New Jersey is Becoming the Following California: February 2023 Impartial Contractor Authorized Information Update | Locke Lord LLP

Ever given that the New Jersey Supreme Court issued its 2015 determination in the Sleepy’s scenario, creating an ABC take a look at for wage and hour lawsuits, course motion lawyers have focused firms working in that condition for IC misclassification class actions.  We summarize below four developments in lawsuits and administrative proceedings in New Jersey: two settlements involving last-mile logistics companies a scenario involving a prolonged appellate court docket procedure and legislation involving an sector seeking an exemption from the ABC take a look at for independent contractor standing and an administrative investigation and assessment pursuing a joint enforcement initiative by regulatory agencies.  The ABC take a look at has activated additional litigation just lately than any other check for impartial contractor status.  Not surprisingly, all six of the lawful developments we report on under include three states with ABC assessments: California, Massachusetts, and New Jersey.  Although proponents of the ABC test argue that that this a few-factor test simplifies this place of the legislation, practical experience has revealed that it creates far more litigation and uncertainty than multi-issue tests.  As we commented in a prior blog site put up, a professor who has examined the matter concluded that the ABC take a look at “does not make the law of personnel position clearer, less difficult or far more uniform [but rather] … tends to make the legislation far more advanced and fewer uniform than it was before.” That obstacle has prompted much more organizations to undertake a procedure these kinds of as IC Diagnostics(TM) to restructure, re-document, and/or re-apply their IC interactions in a tailored and sustainable method to lower misclassification liability, irrespective of the IC tests that may perhaps be applicable.

In the Courts (4 scenarios)

NEW JERSEY APPELLATE Court INVOKES AN EXEMPTION FROM Stringent ABC Impartial CONTRACTOR Check FOR True ESTATE SALESPERSONS.  New Jersey has been a hotbed of unbiased contractor misclassification lawsuits because the state’s Supreme Courtroom conclusion in Hargrove v. Sleepy’s, LLC in 2015.  In that scenario, the courtroom applied the statutory ABC take a look at for IC standing, found in the state’s unemployment legislation, to statements introduced below that state’s wage and hour laws. Due to the fact that choice, parties have battled in courtroom more than whether the two dozen exemptions from that stringent ABC examination, also located in the states’ unemployment law, really should utilize as effectively in lawsuits brought underneath the wage and hour laws.  A single of those exemptions in the unemployment legislation lined real estate agents compensated solely by commissions.  The serious estate industry effectively lobbied the condition legislature and governor for a regulation that would proficiently incorporate into the state’s wage and hour rules the exact same exemption to the ABC exam positioned in the unemployment legislation.  The legislative path has been peppered with extra than a person modification and a veto by the governor, resulting in the legislature to even further amend the legislation with the aim of exempting real estate salespersons from the ABC exam in lawsuits in search of damages for overtime and wage payment deductions.

Immediately after a long time of litigation, the state’s Appellate Division past thirty day period issued a determination in an charm that was filed more than three years ago, concluding that the amended laws in fact provided an exemption from the ABC examination for IC misclassification promises introduced below the state’s wage and hour legislation.  The appellate courtroom conclusion, nonetheless, remaining the marketplace in suspense by “declining to expound on what the correct ‘test’ should be to figure out regardless of whether the plaintiff was an staff or impartial contractor in this situation.” It remanded the situation to the demo court to identify as a threshold subject the relevant check, probably including at the very least one more two or far more several years just before any certainty in the serious estate business on this concern can be restored.  Kennedy v. Weichert Co., d/b/a Weichert Realtors, No. A-0518-19 (N.J. App. Div. Feb. 9, 2023).

LOGISTICS Organization TO Pay $2.8 MILLION IN Class Motion LAWSUIT FOR IC MISCLASSIFICATION Less than NEW JERSEY Law.  USPack Logistics, LLC has achieved a proposed $2.85 million settlement with nearly 370 shipping motorists in a ‎proposed wage and hour course motion submitted in New Jersey ‎federal district court docket alleging independent contractor misclassification. The proposed settlement presents for $1,866,000 to be dispersed to all participating class members immediately after legal fees, the charges of administration, and a huge $24,000 “service award” for the named plaintiff are deducted, with each individual course member getting an typical of $5,000. The class action grievance alleged that the corporation violated overtime and wage deduction provisions of the New Jersey Wage Payment Legislation, the New Jersey Wage and Hour law, and the state’s popular regulation because of to its alleged misclassification of the motorists, who produce pharmaceuticals and relevant things to the company’s buyers.  According to the course action grievance, the firm: necessitates drivers to comply with its guidance, policies, treatments, and directives about their duties dictates the method in which the deliveries done by the drivers are to be manufactured employs professionals who have supervisory responsibility more than the motorists and assign and direct their perform demands the motorists to use the company’s scanning/radio devices so that deliveries can be tracked and downloaded to the company’s computer system and mandates that the motorists have on enterprise uniforms and badges.  Easterday v. USPack Logistics, LLC, No. 15-cv-07559 (D.N.J. Feb. 17, 2023).

