Plaintiffs attempting to sue Strategic Delivery Solutions LLC (SDS) in a class action suit over a myriad of violations of the New Jersey Wage Payment Law (WPL) and New Jersey Wage and Hour Law (WHL) must bring their claims individually through opaque private arbitration rather than as a class in open court before a jury of their peers according to an Appellate Division opinion published on June 4, 2019. Colon et. al. v. Strategic Delivery Solutions, LLC., 2019 N.J. Super. LEXIS 78. This is an unfortunate outcome for plaintiffs, who otherwise had strong claims for New Jersey wage law violations. When hired by SDS, plaintiffs entered into independent vendor agreements, which contained clear and unambiguous arbitration provisions. According to this appellate court, by signing these agreements plaintiffs gave up their rights to bring class actions claims, waived a jury trial, and agreed to binding arbitration. Colon at 4. Moreover, the appellate court concluded that even if the Federal Arbitration Act (FAA) does not apply, the New Jersey Arbitration Act (NJAA) does, and arbitration is required to settle these wage disputes.
In their initial suit filed in December 2016, plaintiffs alleged that from February 2015 to March 2016, they were working out of an SDS facility in Elizabeth performing truck driving and delivery functions for the company. They claim that SDS made unlawful deductions from their compensation in violation of the New Jersey Wage Payment Law during this time. N.J.S.A., 34:11-4.1 to 4.14. Additionally, plaintiffs allege that SDS misclassified them as independent contractors rather than employees and in doing so failed to pay them one-and-a-half hourly rate for any time they worked over forty hours per week in violation of the overtime provisions contained within the WHL. N.J.S.A., 34:11-56a to 56a38. Withholding wages and failing to pay employees the required one-and-a-half-hour overtime rate for excess hours worked are both serious abuses against New Jersey wage laws. Id. However, the Appellate Division agreed that plaintiffs must arbitrate their claims based on this arbitration provision, so sadly plaintiffs will not have their day in court.
Had the plaintiffs not entered into such agreements with the company, they would have had strong claims for a class action lawsuit against SDS for violating the New Jersey employment law statutes. The WHL was enacted to protect employees from unfair wage practices, such as giving employees excessive hours of work. N.J.S.A. 34:11-56a. Therefore, the distinction between independent contractor and employee, which is what plaintiffs are disputing in this case, is not a minor one in terms of application of the wage laws applicable to the employee-employer relationship. The WPL, which governs the time and mode of payment of wages due to employees, excludes independent contractors from its definition of “employee.” Hargrove’s v. Sleepy’s, LLC, 220 N.J. 289 (2015). Similarly, the WHL, which establishes a minimum wage or overtime rate payable to employees, does not do so for independent contractors. Neither the WPL nor its regulations differentiate between an employee and an independent contractor, however the New Jersey Supreme Court held that in distinguishing the two, courts may apply the ABC Test, which is taken from the New Jersey Unemployment Compensation Act. Id.