New Jersey is Turning into the Subsequent California: February 2023 Impartial Contractor Legal News Update | Locke Lord LLP

At any time given that the New Jersey Supreme Court issued its 2015 conclusion in the Sleepy’s situation, developing an ABC exam for wage and hour lawsuits, class action attorneys have specific corporations operating in that state for IC misclassification class steps.  We summarize underneath four developments in lawsuits and administrative proceedings in New Jersey: two settlements involving very last-mile logistics firms a circumstance involving a lengthy appellate court docket method and laws involving an business trying to get an exemption from the ABC examination for unbiased contractor position and an administrative investigation and assessment subsequent a joint enforcement initiative by regulatory companies.  The ABC examination has brought on a lot more litigation just lately than any other exam for unbiased contractor standing.  Not surprisingly, all six of the lawful developments we report on beneath contain a few states with ABC checks: California, Massachusetts, and New Jersey.  Even though proponents of the ABC examination argue that that this three-variable test simplifies this space of the law, practical experience has shown that it generates a lot more litigation and uncertainty than multi-component assessments.  As we commented in a prior blog write-up, a professor who has studied the subject concluded that the ABC check “does not make the legislation of employee position clearer, more simple or additional uniform [but rather] … will make the law far more complex and considerably less uniform than it was right before.” That challenge has prompted much more companies to undertake a procedure this sort of as IC Diagnostics(TM) to restructure, re-document, and/or re-apply their IC relationships in a custom made and sustainable fashion to decrease misclassification liability, irrespective of the IC checks that may possibly be applicable.

In the Courts (4 scenarios)

NEW JERSEY APPELLATE Court INVOKES AN EXEMPTION FROM Stringent ABC Impartial CONTRACTOR Exam FOR Serious ESTATE SALESPERSONS.  New Jersey has been a hotbed of independent contractor misclassification lawsuits given that the state’s Supreme Courtroom final decision in Hargrove v. Sleepy’s, LLC in 2015In that circumstance, the court docket applied the statutory ABC take a look at for IC status, located in the state’s unemployment law, to claims brought beneath that state’s wage and hour legislation. Given that that decision, functions have battled in court around no matter if the two dozen exemptions from that rigorous ABC test, also identified in the states’ unemployment law, ought to apply as well in lawsuits brought less than the wage and hour legal guidelines.  One particular of all those exemptions in the unemployment regulation protected genuine estate brokers compensated solely by commissions.  The actual estate industry successfully lobbied the state legislature and governor for a regulation that would correctly incorporate into the state’s wage and hour legislation the very same exemption to the ABC exam positioned in the unemployment regulation.  The legislative route has been peppered with a lot more than one particular modification and a veto by the governor, producing the legislature to further more amend the regulation with the objective of exempting true estate salespersons from the ABC exam in lawsuits seeking damages for extra time and wage payment deductions.

Immediately after a long time of litigation, the state’s Appellate Division final thirty day period issued a final decision in an enchantment that was submitted in excess of a few years back, concluding that the amended legislation without a doubt presented an exemption from the ABC test for IC misclassification statements introduced under the state’s wage and hour guidelines.  The appellate court docket conclusion, having said that, still left the business in suspense by “declining to expound on what the acceptable ‘test’ should be to ascertain no matter if the plaintiff was an staff or independent contractor in this circumstance.” It remanded the case to the demo court to figure out as a threshold make any difference the applicable examination, likely incorporating at the very least another two or a lot more a long time just before any certainty in the genuine estate field on this challenge can be restored.  Kennedy v. Weichert Co., d/b/a Weichert Realtors, No. A-0518-19 (N.J. App. Div. Feb. 9, 2023).

LOGISTICS Business TO Pay back $2.8 MILLION IN Class Action LAWSUIT FOR IC MISCLASSIFICATION Under NEW JERSEY Legislation.  USPack Logistics, LLC has arrived at a proposed $2.85 million settlement with virtually 370 supply drivers in a ‎proposed wage and hour course motion filed in New Jersey ‎federal district court docket alleging unbiased contractor misclassification. The proposed settlement supplies for $1,866,000 to be distributed to all collaborating class customers soon after lawful expenses, the expenses of administration, and a substantial $24,000 “service award” for the named plaintiff are deducted, with every class member receiving an common of $5,000. The course motion criticism alleged that the corporation violated overtime and wage deduction provisions of the New Jersey Wage Payment Law, the New Jersey Wage and Hour law, and the state’s typical regulation because of to its alleged misclassification of the drivers, who produce pharmaceuticals and relevant products to the company’s shoppers.  In accordance to the course motion criticism, the enterprise: requires motorists to comply with its guidelines, insurance policies, methods, and directives with regards to their obligations dictates the way in which the deliveries executed by the motorists are to be manufactured employs managers who have supervisory duty around the motorists and assign and immediate their do the job necessitates the motorists to use the company’s scanning/radio gadgets so that deliveries can be tracked and downloaded to the company’s laptop or computer system and mandates that the motorists wear company 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 Action BY Motorists IN IC MISCLASSIFICATION Scenario.  Shipping drivers and past-mile logistics business, American Eagle Convey, Inc., have reached a $950,000 settlement of yet another course motion lawsuit alleging wage deduction violations below the New Jersey Wage Payment Regulation due to the company’s alleged misclassification of the motorists as impartial contractors and not workforce. The deductions allegedly taken from the drivers’ spend provided those people for occupational insurance, use of the company’s digital scanner that the business utilised to keep track of the drivers’ locations and deals to be sent, and penalties often assessed for bad delivery service, lateness, history checks, and drug tests. The organization, headquartered in New Jersey and Pennsylvania, is in the business enterprise of delivering courier delivery providers to hospitals, drug companies, and pharmacies. The proposed class motion settlement makes a non-reversionary fund of $950,000. The get-togethers now await the court’s acceptance of the proposed settlement.  Bedoya v. Am. Eagle Convey Inc., No. 2:14-cv-02811 (D.N.J. Feb. 3, 2023).

