In the Courts (5 cases)

WEIGHT MANAGEMENT AND PRESCRIPTION SERVICES COMPANY SUED BY PHYSICIAN IN CLASS ACTION LAWSUIT FOR IC MISCLASSIFICATION. A California physician has commenced a class and collective action lawsuit in California against a health care company offering weight management and prescription services, alleging the company violated the Fair Labor Standards Act (FLSA) and California wage and hour laws by misclassifying physicians as ICs instead of employees. The complaint seeks relief for the company’s alleged failure to pay the physicians minimum wages and overtime compensation, failure to furnish accurate itemized wage statements, and failure to reimburse business expenses. As to the claim under California law, the plaintiff alleges that the defendant cannot satisfy any components of the three-part ABC test. That test, however, may be inapplicable to the extent one of the many exemptions from the ABC test applies to doctors, who may also be exempt from the FLSA’s provisions as a learned professional. Cioppettini v. Mochi Medical CA, PC, No. 3:26-cv-01260 (N.D. Cal. Feb. 11, 2026).

WASTE REMOVAL COMPANY SUED FOR IC MISCLASSIFICATION IN CLASS ACTION BY TRASH COLLECTORS. A waste and snow removal company faces a class and collective action complaint brought in a Pennsylvania federal court by a worker claiming wage and hour violations under the FLSA and Pennsylvania state law due to the company’s alleged misclassification of trash collectors and snow removal workers. The plaintiff collected trash and performed snow removal and hauling for Metropolitan Waste Systems, Inc. He alleges that the company intentionally misclassified him and other similarly situated workers as ICs in an effort to avoid its overtime and minimum wage obligations under the FLSA and Pennsylvania Minimum Wage Act, including training time. According to the complaint, the workers were allowed little or no discretion or independent judgment in the method or manner as to how they performed their work, were supervised by company employees and were subject to discipline, were required to wear uniforms and identify themselves as company employees, and had to follow company guidelines. Johnson v. Metropolitan Waste Systems Inc., No. 2:26-cv-01056 (E.D. Pa. Feb. 19, 2026).

INSURANCE COMPANY AND ITS PRESIDENT SUED IN FLORIDA BY SALES REPRESENTATIVES IN IC MISCLASSIFICATION LAWSUIT. EZ Health IQ, Inc. and its president have been sued by sales representatives under the FLSA in a collective action complaint in a Florida federal court lawsuit alleging the company misclassified the sales reps as ICs and failed to pay them overtime for hours worked as employees over 40 hours in a week. The complaint claims that the sales reps followed sales scripts provided by the company, received a flat rate per week plus commissions regardless of the number of hours worked, and were paid through a cash app. The plaintiff asserts in the complaint that the company set the sales reps’ hours, required them to adhere to a strict schedule, controlled the way they performed their work, provided all materials necessary for the job, required them to undergo training, and closely oversaw the manner in which the reps performed their jobs on a daily basis. Frater v. American Work Health and Life Inc., No. 0:26-cv-60398 (S.D. Fla. Feb. 12, 2026).             

HOME HEALTH COMPANY LIABLE FOR UP TO $12 MILLION DUE TO IC MISCLASSIFICATION ‎OF NURSES AND HOME HEALTH AIDES. A federal district court in Pennsylvania entered summary judgment against a home health company, Amazing Care Home Healthcare Services LLC, as well as its owner and one of its senior managers, in a lawsuit brought by the DOL, finding the defendants liable for misclassifying both licensed practical nurses (LPNs) and home health aides (HHAs) as ICs instead of employees. As detailed in our blog post of February 18, 2026, the court held that the IC relationships with LPNs (and HHAs) failed to satisfy the applicable six-part test for IC status under the federal FLSA because all but one of the factors favored employee status. As a result, the DOL is seeking nearly $12 million in unpaid overtime and statutory liquidated damages from the corporate and individual defendants, personally. The five factors supporting employee status were the degree of the alleged employer’s right to control the manner in which the work is to be performed, whether LPNs had an opportunity for profit or loss depending on each worker’s managerial skill, the use of special skills, the permanence of the working relationship, and whether the services provided by the workers are integral to the alleged employer’s business. The only factor supporting IC status was the workers’ investment in required equipment or materials and the workers’ employment of helpers. The court also considered additional facts, but found most of them favored employee status, such as the fact that the company gave the LPNs performance reviews like employees, directed LPNs to use the same time sheets as employees, subjected LPNs to Amazing Care’s employee handbook, and used workplace forms that referred to all LPNs as “employees” even those paid on a 1099 basis. The court also determined that the owner, who served as president and administrator, and the director of nursing were also “employers” under the FLSA and personally liable to the LPNs as well. The issue of damages will be submitted to a jury. Su v. Amazing Care Home Healthcare Servs., No. 2:24-cv-00190 (E.D. Pa. Feb. 13, 2026).

