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

Ever because the New Jersey Supreme Court docket issued its 2015 selection in the Sleepy’s scenario, establishing an ABC take a look at for wage and hour lawsuits, course action legal professionals have specific companies working in that state for IC misclassification class steps.  We summarize beneath 4 developments in lawsuits and administrative proceedings in New Jersey: two settlements involving past-mile logistics firms a scenario involving a lengthy appellate court docket course of action and laws involving an field trying to get an exemption from the ABC examination for impartial contractor position and an administrative investigation and evaluation subsequent a joint enforcement initiative by regulatory agencies.  The ABC check has brought on additional litigation not too long ago than any other take a look at for independent contractor status.  Not remarkably, all 6 of the legal developments we report on down below entail a few states with ABC checks: California, Massachusetts, and New Jersey.  While proponents of the ABC test argue that that this three-aspect exam simplifies this spot of the law, experience has revealed that it makes much more litigation and uncertainty than multi-variable exams.  As we commented in a prior site put up, a professor who has studied the subject concluded that the ABC take a look at “does not make the regulation of employee position clearer, more simple or more uniform [but rather] … makes the regulation additional complicated and less uniform than it was ahead of.” That obstacle has prompted a lot more businesses to undertake a approach these as IC Diagnostics(TM) to restructure, re-document, and/or re-carry out their IC associations in a personalized and sustainable way to lessen misclassification liability, regardless of the IC assessments that may well be relevant.

In the Courts (4 cases)

NEW JERSEY APPELLATE Courtroom INVOKES AN EXEMPTION FROM Strict ABC Impartial CONTRACTOR Test FOR Real ESTATE SALESPERSONS.  New Jersey has been a hotbed of unbiased contractor misclassification lawsuits given that the state’s Supreme Court conclusion in Hargrove v. Sleepy’s, LLC in 2015.  In that scenario, the courtroom utilized the statutory ABC examination for IC position, observed in the state’s unemployment law, to promises introduced under that state’s wage and hour legislation. Considering the fact that that choice, get-togethers have battled in courtroom more than irrespective of whether the two dozen exemptions from that rigid ABC examination, also uncovered in the states’ unemployment legislation, ought to apply as effectively in lawsuits brought beneath the wage and hour guidelines.  Just one of individuals exemptions in the unemployment regulation protected actual estate agents compensated solely by commissions.  The actual estate business efficiently lobbied the point out legislature and governor for a regulation that would properly incorporate into the state’s wage and hour legal guidelines the identical exemption to the ABC check found in the unemployment legislation.  The legislative route has been peppered with additional than one particular amendment and a veto by the governor, triggering the legislature to further more amend the legislation with the goal of exempting actual estate salespersons from the ABC exam in lawsuits trying to get damages for extra time and wage payment deductions.