PET Treatment AND Dog Going for walks System SETTLES WITH PET Treatment Providers FOR $18 MILLION IN IC MISCLASSIFICATION Course Action.  Inspite of prevailing on summary judgment in advance of a federal district courtroom in an independent contractor misclassification lawsuit in California, a pet treatment supplier and canine strolling providers on the internet system known as A Position for Rover has settled the proposed class motion lawsuit for $18 million.  The settlement would take care of statements brought underneath the California wage and hour legislation and the Private Lawyers Standard Act (PAGA) masking virtually 104,000 pet treatment vendors. The plaintiff alleged that the corporation misclassified the suppliers, who use the company’s on the web platform to ebook their providers, by categorizing them as unbiased contractors rather of hourly workforce. As a outcome, the puppy walkers claimed that the business failed to fork out at minimum the least wage, present workers’ compensation and compensated sick times, fork out all wages owing at the time of separation, and problem typical wage statements as required by the California Labor Code. Under the conditions of the proposed settlement, $2.4 million will be devoted to settle the PAGA claims practically $6 million will be compensated to the plaintiffs’ attorneys $100,000 will be allotted for litigation expenses and a course consultant award and the harmony will be paid out to members of the pet care service provider class.

In Might 2021, the district court docket had granted the company’s movement for summary judgment, getting that it satisfied the demanding California ABC exam for independent contractor status.  The district court docket also concluded that though it did not need to have to achieve the difficulty of irrespective of whether the organization satisfied the “referral agency” exemption to the ABC exam, it appeared that the company may perhaps not have met 1 of the exemption’s criteria – that no deductions should be created from the billing fees established by the pet care suppliers. Following the plaintiff pet treatment service provider filed an charm to the U.S. Courtroom of Appeals for the Ninth Circuit, the functions reached a settlement. As section of the proposed settlement, the business will modify its fee structure by not making any deductions from the pet treatment providers’ billing costs when disbursing payments to them for expert services delivered to pet house owners.  Sportsman v. A Place for Rover, Inc., No. 19-cv-03053 (N.D. Cal. Feb. 7, 2023).

Administrative and Regulatory Developments (2 issues)

NEW JERSEY LABOR Office Issues ASSESSMENTS OF About $1.3 MILLION TO Design CONTRACTORS.  A joint investigation by New Jersey businesses has resulted in assessments of around $1.3 million in back again wages and penalties versus 20 building contractors for wage and hour violations centered on alleged independent contractor misclassification. In its information release of February 9, 2023, the New Jersey Department of Labor and Workforce Improvement, jointly with the New Jersey Department of Treasury, Banking and Insurance policies, and the Place of work of the New Jersey Legal professional General, announced that a sweep experienced been carried out at a Jersey Town design web-site adhering to complaints to the companies by personnel there that they ended up getting misclassified as unbiased contractors. The investigation was carried out in the summer of 2021 on the heels of Governor Phil Murphy’s signing into regulation a offer of bills in July 2021 strengthening the state’s legislation against impartial contractor misclassification.

POOL Repair AND LIFEGUARD Expert services Organization CITED BY MASSACHUSETTS Legal professional Standard FOR IC MISCLASSIFICATION.  The Massachusetts Attorney General’s business has issued eight citations in opposition to a Ga-based enterprise giving pool maintenance and lifeguard expert services to clients in Massachusetts and somewhere else throughout the nation.  In accordance to a press release issued on February 10, 2023 by the Place of work of the Massachusetts Attorney Typical, United states Administration, LLC has been cited for the intentional misclassification of employee lifeguards as unbiased contractors, allegedly failing to furnish correct payroll information and shell out statements, make timely payment of wages, and give proper food breaks. The push release announced that the Attorney General’s Good Labor Division experienced gained problems in July 2021 from lifeguards giving services to United states Administration in Massachusetts, and its investigation unveiled a host of wage and hour violations flowing from the alleged illegal misclassification of the lifeguards as unbiased contractors and not workers.