SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION DOCKET NO. A-1529- 21 MICHAEL BERGIN, Petitioner-Appellant,

v. NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, Respondent-Respondent, and EQUITY NATIONAL CAPITAL, LLC, Petitioner,

v. NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, Respondent.

_____________________________

Argued November 8, 2023

– Decided January 16, 2024

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court.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 parti es in the case and its use in other cases is limite d. R. 1:36- 3.2 A- 1529

- 21 Before Judges Whipple, Mayer and Enright. On appeal from New Jersey Department of Labor and Workforce Development, Docket Nos. 13-015 and 13

- 016. Timothy W. Bergin (Potomac Law Group, PLLC) of the Virginia bar, admitted pro hac vice, argued the cause for appellant (Law Office of Mark A. Kriegel , LLC, and Timothy W. Bergin, attorneys; Mark A. Kriegel and Timothy W. Bergin, on the briefs ). Kevin K.O. Sangster, Deputy Attorney General, argued the cause for respondent (Matthew J. Platkin , Attorney General, attorney; Donna Sue Arons, Assistant Attorney General, of counsel; Kevin K.O. Sangster, on the brief).
PER CURIAM Michael Bergin appeals from a December 16, 2021 fin al administrative action of the Commissioner of the New Jersey Depart ment of Labor and Workforce Development (the Department) requiring Be rgin, as sole member of Equity National Capital, LLC (ENC), to pay employee -related tax assessments in the amount of $110,401.36, plus interest and penalties, for the y ears 2007 through 2011 for financial brokers with whom he cla imed he retained a supplier/customer and landlord/tenant relationship. We affirm. The record informs our decision. In 2006, Bergin, a licensed securities broker, entered into an Office of Supervisory Juris diction (OSJ) agreement3 A- 1529

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with J.P. Turner, LLC (JPT), a securities broker-dealer . In that OSJ agreement, JPT appointed Bergin as its licensee to open, manage, and operate a general securities business; in return, JPT would fulfill certain obligations to Bergin and to the registered brokers/representative s whom Bergin appointed. This was to occur at the Red Bank branch of JPT and would be conducted in accordance with the OSJ agreement. The OSJ agreement stated Bergin was JPT's independe nt contractor. All individuals engaged by Bergin would be Bergin's employees or agents, and JPT would not be responsible for them. Per their a greement, JPT would have no right to control or direct JPT's licensee (Bergi n), other than according to the terms of the OSJ agreement and to the extent requir ed by law to oversee compliance with rules of relevant authorities, such as the Securities Exchange Commission and National Association of Securities D ealers. Under the OSJ agreement, Bergin was to "perform all of the duties typically performed by a branch office manager of a retail-securities firm," including "[h]iring, supervising[,] and terminating, as appro priate, all persons working at, conducting business for, or associated with" the Red Bank branch office and ensuring that branch office brokers abided by all regulations. JPT retained the authority to approve such hiring decis ions. Bergin was to pay the4 A- 1529

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brokers through the Commission Schedule provided to JPT by Bergin, pursuant to Section 4(d) of the OSJ agreement. The OSJ agreement included a provision whereby Bergin was to pay the brokers wit h "forgivable loans," to be repaid over time

— without interest

— by deductions from monthly commission payments. Bergin began acquiring brokers. These new brokers would typically accept the terms of their service in three document s: (1) a Registered Representative (RR) Agreement; (2) a Memorandum of Understanding (MOU); and (3) a promissory note. Each broker, "engaged by licensee" as a registered representative, was to "conduct his or her business as a securities broker " exclusively through JPT, and the broker was to process all orders qualifying as "securities transactions" through JPT. As the licensee, Bergin provided offi ce facilities and supplies. JPT was not obliged to provide any administrative s ervices or to house the brokers. JPT was only to buy and sell orders of ap proved securities and maintain records. In addition, each broker guarant eed that no order would go to a JPT trading desk without signed approval by Be rgin. New registered brokers also signed an MOU with ENC which stated th e broker was an independent contractor.5 A- 1529

