United States: May 2013 Monthly Independent Contractor Compliance And Misclassification Update

In the Courts

  • New York federal district court grants approval of $600,000 settlement in favor of a class of luxury suite attendants who worked at Arthur Ashe Stadium during the U.S. Open between 2004 and 2009. The defendants were three companies that provided catering and concession services at the tennis event. The suit alleged, among other things, violations under the Fair Labor Standards Act and the New York Labor Law for alleged failure to pay all wages due, including overtime, unlawful retention of gratuities, and improper recordkeeping. Yahraes et al. v. Restaurants Associates Events Corp., 10-CV-935 (MKB)(SMG) (E.D.N.Y. May 2013).
  • Highest court in Massachusetts allows extraterritorial application of Massachusetts stringent independent contractor and wage/hour laws to independent couriers that lived and provided services outside of Massachusetts for a Massachusetts company. The couriers alleged that they were misclassified as independent contractors and not employees and that the company also violated Massachusetts wage laws by failing to pay overtime and other wages. The Supreme Judicial Court concluded that the written contracts between the parties contained an enforceable forum selection clause requiring both that actions be brought in Massachusetts and requiring that the contract and all rights and obligations of the parties be determined under Massachusetts law, even though the individuals lived and worked in New York. Taylor v. Eastern Connection Operating, Inc., SJC 11222 (Mass. Supreme Judicial Court May 17, 2013).
  • Kentucky cable company pays $1.075 million to settle misclassification case with U.S. Department of Labor for cable, telephone, and internet installers. Under the consent judgment, the payments will be made to 77 cable installers whom Bowlin Group LLC allegedly misclassified as independent contractors and then failed to pay overtime compensation to the installers as well as other similarly situated installers whom Bowlin designated as employees. Bowlin Group and related parties also consented to a permanent injunction barring them from failing to pay overtime and minimum wages and keeping and preserving employment records in violation of the Fair Labor Standards Act. See our prior blog post dated May 14, 2013, entitled, "Cable Company Pays $1.075 Million to Settle Misclassification Case with U.S. Department of Labor for Cable, Telephone, and Internet Installers." Harris v. Bowlin Group, LLC, Case 2:12-cv-00076 (E. D. Ky. April 30, 2013).
  • The U.S. Court of Appeals for the Third Circuit certifies a question relating to the test to be used for IC classification for resolution by the New Jersey Supreme Court in a proposed class action by delivery drivers against Sleepy's alleging violations by the bedding giant of wage/hour and other employment statutes. Finding that "there are at least four distinct employment tests that have been applied under New Jersey law in other contexts (including unemployment, whistleblowing and tort claims) to determine independent contractor/employee status," the Third Circuit certified the following question: "Under New Jersey law, which test should a court apply to determine a plaintiff's employment status for purposes of the New Jersey Wage Payment Law...and the New Jersey Wage and Hour Law?" Hargrove v. Sleepy's, LLC, Nos. 12-2540 & 12-2541 (3d Cir. May 2013).
  • California truck drivers file suit in Los Angeles County Superior Court against Harbor Express, Inc., a trucking company serving the ports of Los Angeles and Long Beach, seeking class action status and alleging that as many as 400 truckers were misclassified as independent contractors rather than as employees and, as a result, the company improperly sought to avoid paying overtime, rest breaks, other wages and benefits under the applicable labor laws. The drivers claim that they are employees, driving company-owned trucks exclusively for Harbor Express. Estrada v. Harbor Express, Inc. (Los Angeles County Superior Court May 13, 2013).
  • California federal district court revisits certification decision involving San Diego-area newspaper being sued by a proposed class of home delivery carriers. The carriers allege that the company misclassified them as independent contractors and failed to pay minimum wage, hourly wages and overtime wages; failed to provide rest breaks and reimburse reasonable business expenses; and engaged in unfair business practices. The court upheld the certification of the class as to the question of whether the company improperly characterized the carriers as independent contractors and not employees. It also reaffirmed class certification regarding the claims of unreimbursed expenses and unfair business practices; but, decertified the class as to the claims of overtime, minimum wage, and rest breaks due to the differences in hours worked by each delivery carrier and the fact that an undetermined amount of carriers hired substitutes or helpers to perform the services. Dalton v. Lee Publications, Case No. 08-cv-1072-GPC-NLS (2013 U.S. Dist. LEXIS 71291) (S.D. Cal. May 20, 2013).

On the Legislative Front

  • Connecticut bill (HB 6151) exempting certain truck drivers from coverage under the state's unemployment law passes the House on May 16, 2013 and now awaits a Senate vote. Under the proposed bill, independent contractor truck drivers who transport property pursuant to an agreement with a contracting party will be exempt from the unemployment laws if all of the following conditions are met: the vehicle has a gross weight of over 10,000 pounds; the driver owns the vehicle or leases it from an entity other than the contracting party (or any related entity); the driver's pay is based on factors that include mileage-based rates, a percentage of any rate schedules, or flat fee; the driver is free to reject work without consequence and has a non-exclusive relationship with the contracting party; and the driver is not considered an employee under the unemployment law's three-part ABC test. In addition, the bill would enable a trucker to satisfy Element C of the ABC test even if he or she provides services to only one company. Currently, a driver can fail Element C of the test if he or she limits services to only one company.
  • Tennessee Governor signs bill (SB 833) on May 16, 2013 addressing construction industry providers who misclassify employees as independent contractors resulting in workers' compensation fraud and non-compliance. The new law provides civil and criminal penalties for such misclassification.
  • New Jersey passes employee misclassification bill (A1578, S1450), the Truck Operator Independent Contractor Act, creating a presumption that parcel (small package) delivery and drayage truck drivers are employees and not independent contractors unless they can satisfy a three-part ABC test. The bill also provides substantial civil and criminal penalties for the misclassification of such drivers. Although the bill passed in the Assembly and Senate in May, the votes were along party lines, with Democrats favoring the bill and Republicans opposed. Due to strong opposition from those who fear that the bill will discourage small business ownership and hamper the New Jersey economy, many expect that Governor Christie will veto the bill.

Regulatory and Enforcement Initiatives

  • IRS to pursue more cases involving independent contractor misclassification through its Questionable Employment Tax Practices (QETP) program. According to the Chief of the IRS's Employment Tax Policy section, the IRS and 37 participating workforce agencies that have signed a Memorandum of Understanding (MOU) will coordinate enforcement methods and exchange employment tax information for civil cases where the government believes the intent was to evade or inappropriately reduce tax responsibilities. This resurgence is expected to begin in the next 8-10 months. The QETP program was first announced in 2007, but was overshadowed by later information-sharing arrangements between the IRS and the U.S. Department of Labor, which has itself entered into MOUs with an increasing number of workforce agencies. See prior blog post dated May 16, 2013, entitled, "IRS to Reinvigorate its QETP Program in Effort to Crack Down Harder on Independent Contractor Misclassification."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Lisa B. Petkun
Andrew J. Rudolph
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions