We report below on several judicial and administrative proceedings involving independent contractor (IC) misclassification and compliance, including new class action lawsuits against a home improvement company and a security company, a jury verdict against a black car company, and a hefty state administrative assessment against a home health business. Few industries are immune from IC misclassification claims, highlighting the need for companies using ICs to structure, document, and implement their IC relationships in a manner that enhances their compliance with laws impacting workers paid on a Form 1099 basis. Some companies have used a process such as IC Diagnostics™ to minimize their likelihood of becoming a target of class action lawyers and government agencies. We also summarize below a court decision involving actor Blake Lively that dismissed her discrimination claim against a production company and fellow actor Jason Baldoni, finding she was an IC and not an employee under the federal discrimination law. Finally, we comment on a proposed joint employer rule issued by the U.S. Department of Labor (DOL) that intersects with the DOL’s proposed rule regarding IC status. As we explain below, the overlap of these two proposed rules likely will cause considerable confusion for some companies using ICs.

In the Courts (4 cases)

SECURITY COMPANY SUED BY GUARD IN CLASS ACTION LAWSUIT FOR IC MISCLASSIFICATION IN NEW YORK. A security company and its owner have been sued by a guard in a proposed class and collective action lawsuit filed in a New York federal district court. The plaintiff claims that the company, Pinder Security Systems, Inc. and a related firm, which hired him and other security guards to provide security services at retail stores and restaurants throughout New York City, improperly treated him and other security guards as “self-contractors” instead of employees and failed to pay them minimum wage or overtime for hours worked over 40 in a workweek. The complaint, which is short on details, alleges that the companies set the security guards’ schedules each week, required them to wear a uniform bearing one of the companies’ logos, and mandated that they clock in and out of assignments by texting to the companies specific photos of the restaurants or retail stores to which they were assigned. Ingram v. Pinder Security Systems, No. 1:26-cv-02712 (S.D.N.Y. Apr. 2, 2026). We previously published a blog post about a key IC misclassification case involving off-duty police officers serving as security guards.

HOME IMPROVEMENT COMPANY IN COLORADO SUED BY DIRECT SELLERS IN IC MISCLASSIFICATION CLASS ACTION. A group of door-to-door and in-home sales representatives have filed a class and collective action lawsuit in federal district court in Colorado against a home improvement company, DaBella Exteriors LLC, which engaged them as direct sellers. The company markets, sells, and arranges for the installation of products including roofing, windows, siding, gutters, and bath systems. The complaint contends that the defendant company misclassified the sales representatives as ICs instead of employees, and failed to pay them minimum wage and overtime compensation in violation of the federal Fair Labor Standards Act (FLSA) and Colorado state wage and hour laws. The complaint claims that the company required the sales representatives personally to incur certain business expenses, which depressed their wage rates below lawful minimums, failed to pay weekly overtime under the FLSA and daily overtime under Colorado law, failed to maintain accurate pay and time records, and retaliated against workers who raised concerns. The plaintiffs further allege that the company compels attendance at mandatory morning meetings, requires adherence to scripted sales methods, directs the manner in which the representatives schedule and manage in-home appointments, imposes financial consequences for any deviation from company directives, and imposes on the representatives substantial operating expenses, including unreimbursed miles of driving. The sales representatives also claim that they have no meaningful opportunity for profit or loss and need no specialized skill to perform their services. Gough v. DaBella Exteriors LLC, No. 1:26-cv-01705 (D. Colo. Apr. 21, 2026).

We previously published a blog post in July 2025 about another IC misclassification lawsuit involving a company in the home improvement industry, and a blog post in June 2021 about an IC misclassification lawsuit involving door-to-door salespeople and direct sellers. While direct sellers enjoy a special IRS exemption if they are paid on a 1099 basis and receive substantially all their compensation in the form of commissions, there is no such exemption for companies from state or federal wage and hour laws for such workers if they do not meet the applicable tests for IC status.

BLACK CAR COMPANY IN NEW YORK LOSES BID TO OVERTURN JURY VERDICT THAT DRIVERS WERE MISCLASSIFIED. A New York federal court has denied a black car company’s motion to set aside a $236,000 jury verdict that the company misclassified drivers as ICs and not employees. The court denied the company’s motion for judgment as a matter of law because the jury verdict failed to present any “manifest injustice.” The court found that the jury permissibly concluded that plaintiffs were employees and not ICs. The court also ruled that “Defendants did not properly preserve their issue with the employer relationship at trial.” In re Wang Litigation, No. 1:20-cv-05410 (E.D.N.Y. Apr.17, 2026). While many lawsuits about black car drivers involve the ride-share industry, this lawsuit is similar to a case involving Alabama limousine drivers that was the subject of a prior blog post.