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When a broker from JPT's branch office in Red Bank sought benefits under Unemployment Compensation Law (UCL), N.J.S.A. 43:21-1 to -71, in April 2008, it triggered scrutiny by the Department because the broker was not on the ENC payroll. The Department sought to deter mine whether the Red Bank branch office was an employer required to make regular contributions to the New Jersey Unemployment Compensation Fund (UCF) . Anthony M. Miele 1 of the Department conducted an audit of Bergin and ENC for contribution years 2007 through 2010 and determined there was a contribution deficiency in the amount of $74,963.92 from ENC and $110,401.36 from Bergin. Miele found the brokers worked on- site

— using equipment provided to them

— and were selling securities; under the conditions h e observed, the brokers were not considered outside sellers. Miele found Bergin

— the sole principal member of ENC

— had listed brokers and their commissions on his income tax returns using his own social security nu mber, even though he had issued them 1099 forms. Also, the brokers had not been compensated

1 Miele conducted the on-site audits; once Miele reti red, however, he was unavailable to testify.6 A- 1529

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exclusively through commissions, as the payments to them were in the form of "forgivable loans." Miele rejected assertions offered by Edgar D. Gee, CPA for Bergin and ENC, regarding exemptions under Sections 3401 and 3 508 of the Internal Revenue Code and N.J.S.A. 43:21-19(i)(7)(J). Miele also rejected the assertion the brokers' payments were protected by t he federal "safe harbor" provisions and examined the status of the brokers t hrough application of the "ABC" test under New Jersey law. 2 Bergin and ENC disagreed with his findings, so Miele performed a second audit; his co nclusions remained unchanged: the brokers were not true independent c ontractors, ENC had a contribution deficiency of $74,963.92 for the years of 2007 through 2010, and Bergin similarly owed $110,401.36 for the same year s. In September 2011, pursuant to UCL §14(c), ENC and Bergin

— the only member of ENC

— were assessed UCL taxes from January 2007 through M arch 2011 to cure the deficiencies. Both petitioned the Office of Administrative Law (OAL) and filed a joint motion for summary deci sion in the OAL proceedings.

2 "ABC" is a reference to the test in N.J.S.A. 43:21- 19(i)(6)(A) , (B), and (C). E. Bay Drywall, LLC v. Dep't of Labor & Workforce D ev., 251 N.J. 477, 495 (2022).7 A- 1529

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In 2017, Administrative Law Judge (ALJ) Lisa James- Beavers denied the joint motion for summary decision but later gra nted a motion for reconsideration in part, holding that, under UCL § 19(g) and the Revised Uniform Limited Liability Company Act, N.J.S.A. 42: 2C-92, Bergin was not liable for the Department's assessment against him. The Department's Commissioner vacated that decision, ordering an evi dentiary hearing be held. ALJ James-Beavers conducted an evidentiary hearing on the consolidated matters in January 2019. Two witnesses testified. The Department's witness was Supervising Auditor David Menist, who examined Bergin's records and confirmed Miele's audit. Menist testified the investigation and audi t of Bergin occurred when the Department learned that ENC is not a licensed entit y and cannot pay commissions. Consequently, the Department decided to audit ENC's sole member, Bergin, who is fully licensed to pay commis sions. Menist discussed Miele's findings and concluded Be rgin was not entitled to an exemption under N.J.S.A. 43:21-19(i)(7)(J), b ecause "employment" is a precondition under that section. Miele had found t hat not all the brokers were compensated entirely on a commission basis, as some were paid using the "forgivable loan" structure. Menist agreed, based on the audit materials,8 A- 1529

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Bergin failed to establish a statutory exemption un der the Federal Unemployment Tax Act (FUTA) and did not provide the proofs required by N.J.A.C. 12:16-23.2, which would also provide shelt er from the UCL tax. Menist also explained why the other exemptions were inapplicable. For example, the federal "safe harbor" provision is not preemptive in New Jersey and, based on Miele's audit, the "direct sellers" d efense is inapplicable to securities sales. Menist testified Miele's audit showed that ENC fail ed to meet its burden of establishing that the brokers in the franchise d id not satisfy the ABC test, in that they: (a) were not demonstrably outside the c ontrol of ENC; (b) were not shown to be employed outside the ordinary course of ENC's business; and (c) were not shown to be individually and independently operating their own businesses. For instance, while the brokers relied on Bergin to make trades, Bergin relied on JPT to make the trades. In additi on, Bergin disbursed the payment of commissions to the brokers from his own funds and charged for the office administrative services he provided to them. These, with other factors , led to Menist's conclusion that Bergin retained an employer-employee relationship with the brokers under the ABC test.9 A- 1529

