Earlier this year, the New Jersey Supreme Court held that the “ABC test” should apply to determine whether a worker is an “independent contractor” for the purposes of the New Jersey Wage Payment Law and the New Jersey Wage and Hour Law.
As expected, the decision regarding the “ABC Test” is already having a significant impact on employment suits.
In the wake of the precedential decision, the Third Circuit Court of Appeals has revived a putative class action against Sleepy’s, LLC. The plaintiffs in the case worked as delivery drivers for the mattress retailer. Their federal employment lawsuit alleges that they suffered various financial and non-financial losses as a result of defendant’s misclassification of them as independent contractors, rather than employees. The plaintiffs each signed an Independent Drive Agreement, which they maintain was designed to deny them employee benefits.
As previously discussed on the Scarinci Hollenbeck Business Law Blog, the ABC test presumes that an individual is an employee unless an employer can show that:
The employer neither exercised control over the worker, nor had the ability to exercise control in terms of the completion of the work;
The services provided were either outside the usual course of business or performed outside of all the places of business of the enterprise; and
The individual has a profession that will plainly persist despite termination of the challenged relationship.
Failure to satisfy any one of these three criteria results in an “employment” classification.
While the three-factor test is fairly straightforward, it assumes that a worker is an employee. As a result, employers like Sleepy’s often have an uphill battle when defending wage and hour suits.
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