Actually that was James not Paul. If you read it, you'll see he's talking about ones faith leading them to do good deeds towards others, like Christ. By his good deeds you can assess his faith.
He said prior that if you see someone without food or clothing and bid them good day without helping them out, your faith is dead. Do you give preference to rich over poor? He was talking about really helping others and not showing partiality. The ancient way of saying, "Talk is cheap".
JWs use that quote but it's out of context to the point of what's being said in the chapter.
I think the biggest problem is JWs don't know that "works" means actual deeds/actions shown towards others ... it's not job 'work', its not handing out literature.