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Menist concluded the brokers involved in the busin ess were conducting sales of securities in the normal course of Bergin' s business, and the brokers were not independently established in a separate tr ade. He found a contribution deficiency of $88,391.64 and a recorde d liability amount of $436,815.81. The next witness was Bergin, who testified that he issued 1099s to the brokers. Bergin recounted how he was unpleasantly surprised, within the first year of his relationship with JPT, to learn that JP T was issuing to him

— as licensee

— a 1099 form for the entire amount received by the R ed Bank branch, including brokers' commissions issued separately fr om JPT. For example, of the 3.5 million dollars credited to him, Bergin tes tified that 2.7 million dollars had been received by the Red Bank branch's register ed representatives. Because he was dissatisfied with the arrangement w ith JPT, Bergin consulted with Gee, who advised him the arrangement was legal. Gee began administratively issuing 1099 forms to the brokers for the commissions they received, notwithstanding JPT's payment of commissi ons they had already earned. Bergin understood that a 1099 form is issu ed to a contractor to disclose non-wage compensation and that a W-2 form is issued to memorialize
wages.10 A- 1529

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According to Bergin, the brokers were autonomous, he could only recommend hiring and firing of brokers to JPT, and he could not hire and fire brokers himself. There was no dress code at the Red Bank branch, and the brokers were accorded freedom of movement; each bro ker could independently operate upon his or her choosing. When ALJ James-Beavers was elevated to the Superio r Court befor e rendering her written decision, OAL Deputy Director and Administrative Law Assignment Judge (ALAJ) Edward J. Delanoy, Jr.

— with the parties' consent

— issued an initial decision based on the record, wit hout a new hearing. ALAJ Delanoy made the following additional findings of f act when issuing the initial decision: 1. [JPT], after deducting its percentage of [nine]

percent, sent the remainder of each commission it received from the [b]ranch [o]ffice brokers to Berg in. 2. Bergin, after calculating and deducting his var iable percentage, disbursed the remainder to the branch office brokers. He issued 1099 forms to each broke r with his social security number, and claimed the commission expenses on his personal income tax returns. 3. The registered representatives/brokers provided their services on the premises of the Red Bank bran ch office.11 A- 1529

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A preponderance of evidence is generally the stand ard of proof applied in administrative law contested cases before state agencies. Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 169 (2006). As such, ALAJ Delanoy found Bergin and ENC did not present sufficient proof to demonst rate by a preponderance of the evidence the conditions set forth in the exempt ion under N.J.S.A. 43:21- 19(i)(7)(J) existed in the Red Bank branch. He det ermined "[i]t is more likely than not that the brokers were not free from contro l or direction over the performance of their services, both by contract and in fact." The ALAJ also found that Bergin, but not ENC, was liable for the unpaid contributions. As a result, the initial decision affirmed the Departmen t's assessment against Bergin but reversed the assessment against ENC. Thus, the initial decision dismissed Bergin's appeal and granted ENC's appeal. The ALAJ also found, by a preponderance of the evi dence, that the brokers received "remuneration," which is defined a s "all compensation for personal services." N.J.S.A. 43:21-19(p). As the ALAJ explained:

[G]iven the clearly express language in the UCL, th at through commissions which are not the exclusive source of brokers' incomes, and through the monies given the brokers in promissory notes styling them as "forgivable loans," the brokers hired in the Red Ba nk branch were in fact receiving "remuneration" as defined above. Consequently, their services must b e12 A- 1529

- 21 considered "employment," not independent contracting. It is not credible for petitioners to suggest that routinely forgiving "loans" to newcomer brokers, on a regular, scheduled monthly payback . . . is somehow in the nature of a signing bonus. The arrangement lasts years. The years coincide with the length of each of the brokers' contracts of employment in the bran ch. Repeatedly labeling the brokers in the language of these agreements as "independent contractors" does not per se confer that status. It must be determin ed that this language does not succeed, given the cumulative weight of circumstances found in this record. Next, the ALAJ determined Bergin failed to demonstr ate the ABC test set forth under N.J.S.A. 43:21-19(i)(1) had been sa tisfied. Specifically, with respect to Section A of the test, the ALAJ noted:

