A northern New Jersey truck driving school that has been in business since 1983 has agreed to a financial settlement with the state to end a lawsuit in which it was accused of misclassifying driver instructors as independent contractors.
State attorney general Matthew Platkin announced the settlement earlier this week with Jersey Tractor Trailer Training of Hasbrouck Heights in Bergen County.
The original lawsuit was filed by Robert Asaro-Angelo, commissioner of the New Jersey Department of Labor and Workforce Development, in September 2024 in Bergen County Superior Court.
The original New Jersey lawsuit said the misclassification involved “at least” 30 of JTTT’s teachers. Platkin’s settlement announcement did not provide further details on the number of teachers involved in the misclassification.
Payments to teachers will vary
The payment from JTTT as a result of the settlement was broken down by the state as a “total gross settlement” of $345,000. But the state also said the maximum payment to an eligible driving instructor could reach $137,160.
JTTT will also pay $127,839 to the state for penalties and state costs.
The penalties to be paid could be reduced by $80,000 if JTTT “meets all of its reporting obligations,” the state said in its announcement of the settlement. Among that documentation is that the driving school “is treating all current and future instructors as employees under all applicable State labor and employment laws.”
“No business operating in our state should be allowed to deprive workers of their rightful pay and benefits,” Platkin said in a prepared statement. “Today’s settlement is another important victory in the fight against worker misclassification. Our message is simple: comply with the law or face the consequences.”
The issue of control
In the original lawsuit filed last year, the state said JTTT teachers were subject to “significant control” over their activities by JTTT. “Control” is a key test in cases of classification of an independent contractor (IC) as any legal process that seeks to determine whether a worker was truly independent or effectively an employee masquerading as an IC through the definition and rules of the company.
According to the lawsuit, the control included JTTT establishing work hours, requiring training sessions on Saturdays, imposing a school-provided curriculum and “having the right to hire and fire workers.”
“Such misclassification gave (JTTT) an unfair competitive advantage over employers who followed all relevant laws, and therefore provided all mandated benefits to their employees and contributions to the State,” Asaro-Angelo said in his initial lawsuit.
The specific violations that the state alleged in its initial lawsuit included the failure to pay overtime; they do not keep records of wages paid; avoiding sick leave pay; and not making payments to both the state’s unemployment compensation fund and a workforce development fund.
Established through previous court decisions, New Jersey operates under the ABC test to guide litigation and state action on IC classification. That goes back to a 2015 decision in a case involving mattress retailer Sleepy’s.
The New Jersey Department of Labor is in the midst of a rulemaking process that attempts to codify the ABC test, much as California’s 2019 AB5 law codified the ABC test explained in the 2018 Dynamex decision.
Neither the original lawsuit filed by the state nor the announcement of the settlement with JTTT made reference to the ABC test.
The ABC test has three “prongs.” While the wording may vary slightly among jurisdictions that use it, California’s text states that a worker can be considered an independent contractor if:
A. The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. The person performs work that is outside the usual course of business of the leasing entity.
C. The person is usually engaged in a trade, occupation or independently established business of the same nature as that involved in the work performed.
Richard Reibstein, an attorney with the firm Troutman Pepper Locke who specializes in independent contractor law, said the JTTT case raised some difficult questions.
“It’s not that easy to have an independent contractor relationship with a group of CDL instructors,” Reibstein said in an email to FreightWaves. “I can certainly create a bona fide basis to structure an IC relationship as IC compliant, although it is much more difficult in New Jersey under its ABC Test than in other states.”
Emails sent to JTTT through its contact portal on its website, and an email sent to the company’s external counsel listed in the court documents, had not been answered by the time of publication.
More articles by John Kingston
‘Jobs apocalypse’: a panel at Trimble eyes the future of AI in logistics
Likely the first AB5 trucking enforcement action in California, 3 companies are involved
The State of the Goods takeaways: sagging volume, but the capacity tightening a bit
The post Misclassification lawsuit: New Jersey trucking school’s expensive settlement appeared first on FreightWaves.