18th Annual Workplace Class Action Report - 2022 Edition

256 Annual Workplace Class Action Litigation Report: 2022 Edition which demonstrated call outs, late arrivals, and early departures, the Court held that Plaintiffs were not similarly- situated. Accordingly, the Court granted Defendant’s motion for summary judgment. Dean, et al. v. TXX Services, Inc., 2021 U.S. Dist. LEXIS 52358 (E.D.N.Y. March 15, 2021). Plaintiffs, a group of transportation service providers (“TSPs”), filed a class and collective action alleging that Defendants misclassified its TSPs as independent contractors in violation of the FLSA and New York Labor Law. Specifically, Defendants – which were comprised of a transportation broker and its CEO – entered into independent contractor agreements with Plaintiffs wherein the TSPs agreed to deliver freight for Defendants’ customers. Plaintiffs claimed, however, that despite being labeled as independent contractors, their relationship with Defendants was more akin to that of employer-employee. Id. at *14. According to Plaintiffs, as a result of Defendants’ alleged misclassification, Defendants failed to provide TSPs with overtime pay and state-mandated wage notices. Defendants filed a motion for summary judgment on the grounds that Plaintiffs were independent contractors not entitled to such employment-related benefits. The Court denied the motion. In addressing Defendants’ motion, the Court considered five factors of the economic reality test. As to the first factor, Defendants relied on the plain language of the independent contractor agreements, as well as the fact that Defendants did not place Plaintiffs on the payroll and did not provide them with benefits. Plaintiffs countered that Defendants handled the composition of driving routes, controlled all customer relationships, and disciplined TSPs who did not follow the appropriate routes. In light of these disputes of material fact, the Court found that this factor weighed in favor of denying the motion. Given this dispute over Defendants’ control of TSPs’ routes – and thus, of Plaintiffs’ earnings – the Court similarly reasoned that the second factor weighed against a finding of independent contractor status. With respect to the skill required, Defendants contended that Plaintiffs utilized professional driving skills, business management skills, and familiarity with relevant transportation regulations. Id. at *33. However, since the Court in a separate order already had determined that Plaintiffs’ work did not involve any specialized skills, the Court found that this factor also weighed against granting the motion. The parties further disputed the permanence of their working relationship, and because the Court opined that Plaintiffs were an integral part of Defendants’ transportation business, it concluded that all five factors weighed against independent contractor status. For these reasons, the Court denied Defendants’ motion for summary judgment. Ferguson, et al. v. Texas Farm Bureau , Case No. 17-CV-111 (W.D. Tex. May 19, 2021). Plaintiffs, a group of agency managers, filed a collective action alleging that Defendant misclassified them as independent contractors and thereby failed to pay them overtime compensation in violation of the FLSA. Following discovery, Plaintiffs filed a motion for partial summary judgment on the issue of worker classification. The Court granted the motion. The Court applied the economic realities test to Plaintiffs’ circumstances to ascertain whether they were properly classified as employees as a matter of law. The Court determined that while Plaintiffs had some discretion in their day-to-day affairs, there was not sufficient freedom to reach the level of control that indicated status as an independent contractor. The Court further reasoned that while Plaintiffs made substantial investments in their offices, training, and execution of professional responsibilities, Defendant clearly had a much greater overall investment in their own business, dwarfing any investment made by Plaintiffs The parties did not dispute that Defendant had significant influence over the profits and losses of Plaintiffs. Further, Defendant had the ultimate say in the hiring and firing of agents, which affected Plaintiffs’ commissions. Plaintiffs had all worked for Defendants for several years, under indefinite contract terms, and without permission to sell competitive products. Finally, the Court held that Plaintiffs were clearly integral to Defendant’s business, as only Plaintiffs, as agency managers, and agents sold Defendant’s insurance, Plaintiffs trained and supervised over 700 agents on a day-to-day basis, and Plaintiff recruited other agents to sell products. The Court concluded that under the economic realities test, Plaintiffs were Defendant’s employees, and therefore it granted Plaintiffs’ motion for summary judgment as to their employment classification. Guynn-Neupane, et al. v. Magna Legal Services , 2021 U.S. Dist. LEXIS 75079 (N.D. Cal. Sept. 30, 2021). Plaintiff, a mock juror in a research focus group led by Defendant, filed a class action alleging that Defendant misclassified her as an independent contractor and thereby failed to pay all wages due in violation of the California Labor Code and the IWC Wage Order No. 4-2001, which governed “professional, technical, clerical, mechanical and similar occupations.” Id . at *24. Defendant filed a motion for summary judgment, which the Court granted. Defendant contended that Plaintiff was exempt under the data aggregator exemption from