Bergin argues that the funds to brokers were not distributed by him. He issued the 1099 forms to accommodate the pressuring insistence of JPT

. Further, his accountant, Gee, had assured him the process was simply an acceptable accounting device. However, without testimony from Gee or any corroboration by the brokers, and considering the O SJ [agreement]'s clear conferral of responsibility for commission disbursement on Bergin, this argument must fail. Who holds the purse is the controlling factor. Regarding Section B of the test, ALAJ Delanoy found Miele

credibly and consistently reported that the brokers were present on the premises and under the aegis of13 A- 1529

- 21 the Red Bank branch office when performing their services. Against the background of those reasons outlined above, finding that the brokers had direct ion and control by Bergin, the evidence preponderates t hat the brokers were employed in the [b]ranch [o]ffice selling securities on behalf of Bergin and JPT, in the usual course of business. They did not operate out side the places where the usual course of business was performed. As to Section C of the test, ALAJ Delanoy noted the "boundaryless environment" in the Red Bank branch office did not rise to the level of independent operation. Based on those findings, and given Bergin and ENC's failure to sustain their burden of demonstrating by a preponderance of the evidence that the conditions set forth under N.J.S.A. 43:21-19(i)(6)( A)-(C) were satisfied, the ALAJ found Bergin and ENC did not fall within the p urview of N.J.S.A.
43:21 -19(i)(7)(J)'s exemption The ALAJ next addressed Bergin's contention that a corresponding exemption exists within FUTA, in Section 921 of the Taxpayer Relief Act of 1997, codified as a note following 26 U.S.C. § 3121 . However, the ALAJ stated it was "unclear how this section applies to services of the branch office brokers, where employer control is not limited to c ompliance with securities rules." Section 921 "does not provide a defined, c orresponding exemption i n14 A- 1529

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FUTA, as anticipated in N.J.A.C. 12:16-23.1 and N.J .A.C. 12:16-23.2, or N.J.S.A. 43:21-19(i)(7)(J)." ALAJ Delanoy also rejected Bergin and ENC's interr elated, alternative theories of exemption that: (1) they were entitled to the FUTA "direct sellers" exemption under 26 U

. S.C. § 3508(b)(2) ; and (2) the brokers were not subject to tax because of the "safe harbor" provision under Section 530 of the Revenue Act of 1978 (codified as a note to 26 U.S.C. § 3401 ). Rejecting the applicability of the "direct sellers" exemption, th e ALAJ wrote:

The brokers here have been credibly shown by respondent to be operating primarily from the branc h office premises, and to be using a JPT securities platform to transact sales. Nothing in the record suggests this business is, or could be, conducted home- to

- hom e through in-home demonstration. Therefore, I CONCLUDE that the "direct sellers" exemption does not apply, and the services of the branch office brokers cannot be exempted by relianc e on FUTA. [(Emphasis in original.)] The ALAJ also rejected application of the "safe har bor" exemption under the UCL, stating that N.J.A.C. 12:16-23.2(a) "specifica lly precludes use of this safe-harbor provision as evidence of FUTA exemption ." The ALAJ did not definitively rule on Bergin and ENC's argument that N.J.A.C. 12:16-23.2(a)(4) should be applied retroactively to their benefit. Until its amendment in 2018,15 A- 1529

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this rule had defined services by brokers as compor ting with the Internal Revenue Service (IRS) guidelines for establishing t he FUTA exemption for independent contractors. Instead of addressing the outdated definition, the ALAJ determined the Department could rely on the cu rrent version of the rule, retroactively applied. Finally, the ALAJ found Bergin and ENC

— rather than JPT

— were correctly considered the brokers' employers, as sta ted in the OSJ agreement. To that end, the ALAJ noted the Department had not audited or otherwise identified JPT as a party, and there would be a fun damental due process concern if JPT was classified as the employer witho ut a chance to respond or litigate its case. The Department's Commissioner adopted the findings and rationale of the ALAJ regarding the ABC test into the final admi nistrative action. After reiterating the ALAJ's findings with respect to tho se three prongs, the Commissioner concluded:

