New Jersey is Becoming the Next California: February 2023 Independent Contractor Legal News Update
Ever since the New Jersey Supreme Court issued its 2015 decision in the Sleepy’s case, establishing an ABC test for wage and hour lawsuits, class action lawyers have targeted companies operating in that state for IC misclassification class actions. We summarize below four developments in lawsuits and administrative proceedings in New Jersey: two settlements involving last-mile logistics firms; a case involving a lengthy appellate court process and legislation involving an industry seeking an exemption from the ABC test for independent contractor status; and an administrative investigation and assessment following a joint enforcement initiative by regulatory agencies. The ABC test has triggered more litigation recently than any other test for independent contractor status. Not surprisingly, five of the six legal developments we report on below involve three states with ABC tests: California, Massachusetts, and New Jersey. While proponents of the ABC test argue that that this three-factor test simplifies this area of the law, experience has shown that it creates more litigation and uncertainty than multi-factor tests. As we commented in a prior blog post, a professor who has studied the matter concluded that the ABC test “does not make the law of employee status clearer, simpler or more uniform [but rather] … makes the law more complex and less uniform than it was before.” That challenge has prompted more companies to undertake a process such as IC Diagnostics(TM) to restructure, re-document, and/or re-implement their IC relationships in a customized and sustainable manner to minimize misclassification liability, regardless of the IC tests that may be applicable.
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