TRUCKING COMPANY SETTLES IC MISCLASSIFICATION CLASS ACTION BY DRIVERS FOR $1.175 MILLION. A Kentucky federal district court has granted final approval of a $1.175 million collective action settlement resolving IC misclassification claims in a class action lawsuit brought by truck drivers against a trucking and freight transportation company. The drivers claimed in their second amended complaint that, among other things, due to their misclassification as ICs and not employees, Paschall Truck Lines, Inc. unlawfully made deductions from the drivers’ pay, thereby “intentionally reducing” their pay below the minimum wage under the FLSA. In support of their misclassification claims, the drivers alleged that they were required to attend a multiday orientation, watch training videos, and complete a drug test; were subject to supervision; were not permitted to use the commercial vehicles leased to them for any carrier other than the company; and could not accept jobs assigned to them by any other carrier. Carter v. Paschall Truck Lines, Inc., No. 5:18-cv-41 (W.D. Ky. Feb. 13, 2026).

Regulatory Initiatives (1 matter)

U.S. Department of Labor Issues a Proposed Rule on IC Status under the FLSA. As discussed in our blog post of February 26, 2026, the DOL in this second Trump administration issued a proposed regulation on that date regarding the classification status of ICs. It was almost a carbon copy of the 2021 regulation issued by the first Trump administration, which was replaced by a 2024 regulation issued by the Biden administration. As we remarked previously about these competing regulations addressing the issue of IC status under the FLSA, the new rule, once finalized, would be “much ado about (almost) nothing.”

The first part of the proposed regulation would rescind all inconsistent or conflicting administrative rulings, interpretations, practices, and enforcement policies of the DOL relating to the classification of ICs and employees. This appears to be a means to override the Biden administration’s 2024 rule on the subject. The next part of the proposed rule recites the time-honored principle under the FLSA that a worker is an IC only if he or she, as a matter of economic reality, is “in business for him- or herself.” The proposed regulation then lists five factors to be examined. Of the five, the DOL’s proposed regulation refers to two as “core factors”: (1) the nature and degree of the individual’s control over their work; and (2) the individual’s opportunity for profit or loss. The proposed regulation states these two core factors “are the most probative as to whether or not an individual is an economically dependent ‘employee,’ … and each is therefore afforded greater weight in the analysis than is any other factor.” The remaining three, referred to as “non-core” factors, are: (1) the amount of skill required for the work; (2) the degree of permanence of the working relationship; and (3) whether the work is part of an integrated unit of production. Finally, the proposed rule also notes that any factor related to the relationship between an individual and potential employer may be relevant. Notably, the courts under the FLSA have considered dozens of factors bearing on IC status, and the proposed regulation therefore validates this type of broad judicial inquiry.

The DOL’s proposed rule has no application to the IC status of workers under most other federal laws, such as ERISA and the National Labor Relations Act, which have different worker classification tests. It also has no application to the classification of workers under state IC tests, most of which vary considerably from the test under the FLSA. This is a key takeaway, because most litigation against companies alleging IC misclassification arises in whole or in part under state laws.

