On January 29, 2019, the United States Court of Appeals for the Third Circuit ruled that Federal Law does not override New Jersey law for determining whether a truck driver is an employee or an independent contractor. (Bedoya v. Am. Eagle Express, 2019 U.S. App. Lexis 3155, January 29, 2019).
Bedoya stems from a class action lawsuit filed by several truck drivers for American Eagle Express (“AEX”). The lawsuit alleged that the drivers were employees and not independent contractors who claimed lost wages. AEX tried to dismiss the case claiming that Federal law applied which governs motor carriers. The Court disagreed finding that New Jersey law and its test for determining whether a person operates as an independent contractor controls.
Under New Jersey law, a worker is considered an employee and not an independent contractor unless the company can show each of the following factors (commonly called the ABC classification test):
- The person is free form control or direction by the alleged employer;
- The work performed is outside of the alleged employer’s usual course of business or outside of the alleged employer’s place of business; and
- The person is normally engaged in an independent trade, business, profession or occupation.
While the court did not analyze whether the drivers were independent contractors, it did note that the application of New Jersey law would not create a different employment result in every state because, among other things, many states follow the ABC test.
Independent contractors are constantly under attack. When workers are identified as independent contractors, employers should utilize the ABC test to assess whether they are truly independent.