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

In the Courts

  • A Massachusetts federal court approved on November 26, 2013 a $10.0 million settlement in a class action lawsuit against CleanNet USA Inc., who was alleged to have violated Massachusetts independent contractor law by misclassifying employees as independent contractor "franchisees."  The settlement reportedly includes $7.5 million for the janitorial workers and $2.5 million for their attorneys.  The class was comprised of over 100 custodian "franchisees."  The lawsuit claimed that CleanNet violated the state independent contractor law as well as laws prohibiting unfair and deceptive practices when it allegedly induced class members to purchase cleaning franchises and required them to purchase general liability and workers' compensation insurance for the benefit of CleanNet.  Sola v. CleanNet USA Inc., No. 1:12-cv-10580 (D. Mass. Nov. 26, 2013).
  • A California district court denies a motion by insurance agents who sought to proceed with their IC misclassification lawsuit as a class action against Allstate.  The agents claim that Allstate exercised extensive control over their agencies, effectively converting them from independent contractors into "de facto employees." The agents alleged that evidence of such micro-management included mandatory sales quotas under threat of termination, mandatory training sessions, requirement to perform services without compensation, assignment and monitoring of tasks by the company, and recording and evaluating agents' telephone interactions with potential customers. In denying the motion, which would have certified a class of at least 1,300 agents, the court found that the plaintiffs had not shown that common issues predominated in the action and that "a class action would not be a superior method for fairly and efficiently adjudicating the controversy." Comparetto v. Allstate Insurance Company, Case No. LA CV11-09206 (JAK) (FFM) (C.D. Cal. Nov. 20, 2013).
  • In the latest series of cases involving exotic dancers suing adult entertainment clubs regarding independent contractor misclassification, federal district courts in Maryland and New York found two clubs violated federal and/or state wage and hour laws.
    • In the Maryland case, the Court awarded back pay and liquidated damages under the Fair Labor Standards Act (FLSA) to a dancer at Norma Jean's Nite Club where the court found that  she was an employee (and not an independent contractor) who had not been paid at the minimum wage.  Butler v. PP&G Inc., No. 1:13-cv-00430 (D. Md. Nov. 7, 2013).
    • In the New York case, the court had determined in October that the Club had misclassified its exotic dancers as independent contractors in violation of the minimum wage law of the FLSA and the New York Labor Law. The court now has ruled on additional issues, finding that the Club violated the New York Labor Law's wage deduction provisions by requiring the dancers to "pay tip outs, fees, and fines to the Club out of their own pockets." Hart v. Rick's Cabaret, No. 09 Civ. 3043 (PAE) (S.D.N.Y. Nov. 19, 2013).
    • Additionally, two new lawsuits have been filed seeking class action status in Louisiana and Pennsylvania, both alleging misclassification of dancers as independent contractors and violations of the FLSA.  In the Louisiana lawsuit, Moncheski v. RCI Entertainment of Louisiana Inc., No. 2:13-cv-06388 (E.D. La. Nov. 11, 2013), the allegations include, among others, that the dancers were required to follow written guidelines and procedures of the Club (thereby demonstrating an employee (as opposed to an IC) relationship, and a failure to pay any wages and an obligation to pay fines and share tips in the form of "house fees" (allegedly in violation of the federal wage and hour law.  The Pennsylvania case involves One Three Five, Inc., d/b/a Blush.

On the Legislative Front

  • The Payroll Fraud Prevention Act of 2013 (S. 1687) was introduced by Senator Bob Casey (D-PA) on November 12, 2013, following a hearing of the Senate Subcommittee on Employment and Workplace Safety. As more fully discussed in our prior blog posts on November 13 and November 14, 2013, the bill, co-sponsored by Senators Tom Harkin (D-IA), Sherrod Brown (D-OH) and Al Franken (D-MN), seeks to outlaw what Senator Casey called the "intentional misclassification" of employees as independent contractors – a practice that he labeled as "payroll fraud."  The Payroll Fraud Prevention Act would, among other things, make the misclassification of employees as independent contractors a federal offense, expand the Fair Labor Standards Act to include a new category of workers (non-employees), and require every employer and enterprise to provide a classification notice for both employees and non-employees.

Regulatory and Enforcement Initiatives

  • The Wage and Hour Division of the U.S. Department of Labor entered into a Partnership Agreement with Labor Bureau of the New York State Office of Attorney General and a similar Agreement with the New York State Department of Labor.  New York is now the 15th state since September 2011 to sign an agreement with the Wage and Hour Division under the federal Misclassification Initiative. As noted in our blog post of November 18, 2013, the agreement between federal and New York State officials includes, but is not limited to, coordinating investigations and joint enforcement activities; exchanging and sharing investigative leads, complaints and referrals of possible violations; exchanging  confidential unemployment compensation information; and mutually disseminating outreach materials to the regulated community.

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.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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