PORTILLO v. NATIONAL FREIGHT, INC.
1:15-cv-07908
D.N.J.May 2, 2025Background
- Plaintiffs were truck drivers who entered into Independent Contractor Operating Agreements (ICOAs) with National Freight, Inc. (NFI), but the Court previously found they were employees misclassified as independent contractors under New Jersey law.
- Plaintiffs assert NFI took unlawful deductions from their weekly compensation for expenses such as fuel, equipment, insurance, and maintenance.
- The Court had already determined that these drivers are employees, triggering the protections of the New Jersey Wage Payment Law (NJWPL).
- At issue was the proper method for calculating damages: Plaintiffs sought the value of all unlawful deductions, while NFI argued for a comparative analysis of earnings.
- The Court retains jurisdiction under the Class Action Fairness Act, and both parties moved for partial summary judgment on damages calculation under the NJWPL.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper method to calculate damages under NJWPL for misclassified employees | Damages should equal the total of all unauthorized deductions from employee wages | Damages should reflect actual net economic harm, using a "but-for" earnings comparison | Damages are the full amount of unlawful deductions; no economic comparison required |
| Whether deductions from gross settlement payments are from "wages" | Entire gross settlement payments should be treated as wages under NJWPL | Deductions were from non-wage components (e.g., reimbursements, equipment costs) | All gross settlement amounts are considered wages; deductions analyzed for lawfulness |
| Can the ICOA agreements authorize such deductions for NJWPL purposes | Authorization in the ICOAs was invalid since based on misclassification | ICOAs authorized deductions, thus no violation of NJWPL | ICOAs do not constitute valid employee authorization; cannot override NJWPL |
| Economic benefit or offset as defense to wage deductions | Receipt of value (e.g., fuel) does not justify deduction if not compliant with NJWPL | Employee’s benefit from deduction offsets any harm; thus, no damages if no net loss | Economic benefit/offset defense rejected; NJWPL permits no such offset |
Key Cases Cited
- Hargrove v. Sleepy's, LLC, 106 A.3d 449 (N.J. 2015) (NJ wage laws are remedial and must be broadly interpreted to protect employees)
- Rosen v. Smith Barney, Inc., 925 A.2d 32 (N.J. App. Div. 2007) (NJWPL ensures employees receive full earned wages without improper reduction)
- Male v. Acme Markets, Inc., 264 A.2d 245 (N.J. App. Div. 1970) (contractual deductions from wages violating wage statutes are invalid)