeping"; (4) "services rendered personally," as Petit-Clair

could substitute personnel for himself; (5) "hiring, supervising, and pa ying

assistants," because he was not precluded from doing so; (6) "continuing

relationship," because he was appointed for one year terms; (8) "full time

required," as he worked part-time for the ZBA while maintaining his own private

law practice; (10) "order or sequence set," as the he was not directed to complete

his work in a particular order or sequence; (11) "oral or written reports," because

he was not responsible for preparing them; (13) "payment of business and/or

travel expenses," as he had none; (14) "furnishing of tools and materials,"

because he was not provided "office supplies, computer, secretarial support or

any other supplies or equipment" or "an office or permanent workspace"; (17)

"working for more than one firm at a time," as he could maintain his own private

clients; (18) "making services available to the general public," because he served

the public through his private law practice; and (19) "right to discharge," as there


                                                                            A-4561-18T1
                                         4
was no evidence the ZBA could terminate him at will. The Board noted that it

gave relatively less weight to factors (6), (10), and (17), noting regarding factor

(6) that Petit-Clair was reappointed twenty-five years.

      The Board found the following factors favored employee status: (7) "set

hours of work," because the ZBA meetings, which Petit-Clair attended, were

scheduled monthly on appointed days; (9) "doing work on employer's premises,"

since Petit-Clair did most of his work on City premises; (12) "payment by hour,

week, or month," as his payments coincided with those of regular City

employees; (15) "significant investment," although the Board noted he

performed some of his ZBA duties at his own office; (16) "realization of profit

or loss," as Petit-Clair was paid the same, whether meetings were brief or

cancelled; and (20) "right to terminate," because he could terminate his

employment at will. The Board gave all these factors little weight. Regarding

factor (7), the Board noted meetings were often brief or rescheduled. As for

factor (12), the Board noted that the method of payment was designed with the

goal of qualifying him for PERS benefits.

      The Board also applied Publication 963. The Board noted that many of

the twenty factors in Rev. Rul. 87-41 overlapped with the three general

categories in Publication 963. In Petit-Clair I, slip op. at 20, we described the


                                                                           A-4561-18T1
                                        5
three categories as "1) Whether the entity has the right to control the behavior

of the worker; 2) Whether the entity has financial control over the worker; and

3) The relationship of the parties, including how they see their relationship."

(Quoting Publication 963, 4-2).

      The Board quoted the publication's guidance that state statutes creating a

position be analyzed, "to determine whether they establish enough control for

the individual to be classified as an employee under the common-law test." The

Board adopted the Division's view that the Municipal Land Use Law, N.J.S.A.

40:55D-71, "does not establish enough control to classify the ZBA Attorney as

an employee."

      The Board also found that Petit-Clair's receipt of an identification badge

was "not indicative of any particular status," as employees and independent

contractors "in a position such as [Petit-Clair's]" received them. The Board also

rejected Petit-Clair's reliance on the fact he was paid through regular payroll,

deeming that an outgrowth of his misclassification.

      On appeal, Petit-Clair contends the Board erred by relying on the twenty-

factor test in Rev. Rul. 87-41, instead of other expressions of IRS policy.

Alternatively, he contends the Board's application of the twenty-factor test was




                                                                         A-4561-18T1
                                       6
arbitrary and capricious, and the Board's findings are not supported by credible

evidence. We are unpersuaded.

      In exercising our authority to determine strictly legal issues, see

Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973), we remanded for

the Board to apply "the definition of independent contractor as set forth in

regulation or policy of the federal [IRS] for the purposes of the Internal Revenue

Code," N.J.S.A. 43:15A-7.2(b). As we discussed in Petit-Clair I, in addition to

regulations, which we cited, slip op. at 13-15, there exist numerous sources of

IRS policy regarding the classification of workers, including Rev. Rul. 87 -41,

Publication 963, other revenue rulings, and private letter rulings.       As the

Legislature did not specify the relevant source – indeed, the Legislature

mandated reference to regulation or policy – the Board perforce must determine

the most appropriate source of IRS policy. That determination is entitled to

great weight. N.J. Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 575

(1978) (stating "the opinion as to the construction of a regulatory statute of the

expert administrative agency charged with the enforcement of that statute i s

entitled to great weight").

