Workers' Compensation: Luxury Car Transporter Pays $455K for Misclassifying Drivers

The State of New Jersey continues to diligently pursue violations of employment status misclassification and independent contractor relationships.

1. Misclassification Issue

The core of this action revolves around the misclassification of employees as independent contractors. Horseless Carriage Carrier, Inc., a luxury car transporter, was found to have incorrectly classified eight of its drivers as independent contractors when they should have been categorized as employees under New Jersey labor laws.

2. Legal Consequences

- The company agreed to pay $455,000 to settle the case.

- $364,000 (80% of the settlement) will go directly to the misclassified workers as unpaid wages.

- The remaining 20% will be paid to the New Jersey Department of Labor and Workforce Development (NJDOL) as fees and penalties.

3. ABC Test

The NJ Department of Labor utilizes New Jersey's "ABC test" to determine whether a worker should be classified as an employee or an independent contractor. Under this test, a company must prove all three of the following to classify a worker as an independent contractor:

   a) The individual is free from control or direction over their work performance.
   b) The work is outside the company's usual course of business or performed outside all of the company's places of business.
   c) The individual is customarily engaged in an independently established trade, occupation, profession, or business.

4. Impact of Misclassification

Several negative consequences of misclassification:

- Workers lose legal protections and benefits.
- It undermines fair labor practices.
- It weakens workers' financial security and workplace rights.
- It creates unfair competition for law-abiding employers.

5. Lost Benefits

Misclassified workers are deprived of various rights and benefits, including:

- Minimum wage
- Overtime pay
- Unemployment benefits
- Temporary disability benefits
- Earned sick leave
- Job-protected family leave
- Protection against discrimination

6. Regulatory Stance

The statements from Attorney General Platkin and Labor Commissioner Asaro-Angelo demonstrate a strong stance against worker misclassification. They emphasize that this practice is seen as exploitation and that authorities are committed to enforcing labor laws and holding non-compliant companies accountable.

7. Origin and Investigation

The case originated from an employee complaint, leading to an investigation by NJDOL's Wage and Hour Division. This highlights the importance of worker reporting mechanisms in identifying labor law violations.

8. Broader Implications

While this case focuses on a specific company, the press release uses it to send a broader message to all employers about the importance of proper worker classification and compliance with labor laws.

This action underscores the ongoing challenges in properly classifying workers and the serious consequences businesses can face for misclassification. It also demonstrates the active role that state agencies are taking in enforcing labor laws and protecting workers' rights.

IN RE: HORSELESS CARRIAGE CARRIER INC. Settlement Agreement

Recommended Citation: Gelman, Jon L., Luxury Car Transporter Pays $455K for Misclassifying Drivers, www.gelmans.com (08/05/2024) https://workers-compensation.blogspot.com/2024/08/luxury-car-transporter-pays-455k-for.html

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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.