The publisher of this blog was quoted in numerous publications on the proposed rule:

• An article by Parker Purifoy, titled “Labor Agency’s Gig Worker Flip-Flopping Weakens Rules in Court,” in Bloomberg Law Daily Labor Report and Bloomberg Daily Tax Report on March 2, 2026;
• An article by Max Kutner, titled “DOL Contractor Proposal Looks Familiar, With Less Deference,” in Law360 Employment Authority on February 26, 2026;
• An article by John Kingston, titled “Trump’s Independent Contractor Rule Revived, Minimal Difference From Earlier Version.” in Freight Waves on February 26, 2026;
• An article by Michael Cardman, titled “DOL Proposes New(ish) Independent Contractor Rule,” in Brightmine HR and Compliance on February 26, 2026; and
• An article by Nancy Marshall-Genzer, titled “Employee or Gig Worker? Proposed Labor Department Rule Seeks to Clarify,” in Marketplace on March 5, 2026.

Prior to the issuance of the proposed regulation, the New York Law Journal published an article by the author of this blog post on the anticipated proposed regulation in its annual Labor & Employment Special Report, titled “The Upcoming Independent Contractor Regulations,” on February 23, 2026.

Analysis

A review of the proposed regulation issued today has no meaningful differences from the wording of the 2021 rule on IC status issued by the first Trump administration. The only difference is a few of the examples given in the proposed rule dealing with the transportation and the construction industries.

The first part of the proposed regulation would rescind all inconsistent or conflicting administrative rulings, interpretations, practices, and enforcement policies of the Labor Department relating to the classification of ICs and employees. This approach appears to be a means to override the Biden administration’s 2024 rule on the subject.

The next part of the proposed rule recites the time-honored principle under the FLSA that a worker is an IC only if he or she is, as a matter of economic reality, “in business for him- or herself.” The proposed regulation then lists five factors to be examined, but states the five factors “are not exhaustive and no single factor is dispositive.” The proposed rule also notes that any factor related to the relationship between an individual and potential employer may be relevant. Notably, the courts under the FLSA have considered dozens of factors bearing on IC status, and the proposed regulation therefore validates this type of broad judicial inquiry.

Of the five factors, the Labor Department’s proposed regulation refers to two as “core factors”: (1) the nature and degree of the individual’s control over his/her work; and (2) the individual’s opportunity for profit or loss. The proposed regulation states these two core factors “are the most probative as to whether or not an individual is an economically dependent ‘employee,’ … and each is therefore afforded greater weight in the analysis than is any other factor.” While the proposed rule does not create a legal presumption, it does say that if both core factors point toward the same classification, whether employee or IC, “there is a substantial likelihood that is the individual’s accurate classification.”

This is not a new way to analyze IC status under the FLSA; rather, it is consistent with current jurisprudence. As the Department of Labor states in its lengthy supplementary material appearing before the proposed rule, “whenever the control and opportunity factors both pointed to the same classification – whether employee or independent contractor – that was the court’s conclusion regarding the worker’s ultimate classification.” Proposed Rule at note 140.

Under the control factor, the proposed rule restates many of the same conclusions that most courts have already articulated — that several types of activities do “not constitute [the type of] control that makes the individual more or less likely to be an employee under the Act.” Those types of control that are not meaningful include requiring an individual to:

• Comply with specific legal obligations;
• Satisfy health and safety standards;
• Carry insurance;
• Meet contractually agreed-upon deadlines or quality control standards; or
• Satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships).

While the proposed regulation notes that requiring the individual to work exclusively for one company demonstrates control (which is consistent with court decisions), it considerably overstates the law when it says that requiring the individual, directly or indirectly, to work exclusively for a potential employer weighs in favor of the individual being an employee under the FLSA. Many legitimate ICs, for example, commit to one or more projects that require a concentrated, full-time undertaking to produce deliverables within a tight timeframe; that is hardly the type of control that should support employee status.

