Sam Hargrove v. Sleepy's, LLC (072742)
106 A.3d 449
| N.J. | 2015Background
- Plaintiffs (Hargrove, Hall, Eusebio) were mattress delivery drivers for Sleepy’s who signed Independent Driver Agreements and claimed they were misclassified as independent contractors, denying them employee protections and benefits.
- Plaintiffs sued under New Jersey’s Wage Payment Law (WPL) and Wage and Hour Law (WHL) alleging misclassification; the district court applied the ERISA/Darden factors and found them independent contractors.
- The Third Circuit certified the question to the New Jersey Supreme Court: which test governs employee v. independent contractor determinations under the WPL and WHL?
- The New Jersey Department of Labor (DOL) long applied the “ABC” test (from the Unemployment Compensation Act) in WHL cases and also used it in WPL matters; parties and amici urged various tests (ABC, hybrid/D’Annunzio, economic realities/FLSA, or common-law right-to-control).
- The Court analyzed statutory language, purpose, and agency regulations, giving deference to the implementing agency where appropriate, and sought a single rule for both statutes because of their similar remedial aims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which test governs employee status under the WPL and WHL? | Adopt a single test; prefer the hybrid D’Annunzio test, alternatively the ABC or economic-realities test; reject right-to-control. | Apply the common-law right-to-control test (Restatement §220); if WHL addressed, use FLSA/economic-realities for harmonization. | The ABC test (N.J.S.A. 43:21-19(i)(6)) governs employee/independent-contractor disputes under both the WPL and WHL. |
| Burden and effect of test choice on worker protections | Use tests that reach economically dependent workers (hybrid/ABC/economic realities) to maximize remedial coverage. | Favor narrower test(s) to preserve legitimate independent-contractor relationships and respect contractual form. | ABC presumes employee status; employer must satisfy all three prongs, promoting predictability and worker income security. |
| Whether WPL should follow WHL regulation | WPL text silent on test; DOL has applied ABC to WPL historically. | WPL should use traditional right-to-control because of legislative context at enactment. | Court finds reasons to treat WPL and WHL consistently and defers to DOL’s long-standing ABC application. |
| Whether federal FLSA economic-realities or common-law tests should control | Economic-realities is acceptable but plaintiffs prefer ABC; reject right-to-control. | Prefer economic-realities or right-to-control to align with federal law and common law. | Court rejects FLSA economic-realities and right-to-control here in favor of ABC as better aligned with remedial aims and agency practice. |
Key Cases Cited
- Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (examining factors for employee status under ERISA)
- Community for Creative Non-Violence v. Reid, 490 U.S. 730 (common-law right-to-control test for employment)
- Carpet Remnant Warehouse, Inc. v. N.J. Dep’t of Labor, 125 N.J. 567 (ABC test: failure to satisfy any prong yields employment classification)
- D’Annunzio v. Prudential Ins. Co. of Am., 192 N.J. 110 (hybrid test emphasizing control, economic dependence, functional integration for remedial statutes)
- Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376 (Third Circuit adoption of FLSA economic-realities factors)
- Franz v. Raymond Eisenhardt & Sons, 732 F. Supp. 521 (multi-factor test combining control and economic realities)
- Pukowsky v. Caruso, 312 N.J. Super. 171 (App. Div. applying Franz factors)
- Trauma Nurses, Inc. v. Bd. of Review, 242 N.J. Super. 135 (application of ABC prong C regarding independent, continuing profession)
- Gilchrist v. Div. of Emp’t Sec., 48 N.J. Super. 147 (discussion of permanence/independence for prong C)