Upon de novo review of the record, and after consideration of the ALAJ's initial decision, as well as the exceptions filed by petitioner Bergin, I hereby accept and adopt the findings of fact, conclusions[ ,] and recommendation contained in the ALAJ's initial decision.16 A- 1529

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The Commissioner, therefore, ordered Bergin to imm ediately remit $110,401.36

— reflecting his liability for years 2007 through 201 1

— as well as applicable interest and penalties, to the Departmen t. At that time, th e Commissioner also dismissed the Department's assess ment against ENC. This appeal followed. On appeal, Bergin argues he was not the employer of the Red Bank branch office brokers under the UCL. We reject tha t argument and

— under our limited standard of review

— affirm, largely for the extensive discussion and findings of ALAJ Delanoy. We add the f ollowing. "Appellate review of an agency's determination is l imited in scope." Circus Liquors, Inc. v. Governing Body of Middletow n Twp., 199 N.J. 1, 9 (2009); N.J. Ass'n of Sch. Adm'rs v. Cerf, 428 N.J. Super. 588, 595 (App. Div. 2012). "Judicial review of agency regulations begi ns with a presumption that the regulations are both 'valid and reasonable.'" N.J. Ass'n of Sch. Adm'rs v. Schundler, 211 N.J. 535, 548 (2012) (quoting N.J. S oc'y for the Prevention of Cruelty to Animals v. N.J. Dep't of Agric. , 196 N.J. 366, 385 (2008)). "Unless a [c]ourt finds that the agency's action was arbitr ary, capricious, or unreasonable, the agency's ruling should not be dis turbed." I.G. v. Dep't of17 A- 1529

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Hum. Servs., 386 N.J. Super. 282, 286 (App. Div. 20 06) (quoting Brady v. Bd. of Rev., 152 N.J. 197, 210 (1997)). We also generally defer to an administrative agency 's role in factfinding. See Messick v. Bd. of Rev., 420 N.J. Super. 321, 32 5 (App. Div. 2011) (Reviewing courts defer to an administrative agency 's "technical expertise, its superior knowledge of its subject matter area, and its fact-finding role."). The UCL, is "social legislation that provides finan cial assistance to eligible workers suffering the distress and disloca tion caused by unemployment." Utley v. Bd. of Rev., 194 N.J. 534, 543 (2008). "At the center of the UCL is the employer-employee relation ship." Phila. Newspapers, Inc. v. Bd. of Rev., 397 N.J. Super. 309, 318-19, ( App. Div. 2007). Under the UCL, payments to qualified unemployed per sons "are made out of a fund which is financed by contributions th ereto by employers and workers based on the wages paid and received as spe cified in the law." Bloom v. Div. of Emp. Sec., 69 N.J

. Super. 175, 178 (App. Div. 1961). Both employers and employees are required to make contri butions to the fund. N.J.S.A. 43:21-7. If, however, an employer fails t o deduct the contributions of any of his employees at the time wages are paid, on ly the employer is liable to the fund for such contributions. N.J.S.A. 43:21-7( d)(1)(E).18 A- 1529

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Once the Department determines an employer-employee relationship exists, the party challenging the Department's dete rmination has the burden of showing otherwise. N.J.S.A. 43:21 -19(i)(6). Under that framework, the putative employer

— here, Bergin

— must establish the existence of the three criteria under what is now known as the ABC test. Ibid. N.J.S.A.
43:21 -19(i)(6)(A), (B), and (C) provide as follows:

Services performed by an individual for remuneratio n shall be deemed to be employment subject to this chapter [(N.J.S.A. 43:21-1 to -71)] unless and unti l it is shown to the satisfaction of the division 3 that A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; (B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and (C) Such individual is customarily engaged in an independently established trade, occupation, profession[,] or business.

