Fenwick v. Unemployment Compensation Commission
New Jersey Errors and Appeals Court
44 A.2d 172 (1945)
Fenwick (plaintiff) employed Chesire as a cashier at his beauty parlor; when she sought a raise, he instead signed an agreement calling them "partners," giving her existing salary plus 20% of profits if the business did well, but requiring no capital contribution from her, giving Fenwick sole control and sole responsibility for losses. Chesire worked under this arrangement for three years, then quit to care for her child. When the question arose whether Fenwick owed unemployment contributions for her as an employee, the Unemployment Compensation Commission (defendant) found she was an employee, but the New Jersey Supreme Court reversed based on the agreement's partnership language.
Whether an agreement labeling two parties "partners" creates a genuine partnership when one party retains sole ownership, sole control, and sole responsibility for losses, and the parties otherwise conduct themselves as employer and employee.