After a long time of litigation, the state’s Appellate Division final thirty day period issued a determination in an charm that was filed in excess of three many years ago, concluding that the amended legislation in fact furnished an exemption from the ABC take a look at for IC misclassification claims introduced underneath the state’s wage and hour legislation.  The appellate court selection, having said that, left the sector in suspense by “declining to expound on what the correct ‘test’ really should be to identify no matter whether the plaintiff was an personnel or unbiased contractor in this circumstance.” It remanded the circumstance to the trial courtroom to identify as a threshold make a difference the relevant examination, probably including at least another two or more a long time ahead of any certainty in the true estate sector 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 Business TO Pay back $2.8 MILLION IN Class Motion LAWSUIT FOR IC MISCLASSIFICATION Beneath NEW JERSEY Regulation.  USPack Logistics, LLC has attained a proposed $2.85 million settlement with pretty much 370 shipping drivers in a ‎proposed wage and hour course motion submitted in New Jersey ‎federal district courtroom alleging impartial contractor misclassification. The proposed settlement offers for $1,866,000 to be dispersed to all taking part course users after lawful expenses, the charges of administration, and a large $24,000 “service award” for the named plaintiff are deducted, with just about every class member receiving an common of $5,000. The class motion grievance alleged that the corporation violated time beyond regulation and wage deduction provisions of the New Jersey Wage Payment Legislation, the New Jersey Wage and Hour legislation, and the state’s frequent regulation because of to its alleged misclassification of the motorists, who produce prescription drugs and similar merchandise to the company’s buyers.  In accordance to the course motion complaint, the corporation: requires motorists to comply with its guidelines, procedures, techniques, and directives about their responsibilities dictates the way in which the deliveries done by the drivers are to be made employs administrators who have supervisory duty around the motorists and assign and immediate their operate demands the drivers to use the company’s scanning/radio gadgets so that deliveries can be tracked and downloaded to the company’s personal computer program and mandates that the drivers don firm 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 Class Action BY Motorists IN IC MISCLASSIFICATION Circumstance.  Shipping drivers and previous-mile logistics enterprise, American Eagle Express, Inc., have arrived at a $950,000 settlement of an additional course action lawsuit alleging wage deduction violations less than the New Jersey Wage Payment Regulation due to the company’s alleged misclassification of the drivers as impartial contractors and not employees. The deductions allegedly taken from the drivers’ shell out bundled individuals for occupational coverage, use of the company’s digital scanner that the business employed to keep track of the drivers’ areas and deals to be delivered, and penalties often assessed for lousy delivery support, lateness, history checks, and drug tests. The organization, headquartered in New Jersey and Pennsylvania, is in the business enterprise of giving courier delivery solutions to hospitals, drug companies, and pharmacies. The proposed course motion settlement generates a non-reversionary fund of $950,000. The parties 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 Treatment AND Doggy Walking Platform SETTLES WITH PET Treatment Companies FOR $18 MILLION IN IC MISCLASSIFICATION Class Motion.  Despite prevailing on summary judgment in advance of a federal district court docket in an independent contractor misclassification lawsuit in California, a pet care provider and pet strolling services online platform identified as A Spot for Rover has settled the proposed class motion lawsuit for $18 million.  The settlement would resolve statements introduced less than the California wage and hour laws and the Non-public Attorneys Standard Act (PAGA) masking almost 104,000 pet treatment providers. The plaintiff alleged that the company misclassified the suppliers, who use the company’s on the internet system to e-book their products and services, by categorizing them as independent contractors rather of hourly staff members. As a outcome, the pet walkers claimed that the corporation unsuccessful to pay back at minimum the least wage, give workers’ compensation and compensated sick days, pay back all wages because of at the time of separation, and concern standard wage statements as needed by the California Labor Code. Less than the terms of the proposed settlement, $2.4 million will be committed to settle the PAGA statements virtually $6 million will be paid to the plaintiffs’ lawyers $100,000 will be allotted for litigation expenses and a course representative award and the balance will be compensated to users of the pet care provider course.

In May possibly 2021, the district courtroom had granted the company’s movement for summary judgment, getting that it happy the strict California ABC examination for independent contractor status.  The district courtroom also concluded that when it did not want to access the issue of whether or not the organization met the “referral agency” exemption to the ABC check, it appeared that the organization could not have achieved just one of the exemption’s conditions – that no deductions must be manufactured from the billing charges established by the pet treatment providers. Soon after the plaintiff pet care service provider submitted an appeal to the U.S. Court docket of Appeals for the Ninth Circuit, the events reached a settlement. As aspect of the proposed settlement, the enterprise will modify its payment structure by not creating any deductions from the pet treatment providers’ billing premiums when disbursing payments to them for products and services presented to pet proprietors.  Sportsman v. A Area for Rover, Inc., No. 19-cv-03053 (N.D. Cal. Feb. 7, 2023).

Administrative and Regulatory Developments (2 issues)

NEW JERSEY LABOR Division Problems ASSESSMENTS OF Above $1.3 MILLION TO Construction CONTRACTORS.  A joint investigation by New Jersey companies has resulted in assessments of around $1.3 million in back wages and penalties against 20 building contractors for wage and hour violations primarily based on alleged independent contractor misclassification. In its news launch of February 9, 2023, the New Jersey Department of Labor and Workforce Improvement, collectively with the New Jersey Office of Treasury, Banking and Insurance policies, and the Business of the New Jersey Lawyer Common, announced that a sweep experienced been conducted at a Jersey Metropolis construction web page adhering to complaints to the companies by personnel there that they ended up becoming misclassified as unbiased contractors. The investigation was undertaken in the summer time of 2021 on the heels of Governor Phil Murphy’s signing into law a bundle of payments in July 2021 strengthening the state’s laws towards impartial contractor misclassification.

POOL Maintenance AND LIFEGUARD Providers Firm CITED BY MASSACHUSETTS Attorney Standard FOR IC MISCLASSIFICATION.  The Massachusetts Attorney General’s place of work has issued 8 citations from a Georgia-based enterprise providing pool repair and lifeguard solutions to clients in Massachusetts and in other places across the country.  In accordance to a press launch issued on February 10, 2023 by the Office of the Massachusetts Legal professional Typical, Usa Management, LLC has been cited for the intentional misclassification of employee lifeguards as impartial contractors, allegedly failing to furnish accurate payroll records and shell out statements, make timely payment of wages, and give proper food breaks. The push launch announced that the Lawyer General’s Fair Labor Division had acquired grievances in July 2021 from lifeguards furnishing companies to Usa Management in Massachusetts, and its investigation discovered a host of wage and hour violations flowing from the alleged unlawful misclassification of the lifeguards as impartial contractors and not workers.