3 "'Division' means the Division of Unemployment and Temporary Disability Insurance of the Department of Labor and Workforce Development." N.J.S.A. 43:21 -19(e)(1).19 A- 1529

- 21 [Ibid.] All three provisions must be satisfied under this t est; an entity that fails to prove even one of the elements is considered an emp loyer under the UCL. Carpet Remnant Warehouse, Inc. v. N.J. Dep't of Labor, 125 N.J. 567, 581 (1991); William H. Goldberg & Co. v. Div. of Emp. S ec., 21 N.J. 107, 113 (1956); Trauma Nurses, Inc. v. Bd. of Rev., 242 N.J . Super. 135, 143 (App. Div. 1990); Bloom, 69 N.J. Super. at 178-79. Bergin argues he was not an employer but, instead, retained a sup pliercustomer relationship with the brokers, akin to a l andlord-tenant relationship. However, this claim is not borne out by, and is con tradicted by, the record. The UCL broadly defines "employment" as services "p erformed for remuneration or under any contract of hire, written or oral, express or implied." N.J.S.A. 43:21-19(i)(1)(A). Bergin contends the brokers associated with the Red Bank branch office did not provide services to him and an employer- em ployee relationship did not exist, rather, a supplier-customer/landlord-tenant relationship was in place

. Bergin contends he provided the brokers with office space, equipment, and related services, for which the brokers agreed to p ay, as a monthly fee, a percentage of their gross commissions. But this as sertion is belied by the fact20 A- 1529

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that he issued the brokers 1099 forms, and he liste d those brokers and their commissions on his own income tax returns using his social security number. As to the interrelated argument regarding the thres hold requirements triggering applicability of the ABC test, Bergin co ntends the Department failed to demonstrate he remunerated the brokers. Instead , Bergin argues, the record establishes JPT directly paid the brokers their net commissions, which it agreed to do. Under the OSJ agreement, Bergin was an independent contractor for JPT, and all individuals engaged by Bergin as agent s were Bergin's responsibility; Bergin's duties for such individual s included "hiring, supervising and terminating, as appropriate, all pe rsons [who] work at, conduct business for" the Red Bank branch office. Bergin a lso remunerated the brokers through the Commission Schedule provided to JPT by Bergin, pursuant to Section 4(d) of the OSJ agreement. In addition, as an amendment to the OSJ agreement, Bergin remunerated the broker s with "forgivable loans." Also, under the RR Agreement, the brokers were subj ect to various constraints at Bergin's discretion. Bergin was not solely a la ndlord who managed the office as JPT's agent; his attempt to classify his role as such is without merit, because the record contradicts this assertion.21 A- 1529

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The ALAJ found, by a preponderance of the evidence, the brokers were remunerated, and the commissions were not the sole source of their income. The brokers were provided money in the form of forg ivable loans, acknowledged as such in promissory notes. The ALAJ rejected the assertion that routinely forgiving 'loans' to newcomer brokers, ba sed on a regular, scheduled monthly payback is somehow in the nature of a signing bonus. These findings were well-supported by the record. Bergin argues he paid the brokers as a conduit for JPT, a third party, and that JPT collected all commissions that the brokers were due from their clients. He further argues such payments did not transform h im into an employer even if he issued the 1099 forms, citing Koza v. New Jer sey Department of Labor , 307 N.J. Super. 439, 442 (App. Div. 1998) ("petitio ner merely was the conduit for the payment of the group's earnings"). However, the facts of Koza are distinguishable. In Koza, the court held a bandleader was not the employer of musicians who sporadically played together, since the bandleader only received the mo ney from the club owner and distributed it amongst the musicians. 307 N.J. Super. at 444. There, the court found the bandleader was a mere "conduit" for the remuneration, and, in that context, the arrangement was akin to a joint v enture, instead of an22 A- 1529

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employer-employee relationship. Ibid. As discussed herein, the parties agreed that Bergin was to assert control over the brokers. He also issued 1099 forms to them, listed the brokers and their commissions o n his own income tax returns using his own social security number, and o therwise remunerated them for their work. Thus, Koza remains distinguishable , and Bergin's argument that JPT was the employer of the Red Bank branch of fice brokers is meritless. Having determined the threshold requirements of th e ABC tests are applicable, the next step is to assess whether the ABC test was, indeed, satisfied. Bergin argues he has satisfied the thre e sections of the ABC test, and the Department erred in finding otherwise. Based o n our review of the record, we conclude Bergin has not demonstrated the Departm ent's determination rose to an arbitrary, capricious, or unreasonable error. Part A of the ABC test requires a showing that the provider of services "has been and will continue to be free from control or direction over the performance of such service." N.J.S.A. 43:21-19(i) (6)(A). Factors showing control include: "whether the worker is required t o work any set hours or jobs, whether the enterprise has the right to control the details and means by which the services are performed, and whether the service s must be rendered personally." Carpet Remnant Warehouse, 125 N.J. at 590.23 A- 1529

