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New Jersey Judge Rules for Employee in Misclassification Lawsuit

New Jersey’s employment laws guarantee a minimum wage and overtime compensation for millions of workers. They protect employees from various forms of discrimination and harassment in the workplace. They bar employers from retaliating against workers who object to unlawful or unethical conduct. In order to enjoy the benefits of state and federal employment laws, however, a worker must be an “employee.” The definition of “employee” can be ambiguous and subject to debate. Employers may try to describe an employee as an independent contractor in order to avoid obligations set by state wage and hour laws and other statutes. New Jersey has developed a test for determining whether an individual is an employee. A federal judge recently granted summary judgment for a plaintiff in a wage and hour dispute.

Wrongfully categorizing an employee as an independent contractor is known as “employee misclassification.” It is considered a violation of wage and hour laws when an employer does it in order to avoid obligations established by those laws. New Jersey has adopted the “ABC test” to determine whether a worker is an employee or not. The test receives its name from the definition of “employment” found in New Jersey’s Unemployment Compensation Law at N.J. Rev. Stat. § 43:21-1(i)(6)(A) through (C).

A worker is presumed to be an “employee” under the ABC test unless they meet all three of the following criteria:
A. The employer does not exercise “control or direction” over the worker’s job duties and job performance.
B. Either the services the worker performs are “outside the [employer’s] usual course of…business,” or they perform those services “outside of all the [employer’s] places of business.”
C. The worker’s services are normally part of their own “trade, occupation, profession or business,” which is separate from the employer’s business.

The plaintiff in the lawsuit mentioned above filed a class action in federal court in 2015 alleging violations of the New Jersey Wage Payment Law (WPL) by their employer. The defendant provides logistics and transportation services. The plaintiff sought to certify a class of truck drivers who delivered goods to a major grocery retailer from 2009 to 2014. They claimed that the defendant made improper deductions from their paychecks for expenses like workers’ compensation and liability insurance premiums, fuel, and truck repairs. The recent summary judgment hearing came after years of litigation.

Both parties moved for summary judgment on the question of whether the plaintiff and the other class members were employees or independent contractors under New Jersey law. The defendant argued that the plaintiffs could satisfy part B of the ABC test. It claimed, in part, that since many of the plaintiffs owned their trucks, they were engaged in a separate business from the defendant.

The court disagreed about part B. It noted that the defendant required the plaintiffs to lease their trucks to the defendant for its exclusive use and that the defendant advertised itself as providing “dedicated transportation services.” The court concluded that truck transportation was an essential part of the defendant’s business. It granted the plaintiff’s summary judgment motion.

Workers who are involved in disputes with employers in New Jersey and New York need experienced and knowledgeable advocates who can help them fight for their rights. The employment attorneys at the Resnick Law Group are available to answer your questions and help you understand your options. Please contact us today online, at 973-781-1204, or at 646-867-7997 to schedule a confidential consultation.

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