The profit or loss factor expands the manner in which courts have considered a worker’s investment. Some have examined only the worker’s financial investment. However, the proposed regulation would follow newer court decisions that also have examined the manner in which profits are maximized by the individual’s initiative.

Next, the proposed regulation addresses the three “other” factors: (1) the amount of skill required for the work; (2) the degree of permanence of the working relationship; and (3) whether the work is part of an integrated unit of production.

The amount of skill required factor fails to mention that many legitimate ICs do not have what some may refer to as an elevated skillset, yet they may have little or no economic dependence on a business. While some may think that taxi drivers, for example, do not have a high degree of skill, a number are very skillful and operate their own taxi business as ICs, as the courts have found over the years. Likewise, a doctor working for a hospital has elevated skills, but that does not make him or her an IC if the hospital directs and controls his or her work while he or she works at a fixed salary in a hospital.

The degree of permanence factor in the proposed regulation failed to recognize that many IC relationships are at least semi-permanent by choice of the worker: for example, a gardener who provides service weekly to a homeowner for 20 years; a distributor who chooses to operate his or her own business distributing another company’s products exclusively; and a tutor who provides frequent tutoring to the same family’s children throughout their school years.

The final factor is characterized as whether the work “is part of an integrated unit of production.” As the proposed rule states: “This factor is different from the concept of the importance or centrality of the individual’s work to the potential employer’s business.” In this manner, the Department of Labor is seeking to change the focus of this factor, which historically has been given little weight by the courts anyway.

As noted above, the proposed regulation adds a new subsection with six examples of workers and comments on whether the workers would be properly classified as employees or ICs under the final regulation.

Lastly, the proposed regulation addresses the “primacy of actual practice.” It states that a company’s actual practice is more significant than what is written in a purported IC’s contract.

The formal notice announcing the proposed regulation is likely to be issued tomorrow in the Federal Register, and the public may submit comments to the Labor Department within 60 days thereafter. We expect to submit comments, as we did in connection with the 2021 Trump Rule and the 2024 Biden Rule, both of which quoted comments by the publisher of this blog.

The Labor Department’s proposed rule, like the first Trump administration’s 2021 Rule and the Biden administration’s 2024 Rule, is likely to face lawsuits regarding its enforceability. But because no court has relied upon either of those other rules in determining the IC status of workers, such litigation has limited practical meaning.

Of course, the Labor Department’s proposed rule has no application to the IC status of workers under most other federal laws, such as ERISA and the National Labor Relations Act, which have different worker classification tests. It also has no application to the classification of workers under state IC tests, most of which vary considerably from the test under the FLSA. And most litigation against companies alleging IC misclassification arises in whole or in part under state laws and not exclusively the federal wage and hour law.

Takeaway

IC compliance and misclassification has been front-page news for many years. State workforce agencies and plaintiffs’ class action attorneys have continued to focus on companies that are out of compliance with federal and state IC laws. While this proposed regulation may be construed as favoring IC status, it will likely increase attention on this matter and prompt more class action lawsuits by plaintiffs’ attorneys, as an unintended consequence.

Many companies that utilize a number of ICs may be vulnerable to misclassification liability if they are not in a heightened state of compliance with applicable federal and state laws. Some companies have resorted to a process such as IC Diagnostics (TM) to elevate their level of compliance with IC laws. Companies willing to reevaluate their compliance in this area can, consistent with their current business model, restructure, re-document, and re-implement their IC relationships in a manner that is customized and sustainable.