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Part B of the test requires a showing that the ser vices provided were "either outside the usual course of [Bergin's] busi ness" or that the services were "performed outside of all the places of [Bergi n's] business." N.J.S.A.
43:21 -19(i)(6)(B). As used in the UCL, the term "place of business" refers to, among other things, those locations where the enter prise "conducts an integral part of its business." Carpet Remnant Warehouse, 1 25 N.J. at 592. Part C of the test requires a showing that the putative employees were "customarily engaged in an independently establishe d trade, occupation, profession[,] or business." N.J.S.A. 43:21-19(i)(6 )(C). To satisfy Part C, a supposed employer must demonstrate that each indivi dual is engaged in "an enterprise that exists and can continue to exist in dependently of and apart from the particular service relationship." Carpet Remnant Warehouse, 125 N.J. at 585. In other words, each broker would have had to conduct an "enterprise" that could have continued to exist independently fr om the services they performed for Bergin. Bergin asserts the brokers were free from his cont rol and direction, and his role was as a mere conduit for JPT, subject to JPT's control and direction; Bergin claims he was more akin to a landlord to the brokers . T he OSJ24 A- 1529

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agreement between JPT and Bergin, as well as the MO U and RR agreements between Bergin and the brokers, undermine Bergin's arguments. JPT appointed Bergin as its licensee to open, mana ge, and operate a general securities business; in return, JPT would p rovide "services" to Bergin and to the registered brokers who Bergin appointed. This would occur at the Red Bank branch and would be conducted in accordanc e with the agreement. The OSJ agreement stated Bergin would be JPT's inde pendent contractor. All individuals engaged by Bergin as employees or agents would be Bergin's responsibility, and JPT would not be responsible fo r them. Per their agreement, JPT would have no right to control or di rect the brokers engaged by Bergin, other than according to the terms of the OSJ agreement and to the extent required by law to oversee compliance with r ules of relevant authorities. Per the OSJ agreement, Bergin's duties as licensee were to be those typical of a branch manager of a retail securities firm, includi ng ensuring that branch brokers abided by all regulations. The proofs indi cate Bergin, as ENC's sole member, monitored and controlled the brokers workin g out of the Red Bank branch office.25 A- 1529

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The ALAJ and the Department's Commissioner properl y found Parts A, B, and C of the ABC test applicable, and Bergin has failed to demonstrate how this finding was arbitrary, capricious, or unreason able. Bergin argues only JPT, and not he, can be consider ed an employer of the brokers under UCL § 19(g), which defines "employing unit" and provides:

All individuals performing services within this Sta te for any employing unit which maintains two or more separate establishments within this State shall be deemed to be employed by a single employing unit fo r all the purposes of this chapter [(N.J.S.A. 43:21-1 to - 71)]. Each individual employed to perform or to as sist in performing the work of any agent or employee of an employing unit shall be deemed to be employed by such employing unit for all purposes of this chapte r [(N.J.S.A. 43:21-1 to -71)], whether such individua l was hired or paid directly by such employing unit o r by such agent or employee, provided the employing unit had actual or constructive knowledge of the wo rk. [N.J.S.A. 43:21-19(g).] Bergin's argument pertaining to N.J.S.A. 43:21-19( g) is two-fold: first, that he cannot be considered the brokers' employer because he was not the highest corporate authority; and second, that he ca nnot be deemed their employer because he purportedly did not hire and pa y the brokers. Bergin maintains, pursuant to N.J.S.A. 43:21-19(g), JPT was the highest corporate authority, and, hence, he cannot be consi dered the employing unit26 A- 1529

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under UCL. Bergin cites MBL Holding Corp. v. State , 215 N.J. Super. 418 (App. Div. 1987), in support of this argument, but his reliance on MBL is misplaced. In MBL , the corporations were subsidiaries of mul ti -line insurance carrier, MBL. 215 N.J. Super at 420. The parent c orporation hired the employees, assigned them occasionally to work for t he subsidiaries, and arranged for a system where the employees worked di rectly from the parent corporation's office. Ibid. MBL paid the employees and made the contributions to the UCF and "in turn billed each [ subsidiary] for its share of the employee's salary and benefits." Ibid. The court found that, under N.J.S.A. 43:21-19(g), only MBL could be considered the employer and, therefore, liable for the unemployment contribution s; MBL directly hired the employees and paid them out of MBL funds. Id. at 4 22. Only MBL exercised real control. Ibid. Therefore, the employees were not employed by the subsidiary corporati ons within the statutory definition of N.J.S.A. 43: 21-19(g). The facts of this case stand in stark contrast to MBL