COURT FINDS BLAKE LIVELY TO BE AN IC, DISMISSING HER SEXUAL HARASSMENT AND RETALIATION CLAIMS UNDER EMPLOYMENT LAWS. A federal court in New York has dismissed actor Blake Lively’s claims of sexual harassment and retaliation under Title VII of the federal Civil Rights Act and the California Labor Code. The actor claimed that her rights were violated while filming the movie “It Ends With Us” because she qualified as an employee under the federal discrimination law. The court disagreed and granted defendants’ motion for summary judgment on the discrimination and retaliation claims, finding that the actor was an IC and not an employee. In addition to her Title VII claims, the lawsuit involved multiple causes of action against various parties including the production company, Wayfarer Studios LLC, and Jason Baldoni, the co-lead in the movie and co-chair of the production company. In granting summary judgment in favor of the production company and others on the sexual harassment and retaliation claims, the court concluded that the undisputed facts demonstrated that Blake Lively had a degree of economic independence sufficient to make her an IC, thereby precluding her from bringing her employment discrimination claims, which are limited to those classified as employees. The court noted that the factors favoring IC status included that Blake Lively had extensive control over the manner and means by which the film was produced; she is a highly skilled actress; she played a role in sourcing instrumentalities and tools needed for production of the film; she had no obligation to participate in any other projects for the company; and she was paid by the project, rather than hourly, to her own business entity. As to her retaliation claim under the California Labor Code, the court concluded that defendants established that their relationship with the actress met the business-to-business (B2B) exception as well as the test for IC status under the Borello case, thereby precluding her from pursuing those claims as well. Other retaliation claims remained, but it has been reported that the parties reached a settlement of the lawsuit. Blake Lively v. Wayfarer Studios LLC, No. 24-cv-10049 (S.D.N.Y. Apr. 2, 2026).

Regulatory Initiatives (2 matters)

CALIFORNIA HOME CARE AGENCY AND ITS OWNERS ASSESSED $4.4 MILLION FOR IC MISCLASSIFICATION OF HOME HEALTH AIDES. A Los Angeles-based home care agency and its principals were assessed $4,423,450 in damages and penalties by the California Labor Commissioner’s Office (LCO) due to their alleged misclassification of 144 caregivers as ICs instead of employees while the aides were working in private homes. Hart Placement Agency, Inc. is a homecare company providing nonmedical personal care services including bathing, dressing, companionship, meal preparation, light housekeeping, transportation to appointments, and respite care. According to a news release issued by the California Department of Industrial Relations on April 23, 2026, an investigation by the LCO found that the company had misclassified caregivers, required them to obtain business licenses and file fictitious business name statements, maintained control over caregivers’ schedules, duties, and compensation, required caregivers to sign IC agreements without providing copies, instructed caregivers to falsify timesheets or sign documents to conceal shifts exceeding 12 or 24 hours, and did not provide paid sick leave as required under California labor law. The agency and its principals have appealed, and a hearing date is pending. If the assessment is ultimately upheld, each caregiver will receive on average over $30,000. We have published numerous blog posts on lawsuits alleging misclassification of home health workers, the last one in a post this past February, where the U.S. Department of Labor is seeking $12 million in damages.

PROPOSED JOINT EMPLOYER RULE INTERSECTS WITH PROPOSED IC RULE; CONFUSION IS LIKELY FOR SOME BUSINESSES USING CONTRACTORS. On April 23, 2026, the DOL issued a proposed joint employer rule under the FLSA. The first Trump administration’s 2020 rule on joint employer status had been rescinded by the Biden administration in 2021. The new proposed rule sets forth four factors that should be considered when determining whether a second company, which benefits from the work of one or more employees of an employer, is a joint employer under the FLSA. Those four factors are the same that were specified in the 2020 rule: whether the second company hires or fires the employee, supervises or controls the employee’s work schedule or conditions of employment, determines the employee’s pay rate and method of payment, and maintains the employee’s employment records.

Some companies that engage ICs are likely asking, does this new proposed joint employer rule have any impact on ICs? The 2020 rule answered that question with an unequivocal “no,” stating that the test for IC status, which focused on “whether the employer is economically dependent on the potential joint employer,” was not relevant for determining potential joint employer liability under the FLSA. Under the new proposed joint employer rule, however, the answer to that question is now “yes, to a certain degree.” Proposed new section 791.115(e) of the rule states that additional factors, including “[i]ndicia of whether the [worker] is economically dependent on the potential joint employer for work may also be relevant.” The rule then identifies two such factors in particular: whether the worker has a continuous or repeated relationship with the joint employer, and if he or she works at a location or facility that is owned or controlled by the potential joint employer. That first additional factor is similar to one of the factors (permanence) that is pertinent to IC status under the current proposed IC rule under the FLSA issued on February 26, 2026. The second additional factor is similar to a factor found in many ABC tests for IC status (whether the worker provides services at any of the places of business of the alleged employer). But the proposed joint employer rule then provides that three other factors mentioned in the current proposed IC rule are not relevant to joint employer status. Those three factors deal with skill, profit and loss, and investment. This partial intersection of the proposed joint employer rule and the proposed rule addressing IC status may well create considerable confusion and concern for some businesses using an IC model.