      We acknowledge that "[t]he conclusions expressed in Revenue Rulings

will be directly responsive to and limited in scope by the pivotal facts stated in


                                                                          A-4561-18T1
                                        7
the revenue ruling," 26 C.F.R. § 601.601(d)(2)(v)(a), and Rev. Rul. 87-41

pertained to the classification of certain technical services workers who, under

three scenarios, were assigned to work for clients of personnel firms of various

kinds. See Petit-Clair I, slip op. at 17. Nonetheless, the IRS itself recognized

that the twenty factors represented a distillation of other cases presenting various

factual patterns, stating that "[t]he twenty factors have been developed based on

an examination of cases and rulings considering whether an individual is an

employee." Rev. Rul. 87-41 at 4. Also, the factors should be applied in a fact-

sensitive manner, inasmuch as "[t]he degree of importance of each factor varies

depending on the occupation and the factual context in which the services are

performed." Ibid.

      Commentators have recognized that the IRS's reliance on the twenty

factors is not restricted to the specific fact patterns in the ruling. See James J.

Jurinski, Eligibility for Relief from Federal Employment Taxes under § 530 of

the Internal Revenue Code, 149 A.L.R. Fed 627 (1998) (stating the IRS

"normally makes its determination [regarding employee classification] with

reference to 20 factors detailed in Rev. Proc. 87-41"); Myron Hulen et al.,

Independent Contractors: Compliance and Classification Issues, 11 Am. J. Tax

Pol'y 13, 27 (1994) (stating that the IRS "developed a 20-factor test in making


                                                                            A-4561-18T1
                                         8
the control determination" and noting "[t]he test is not objective, that is, no

specific number of factors need to be satisfied for a finding that the worker is an

employee").

      We have endorsed the twenty-factor test in other cases. See, e.g., 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. Div.

1996). So have other jurisdictions. See Klausner v. Brockman, 58 S.W.3d 671,

676-81 (Mo. Ct. App. 2001) (affirming agency's reliance on twenty-factor test

where regulation directed consideration of IRS regulations and revenue rulings

in determining employer-employee relationship), overruled in part on other

grounds by Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 225 (Mo.

2003); see also Kentfield Med. Hosp. Corp. v. United States, 215 F. Supp. 2d

1064, 1070 (N.D. Cal. 2002) (considering Rev. Rul. 87-41 in case involving

hospital psychologist's employment status); Poe v. Univ. of Cincinnati, 5 N.E.3d

61, 65-66 (Ohio Ct. App. 2013) (considering Rev. Rul. 87-41 in case involving

physician's employment status).




                                                                           A-4561-18T1
                                        9
      Although the IRS has issued revenue rulings that expressly address the

employment status of attorneys, see Petit-Clair I, slip op. at 18 (citing Rev. Rul.

68-323, 1968 -1 C.B. 432, and Rev. Rul. 68-324, 1968-1 C.B. 433), the twenty-

factor test remains viable. We reject Petit-Clair's contention that control-related

factors are "inapplicable" to his case. The Legislature dictated reference to IRS

regulations or policy, and the IRS has adopted the right to control as the unifying

principle of the common law test to classify a worker as an employee. See 26

C.F.R. § 31.3121(d)-1(c)(2); 26 C.F.R. § 31.3306(i)-1(b); 26 C.F.R. §

31.3401(c)-1(b). The IRS recognizes that an entity may not dictate how persons

should practice their professions, "but may retain other kinds of control, such as

requiring work to be done at government offices, controlling scheduling,

holidays, vacations, and other conditions of employment." Publication 963 at

4-3. In short, we shall not disturb the Board's reliance on control factors.

