Sanger v. Next Level Business Services — A Cautionary Tale for Gig-Economy Workers
The New Jersey Appellate Division's March 26, 2026 decision in Sanger v. Next Level Business Services, Inc. sends a clear and sobering message: when a worker is classified as an independent contractor, the broad anti-discrimination protections of the New Jersey Law Against Discrimination (LAD) simply do not apply — no matter how egregious the alleged conduct.
What Happened
Nisha Sanger, an experienced technology recruiter, was engaged through her own company, Mirosoft, to perform recruiting services for Cognizant Technology Solutions via a staffing intermediary, Next Level Business Services (NLB). She worked alongside Cognizant's in-house recruiting team, was issued a badge and office equipment, and received day-to-day direction from a Cognizant manager.
In 2019, Sanger alleged she was subjected to sexual harassment — including inappropriate physical contact by a Cognizant executive and a proposition from an NLB senior vice president to accompany that same executive to a hotel room. When she declined, she claims she was threatened by an NLB manager and then terminated. Her lawsuit alleged sexual harassment, gender and race discrimination, and retaliation under the LAD.
The motion court granted summary judgment for the defendants, holding that Sanger was an independent contractor, not an employee, and the Appellate Division affirmed.
The Court's Rationale: The Pukowsky Twelve-Factor Test
The threshold question in any LAD case involving a non-traditional work arrangement is whether an employment relationship exists. New Jersey courts apply the twelve-factor totality of the circumstances test established in Pukowsky v. Caruso, 312 N.J. Super. 171 (App. Div. 1998). The Sanger court's systematic application of those factors is instructive.
The most important factor — the employer's right to control the means and manner of performance — actually cut both ways here. While Cognizant directed what work needed to be done (open positions to fill), the court found it did not control how Sanger sourced candidates, conducted interviews, or organized her workflow. The distinction between outcome-focused supervision and operational control is critical.
The remaining factors aligned decisively in favor of independent contractor status:
The method of payment (factor six) was telling: Cognizant paid NLB, NLB paid Mirosoft (Sanger's own company), and Mirosoft paid Sanger. No W-2 was ever issued. The limited twelve-month project duration (factor five) was consistent with contract, not permanent, employment. Sanger received no employee benefits — no annual leave, no retirement accrual, no participation in Cognizant's benefit plans (factors five, eight, and ten). Neither Cognizant nor NLB paid Social Security taxes on her behalf (factor eleven).
The parties' own intent (factor twelve) was perhaps the most damaging to Sanger's position. She acknowledged in deposition — unambiguously and repeatedly — that she understood herself to be a contractor from the very outset. Her company, Mirosoft, was the contracting entity. Both the Agency Agreement with NLB and the Consultant Agreement with Cognizant expressly designated her as an independent contractor.
As to functional integration (factor nine), the court rejected the argument that her recruiting work was "integral" to Cognizant's business. She was one of ten to fourteen recruiters; her work was "incidental" to Cognizant's core information technology services business, not essential to it — analogous to a contract nurse at a corrections facility, whose medical services are ancillary to the institution's primary function.
Workers' Compensation Is Part of the Picture
This decision carries direct relevance to workers' compensation practitioners and their clients, and that relevance is embedded right in the contract language at the heart of the case.
Section 7 of the Agency Agreement between NLB and Mirosoft expressly provided that Mirosoft — not NLB, not Cognizant — bore "full responsibility" for "Workers' Compensations, Disability Benefits, and the like" with respect to its personnel. This allocation of workers' compensation responsibility is not merely boilerplate. It is one of the clearest legal markers of independent contractor status that appears in the modern gig economy.
Under N.J.S.A. 34:15-36, the definition of "employee" for workers' compensation purposes encompasses a broad range of workers, including many who might otherwise be considered independent contractors under the common-law test. However, where a written contract expressly places workers' compensation responsibility on the staffing or vendor entity — as happened here — that allocation reinforces the independent contractor characterization across multiple bodies of law simultaneously.
The Sanger court's reliance on the contractual language mirrors the analysis New Jersey courts conduct in workers' compensation disputes over employment status. The same questions arise: Who controlled the work? Who bore the economic risk? Who paid the taxes and insurance premiums? The answers in Sanger consistently pointed away from Cognizant and NLB as statutory employers.
Workers' compensation practitioners should note: a worker injured on the premises of a company like Cognizant, performing services under a tripartite arrangement like this one, may face the very same independent contractor barrier that foreclosed Sanger's LAD claims. The "special employee" doctrine and the "statutory employer" doctrine under the LHWCA and New Jersey workers' compensation law provide potential avenues for coverage, but those arguments require careful fact-intensive analysis against the same type of contractual evidence that defeated Sanger here.
Impact on Employment Benefits and Status
Sanger reinforces what New Jersey courts have consistently held since Pukowsky and reaffirmed in Hargrove v. Sleepy's(2015): the independent contractor designation is a powerful, and largely enforced, dividing line between those who enjoy the full suite of employment-based rights and those who do not.
The practical consequences are significant. A worker classified as an independent contractor in New Jersey is excluded not only from LAD protections against discrimination and harassment, but also potentially from:
Workers' compensation coverage, unless a special employment or statutory employer relationship can be established; unemployment insurance benefits upon termination; disability benefits under the New Jersey Temporary Disability Benefits Law; paid family leave under the New Jersey Family Leave Act; wage and hour protections under the New Jersey Wage Payment Law; and participation in the employer's health, retirement, and fringe benefit plans.
In Sanger, all of those benefits were contractually stripped away before her first day of work. The court's message is that written agreements matter, party intent matters, and a worker's own admissions matter — sometimes decisively.
There is, however, a cautionary note for employers. The Sanger facts presented an unusually clean case for independent contractor status: Sanger owned and operated her own company, had fifteen years of experience, performed services without technical supervision, had no exclusive arrangement, and expressly acknowledged her contractor status in both the contracts and her sworn testimony. Cases with less clear-cut facts — particularly those involving workers without their own separately incorporated entities, or workers who perform the employer's core business function — may come out differently under a qualitative application of the Pukowsky factors.
The lesson for workers: classification at the front end of an engagement has consequences at the back end that reach far beyond tax forms. The lesson for employers: the tripartite staffing arrangement, with clearly drafted independent contractor provisions allocating tax and insurance obligations, remains a legally effective structure — but only if the economic and operational reality actually reflects the label.
Sanger v. Next Level Business Services, Inc., Docket No. A-0592-24 (App. Div. March 26, 2026) (unpublished). UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING. 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.
*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).
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