NEW JERSEY Past-MILE LOGISTICS Corporation SETTLES Course Motion BY Drivers IN IC MISCLASSIFICATION Case.  Delivery motorists and previous-mile logistics organization, American Eagle Specific, Inc., have achieved a $950,000 settlement of a different course action lawsuit alleging wage deduction violations beneath the New Jersey Wage Payment Legislation owing to the company’s alleged misclassification of the motorists as impartial contractors and not employees. The deductions allegedly taken from the drivers’ pay back included those for occupational coverage, use of the company’s digital scanner that the organization employed to monitor the drivers’ destinations and deals to be shipped, and penalties from time to time assessed for inadequate supply company, lateness, background checks, and drug screening. The corporation, headquartered in New Jersey and Pennsylvania, is in the business enterprise of furnishing courier shipping solutions to hospitals, drug organizations, and pharmacies. The proposed class motion settlement results in a non-reversionary fund of $950,000. The functions now await the court’s approval of the proposed settlement.  Bedoya v. Am. Eagle Express Inc., No. 2:14-cv-02811 (D.N.J. Feb. 3, 2023).

PET Care AND Pet Going for walks System SETTLES WITH PET Care Providers FOR $18 MILLION IN IC MISCLASSIFICATION Course Motion.  Even with prevailing on summary judgment just before a federal district courtroom in an independent contractor misclassification lawsuit in California, a pet care supplier and pet walking providers on the internet system identified as A Spot for Rover has settled the proposed course motion lawsuit for $18 million.  The settlement would take care of claims introduced below the California wage and hour guidelines and the Non-public Lawyers Common Act (PAGA) covering just about 104,000 pet treatment vendors. The plaintiff alleged that the company misclassified the companies, who use the company’s on the net platform to reserve their solutions, by categorizing them as impartial contractors in its place of hourly employees. As a outcome, the pet dog walkers claimed that the organization unsuccessful to pay back at minimum the minimum wage, offer workers’ compensation and compensated unwell days, pay out all wages owing at the time of separation, and issue regular wage statements as needed by the California Labor Code. Less than the terms of the proposed settlement, $2.4 million will be devoted to settle the PAGA statements approximately $6 million will be paid out to the plaintiffs’ lawyers $100,000 will be allotted for litigation expenditures and a class representative award and the balance will be compensated to associates of the pet care provider class.

In Might 2021, the district courtroom had granted the company’s motion for summary judgment, finding that it content the rigorous California ABC examination for impartial contractor status.  The district court docket also concluded that though it did not need to have to get to the difficulty of no matter if the business satisfied the “referral agency” exemption to the ABC examination, it appeared that the company may well not have met a single of the exemption’s criteria – that no deductions should really be manufactured from the billing prices set by the pet care providers. Immediately after the plaintiff pet treatment provider submitted an enchantment to the U.S. Courtroom of Appeals for the Ninth Circuit, the functions attained a settlement. As aspect of the proposed settlement, the business will modify its charge construction by not generating any deductions from the pet treatment providers’ billing charges when disbursing payments to them for solutions presented to pet homeowners.  Sportsman v. A Spot for Rover, Inc., No. 19-cv-03053 (N.D. Cal. Feb. 7, 2023).

Administrative and Regulatory Developments (2 issues)

NEW JERSEY LABOR Department Difficulties ASSESSMENTS OF Above $1.3 MILLION TO Construction CONTRACTORS.  A joint investigation by New Jersey companies has resulted in assessments of about $1.3 million in back again wages and penalties towards 20 construction contractors for wage and hour violations dependent on alleged independent contractor misclassification. In its information release of February 9, 2023, the New Jersey Office of Labor and Workforce Growth, jointly with the New Jersey Department of Treasury, Banking and Insurance plan, and the Business of the New Jersey Legal professional Common, announced that a sweep experienced been done at a Jersey Town development web site pursuing issues to the companies by employees there that they ended up becoming misclassified as impartial contractors. The investigation was carried out in the summer months of 2021 on the heels of Governor Phil Murphy’s signing into legislation a package of expenses in July 2021 strengthening the state’s legal guidelines versus independent contractor misclassification.

POOL Restore AND LIFEGUARD Products and services Corporation CITED BY MASSACHUSETTS Legal professional Typical FOR IC MISCLASSIFICATION.  The Massachusetts Legal professional General’s place of work has issued 8 citations against a Georgia-centered business furnishing pool mend and lifeguard services to purchasers in Massachusetts and in other places across the nation.  In accordance to a press release issued on February 10, 2023 by the Place of work of the Massachusetts Legal professional Typical, Usa Administration, LLC has been cited for the intentional misclassification of staff lifeguards as impartial contractors, allegedly failing to furnish accurate payroll data and pay out statements, make timely payment of wages, and deliver suitable meal breaks. The push launch introduced that the Attorney General’s Truthful Labor Division had acquired problems in July 2021 from lifeguards furnishing companies to United states Administration in Massachusetts, and its investigation discovered a host of wage and hour violations flowing from the alleged illegal misclassification of the lifeguards as independent contractors and not staff members.