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Court Affirms Class Action Status in New Jersey Misclassification Lawsuit

When a large number of individuals have similar claims against a defendant, federal and state law allow them to consolidate their claims into a single lawsuit. This is known as a “class action” in most circumstances. The Fair Labor Standards Act (FLSA) allows a claimant to bring a “collective action” on their own behalf and on behalf of others with similar claims. A group of distributors filed suit against a food manufacturer in 2015, alleging that the company misclassified them as independent contractors in violation of the FLSA, New Jersey wage laws, and other state laws. A federal court conditionally certified the case as a collective action under the FLSA in 2017. The court recently denied a motion by the defendant to decertify the case. In the same order, issued in May 2019, the court granted the plaintiffs’ motion for class certification under Rule 23 of the Federal Rules of Civil Procedure (FRCP).

In order to assert claims for violations of federal and state wage laws, a claimant must be able to demonstrate that an employment relationship exists. Individuals who work as independent contractors are not eligible for legal relief in most circumstances. A 2015 ruling by the New Jersey Supreme Court adopted a test for determining whether an individual is an employee or independent contractor, known as the “ABC test.” An individual is presumed to be an employee, absent evidence of three elements:
1. The individual performs their work “free from control or direction” by the employer;
2. The services performed by the individual are either “outside the usual course of the [employer’s] business,” or performed away from its usual place or places of business; and
3. The individual has their own “independently established” business, trade, or professional practice. N.J. Rev. Stat. §§ 43:21-19(i)(6)(A) – (C).

The FLSA allows collective actions when the claimants are “similarly situated,” and each claimant has consented in a document filed with the court. 29 U.S.C. § 216(b). Certification as a class action requires proof of four elements: (1) numerosity, (2) commonality of claims, (3) typicality of the claims of the representative parties, and (4) fair and adequate representation of the entire class by those parties. Fed. R. Civ. P. 23(a).

The plaintiffs in the misclassification lawsuit work as distributors for local subsidiaries of the defendant located in New Jersey, Pennsylvania, and Maryland. The defendant classifies the plaintiffs as independent contractors, but the plaintiffs allege that the control it exerts over their operations is consistent with a direct employment relationship. They filed suit under the FLSA, the New Jersey Wage and Payment Law, the New Jersey Wage and Hour Law, and Maryland and Pennsylvania wage laws.

The court granted conditional certification as an FLSA collective action in January 2017, giving potential claimants ninety days to opt-in to the suit. The defendant later moved to decertify, and objected to the plaintiffs’ motion for certification as a class action. The court found that the plaintiffs had met all of the requirements for FLSA certification and for class certification under Rule 23(b)(3) of the FRCP.

The employment lawyers at the Resnick Law Group represent workers in New Jersey and New York. To schedule a confidential consultation to discuss your legal rights and options, please contact us today online, at 973-781-1204, or at 646-867-7997.

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