. Bergin exercised control over the brokers, remunera ted them for their services

— with commissions and forgivable loans

— and issued them 1099 forms. The brokers performed services for remunera tion, they were hired by Bergin to work under his control out of the Red Ban k branch office, and they27 A- 1529

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were paid directly by Bergin for their services. U nlike the parent company in MBL, the extent of JPT's oversight was to provide t hat necessary to ensure the brokers' compliance with securities laws. Under N.J.S.A. 43:21-19(g), JPT cannot be considered the brokers' employer. Moreover, as the ALAJ noted, the Department did not audit or otherwise identify JPT as a party in this case, and there wou ld be a "fatal absence of due process" if JPT was classified as the employer with out a chance to respond. This is especially pertinent at this late stage in the litigation. Bergin similarly argues he cannot be held liable fo r UCL taxes as the sole member of ENC under our State's Revised Unifor m Limited Liability Company Act (LLC Act), N.J.S.A. 42:2C- 92 . According to Bergin, ALAJ Delanoy did not have the authority under the LLC Ac t to hold him solely liable for the UCL taxes, rather than holding both Bergin and ENC liable, as ALJ James-Beavers had done previously. The record is devoid of proof that ENC paid the bro kers directly, and Bergin has failed to demonstrate otherwise. On the other hand, ENC did not possess a broker license; only Bergin possessed suc h a license. Only properly licensed entities can pay brokerage commissions.28 A- 1529

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Bergin also argues he is entitled to an exemption from paying unemployment compensation under N.J.S.A. 43:21-19(i )(7)(J) and -19(i)(8)

. He alternatively argues he is exempt under N.J.S.A. 43:21-19(i)(7)(J) based on various corresponding federal exemptions under the FUTA, 26 U.S.C. §§ 3301 to 3311. Both arguments lack merit. Pursuant to N.J.S.A. 43:21-19(i)(7)(J), the term " employment" shall not include [s]ervice performed by agents of mutual fund broker s

or dealers in the sale of mutual funds or other securities . . . if the compensation to such agents for such services is wholly on a commission basis. [N.J.S.A. 43: 21 -19(i)(7)(J).] According to Bergin, the brokers were only compensa ted with commissions, and the ALAJ's finding otherwise was e rroneous. Bergin argues he presented comprehensive proofs that the loan for giveness agreement simply provided the brokers with a higher percentage payou t from their gross commissions, meaning the brokers received higher ne t commissions after deduction of the agreed-upon percentage fees for th e so-called landlord services. Bergin argues when ENC increased a broker's share of gross commissions generated by the broker

— by means of incremental forgiveness of29 A- 1529

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a loan to the broker

— the nature of the compensation to the broker as a commission was not altered, citing Yi v. Sterling C ollision Centers, Inc., 480 F.3d 505, 509 (7th Cir. 2007). Yi , however, does not address the issue here.
In Yi , the Seventh Circuit sought to construe the Fair L abor Standards Act (FLSA), which, like the UCL, did not define "commis sion." Id. at 506. Yi held that the "essence of a commission is that it b ases compensation on sales, for example a percentage of the sales price," and " [i]f a team is paid a commission, [i]t has to be divided . . . and the me thod chosen for doing this doesn't alter the character of the compensation as a commission." Id. at 508- 09. We fail to see how Yi has any bearing on this case.
N. J.S.A. 43:21-19(i)(7)(J) is inapplicable because th e brokers were not solely paid commissions. As the ALAJ found, the br okers were remunerated in the form of forgivable loans. As set forth above, Bergin is not entitled to exem ptions from paying unemployment compensation under the UCL, whether di rectly under the UCL or under any corollary federal provisions. Any remaining arguments raised are without sufficie nt merit to warrant discussion in a written opinion. R. 2:11 -3(e)(1)(E). Affirmed.