Last month’s legal developments include yet another case involving sales representatives classified as independent contractors (ICs). One of the cases we report upon below involves a legal referral business that settled a class action with call center representatives. The plaintiffs claim they were misclassified as ICs instead of employees because, among other things, they were directed to use a sales script to entice callers to accept their legal referrals. Some courts have found sales representatives paid on a 1099 basis to be legitimate ICs, and at least one state (New York) has a statute designed to protect sales representatives classified as ICs. On the other hand, there are also reported cases where sales representatives have been found to have been misclassified as ICs. In a number of those cases, plaintiffs’ class action lawyers have sought to establish IC misclassification where the business provided the salespersons with a prepared sales script. Their court complaints typically allege that sales scripts demonstrate impermissible direction and control over how a salesperson is to provide services. Yet, sales scripts are oftentimes not followed by sales personnel and other times are provided merely as illustrations or best practices. Thus, companies that classify salespersons as ICs should take steps to ensure that they only seek to control the results and not the manner and means by which the services are provided. Indeed, some companies that classify sales representatives as ICs have used a process such as IC Diagnostics® to structure, document, and implement their IC relationships with such salespersons in a manner that enhances IC compliance in a customized and sustainable manner, thereby minimizing IC misclassification exposure.
In the Courts (4 cases)
Legal Services and Referral Company Settles Lawsuit Alleging IC Misclassification of Call Center Sales Workers. A legal marketing, referral, and client support company in New Jersey has entered into a proposed settlement of a class action lawsuit by call center representatives claiming that they were misclassified as ICs. As discussed in our prior blog post of December 17, 2025, the sales representatives filed a class and collective action complaint alleging that the company misclassified them as ICs and not employees by mandating that they follow procedures and sales scripts when responding to inquiries, training and supervising them, and utilizing performance metrics to evaluate workers’ performance. The complaint further alleged that due to their misclassification as ICs, the representatives should have been paid overtime compensation for hours worked in excess of forty in a work week. Greenlee v. Lawyer.com Inc., No. 3:26-cv-13134 (D.N.J. Oct. 8, 2026). In the past year, we have seen an increased number of IC misclassification cases by sales representatives who allege that they are required to follow sales scripts. See, e.g., our blog post on May 11, 2026 involving salespersons for a home improvement company and our blog post on August 12, 2026 involving call center workers for an insurance company.
Ride-Sharing Company Agrees to Settle California IC Misclassification Lawsuit for $272 Million. Ride-sharing giant Lyft, Inc. has reached a proposed $272.5 million landmark settlement with the California Attorney General, City Attorneys for San Francisco, San Diego and Los Angeles, the California Labor Commissioner, and a group of private plaintiffs, resolving claims of IC misclassification. In a press release issued by Attorney General Rob Bonta on October 1, 2026, he reports that in 2020, the Attorney General’s Office and the City Attorneys brought a lawsuit alleging that between 2016 and 2020, the company violated various wage and hour provisions of California Labor Code and Unfair Competition Law by misclassifying drivers as ICs. The suit covers the period prior to the time that voters in California passed Prop 22, a voter initiative negating the employee-friendly “ABC” test that was enacted into law effective January 1, 2020. Under the proposed settlement, the company will pay $272.5 million in “restitution” and penalties with at least $237 million reserved for drivers. Driver eligibility and payments will be based on the number of hours and miles driven during a specific period of time.
Construction Subcontractor Agrees to Consent Decree of $1.7 Million with D.C. Attorney General for Its Use of Labor Brokers to Misclassify Trades Workers as ICs. Washington, D.C. Attorney General Brian Schwalb has entered into a consent decree with a construction subcontractor where the company has agreed to pay approximately 500 construction workers and the Office of the Attorney General (OAG) a total of $1.7 million to resolve claims of IC misclassification. According to a news release issued on October 13, 2026 by the OAG, it filed a lawsuit in 2024 against the construction subcontractor and three labor brokers for engaging in a widespread IC misclassification scheme that allegedly deprived hundreds of HVAC, plumbing, and sheet metal workers of wages and benefits under the D.C. Workplace Fraud Act, D.C. Minimum Wage Revision Act, and D.C. Sick and Safe Leave Act. Under the terms of the Consent Order, the construction company will pay $1,000,000 in penalties to the District and nearly $700,000 to 500 construction workers. In addition, the company agreed that all workers on the company’s projects would be classified as employees in the future and that it will cease doing business with certain labor brokers who have previously misclassified workers as ICs, unless specific requirements are met. A separate settlement agreement was reached with the general contracting company that was also a subject of the lawsuit. District of Columbia v. Whiting-Turner Contracting Company, No. 2024CAB003811 (Super. Ct. Civ. Div. Dist. of Columbia Oct. 13, 2026).
Ride-Sharing Company Prevails on Summary Judgment in Vicarious Liability Lawsuit by Passenger Injured by Driver. The Georgia Court of Appeals has affirmed a trial court’s grant of summary judgment that a large ride-sharing company is not liable for injuries to a passenger injured in an assault by a driver classified as an IC by the company. The injured passenger filed suit against the company and IC driver alleging that the company was liable for the driver’s assault of the passenger based on the doctrine of vicarious liability. The passenger also alleged the company should be liable for her injuries due to its alleged negligent hiring, training, supervision, and retention, as well as its alleged negligence in failing to disqualify the driver from using the company’s platform after repeated violations of the company’s zero-tolerance drug and alcohol policy. The trial court granted the company’s motion for summary judgment, concluding that the passenger’s claims against the company based on vicarious liability and negligence failed as a matter of law because of the driver’s undisputed status as an IC. As to the passenger’s negligence claim based on the driver’s driving record, the trial court found the conviction for improper driving was not an offense warranting removal from the company’s platform and violations of the company’s zero-tolerance drug and alcohol policy did not put the company of notice of the driver’s violent propensities. On appeal, a panel of the Georgia Court of Appeals affirmed the trial court’s decision. The panel concluded that “a prior speeding ticket is not evidence of an incident similar to the violent behavior that caused the injuries at issue,” and that “there is no evidence that [the company] knew of [the driver’s] propensity for aggression and violence or that it was reasonably foreseeable that his apparent issues with drugs and/or alcohol would result in [the type of] injuries sustained by [the passenger].” Evans v. Lyft Inc., No. A26A1152 (Ct. App. 2d Div. Ga. Oct. 27, 2026).
Written by Richard Reibstein, Publisher
Compiled and edited by Janet Barsky, Managing Editor