      Furthermore, the Board reasonably relied on Publication 963, which

specifically addresses the classification of public employees. We reject Petit -

Clair's contention that the Board paid only "lip service" to the publication. The

Board specifically addressed the significance of factors identified in the

publication, including the statutory source of the position being analyzed, and

the use of an identification badge.


                                                                           A-4561-18T1
                                       10
      In the alternative, Petit-Clair contends that the Board's conclusions, with

respect to the twenty-factor test and the Publication 963 factors, were arbitrary,

capricious, and unreasonable. We disagree.

      The classification of a worker as an independent contractor or an

employee is far from scientific. As we have discussed, the IRS has identified

numerous factors that often counter-balance each other.           Yet, IRS also

recognizes that "[g]enerally, . . . lawyers [among other professionals] . . . who

follow an independent . . . profession, in which they offer their services to the

public, are not employees."     26 C.F.R. § 31.3401(c)-1(c); cf. 26 C.F.R. §

31.3121(d)-1(c)(2) and 26 C.F.R. § 31.3306(i)-1(b) (stating the same principle,

but omitting the word "generally").

      Although reasonable minds may differ in a close classification case, the

Legislature has delegated the responsibility for making this determination to the

Board. See Commc'ns Workers of Am., AFL-CIO v. N.J. Civil Serv. Comm'n,

234 N.J. 483, 514-15 (2018) (noting the Legislature delegates authority to an

agency to exercise its expertise). As we stated in another pension case:

            [W]here the result is fairly debatable and is based upon
            policy choices made by the Legislature and committed
            for administration and enforcement to a designated
            agency, "we cannot substitute our judgment for that of
            the agency, even if we would have decided the case
            differently" had we been empowered to make the

                                                                           A-4561-18T1
                                       11
            evidentiary choices and apply the governing policies in
            the first instance.

            [Caminiti v. Bd. of Trs., Police & Firemen's Ret. Sys.,
            394 N.J. Super. 478, 482 (App. Div. 2007) (quoting
            Murray v. State Health Benefits Comm'n, 337 N.J.
            Super. 435, 443 (App. Div. 2001)).]

      In essence, Petit-Clair asks us to substitute our judgment for the Board's

in weighing the various factors. We shall not revisit Petit-Clair's contentions

with respect to the Board's factual findings, which we affirmed in Petit-Clair I.

Nor do we conclude that the Board's application of those findings to IRS policy

was arbitrary, capricious, or unreasonable. For example, there was nothing

unreasonable about the Board's conclusion that Petit-Clair's need to secure

annual appointment favored classifying him as an independent contractor,

notwithstanding that he succeeded in securing that appointment each year. Nor

did the Board unreasonably conclude that the City's failure to furnish Petit-Clair

with a computer, office supplies, a secretary, or other supplies or equipment

favored independent contractor status. The provision of a zoning law treatise,

City letterhead, and access to the coffee room falls far short of the tools and

materials that a lawyer needs to practice his or her profession, and which an

employer would provide to an employee.




                                                                          A-4561-18T1
                                       12
      Additionally, we observe that some factors that the Board decided favored

employee status could easily have been deemed to favor independent contractor

status. For example, regarding "significant investment," the IRS states that

independent contractor status is favored "[i]f the worker invests in facilities"

that the workers uses in "performing services and are not typically maintained

by employees" such as renting an office. Although Petit-Clair performed most

of his ZBA work at City Hall, he maintained a separate office as a practicing

attorney. Also, the Board counted the "realization of profit or loss" fac tor as

favoring employee status. However, Petit-Clair could enjoy a profit, if he

received his fixed payment for little work, and could suffer a loss if his hours

staffing ZBA meetings were unexpectedly extended. An employee does not face

such financial uncertainty.

      In sum, the Board adhered to this court's directive on remand and reached

a decision that deserves our deference.

      Affirmed.




                                                                        A-4561-18T1
                                      13