Publisher’s Note (3/2/26): The publisher of this blog was quoted on the proposed rule in a number of publications: an article by Parker Purifoy, titled “Labor Agency’s Gig Worker Flip-Flopping Weakens Rules in Court,” in Bloomberg Law Daily Labor Report and Bloomberg Daily Tax Report on March 2, 2026; an article by Max Kutner, titled “DOL Contractor Proposal Looks Familiar, With Less Deference,” in Law360 Employment Authority on February 26, 2026; an article by John Kingston, titled “Trump’s Independent Contractor Rule Revived, Minimal Difference From Earlier Version.” in Freight Waves on February 26, 2026; and an article by Michael Cardman, titled “DOL Proposes New(ish) Independent Contractor Rule,” in Brightmine HR and Compliance on February 26, 2026. Prior to the issuance of the proposed regulation, the New York Law Journal published an article by the author of this blog post on the anticipated proposed regulation in its annual Labor & Employment Special Report, titled “The Upcoming Independent Contractor Regulations,” on February 23, 2026. (Subscriptions may be required for the Bloomberg Law, Law360, and New York Law Journal articles.)

Why should businesses that use ICs disregard the legal significance of upcoming regulations? And why should worker organizations take comfort that the anticipated regulations will not alter the legal landscape for IC compliance and misclassification? First, the Labor Department does not decide IC status under federal law; the federal courts do. Each of the federal appellate circuits have, for decades, articulated their own tests for IC status, and each of those tests are roughly similar to each other. Second, the past regulations by both the earlier Trump Administration and the Biden Administration were little more than an interpretation of selected federal appellate court decisions, yet the courts routinely apply their own judicial precedent and do not need an agency to interpret their opinions. If, as expected, the new regulation again is simply an interpretation of court decisions by the current Administration, they too will likely be disregarded by the federal courts. Indeed, no court has yet relied upon any of the prior Labor Department regulations in deciding the merits of an IC misclassification case. Third, most litigation in the U.S. alleging IC misclassification is based at least in part on state laws, and federal regulations have absolutely no impact on the various state law tests for IC status.

The Prior Interpretations and Regulations

Few legal issues have been so blatantly subjected to political ping pong at the federal level over the past ten years than the status of workers as ICs or employees.

The Obama Administration Interpretation

On July 15, 2015, during the tail end of the Obama Administration, the Wage and Hour Administrator of the U.S. Department of Labor issued an “Administrator’s Interpretation” on IC status providing comprehensive guidelines on IC status under the FLSA. As we noted in a blog post[1] that day, the new Interpretation “contains nothing new, different, or dramatic.” We added: “In fact, the new Interpretation does little more than restate the same … factors that have historically been applied by the Labor Department and that can still be found on its website.” We commented that the new Interpretation, however, placed far greater emphasis than do the courts on “a worker’s ‘economic dependence’ on the business that has engaged his or her services,” a factor that favors employee status. We observed that, by doing so, the Interpretation overlooked governing judicial precedent.

The First Trump Administration’s Regulation

In early June 2017, less than five months after the start of the Trump Administration, the Labor Department withdrew that Administrator’s Interpretation and thereafter began working on the issuance of a formal rule on IC status. On January 6, 2021, only two weeks before the conclusion of the first Trump Administration, the Labor Department issued a final rule governing IC status under the FLSA. The 2021 rule noted that the courts typically examine five factors to determine IC status, but expressly stated that two factors should be given greater weight: (1) the nature and degree of the individual’s control over his/her work; and (2) the individual’s opportunity for profit or loss. The regulation referred to those as “core factors” and pronounced that the remaining three factors, referred to as “non-core” factors, should be given less importance: the amount of skill required for the work; the degree of permanence of the working relationship; and whether the work is part of an integrated unit of production.

Notably, the illustrations in the final 2021 rule issued by the first Trump Administration focused on factual scenarios and court decisions that favored IC status. As we observed in a blog post[2] on the day the final regulations were issued, “unlike most regulations with hard and fast rules, th[is] proposed regulation was in the nature of an administrative interpretation comprising the Labor Department’s review of existing court decisions and its articulation of a preferred legal analysis.” We predicted that, as a result, “courts would give little if any deference to it.”

The Biden Administration’s Regulation

In May 2021, only four months after the start of the Biden Administration, the U.S. Department of Labor issued a rule that withdrew the Trump Administration’s regulation on IC status. That rule was immediately challenged in court. Meanwhile, the Biden Labor began its own version of a regulation governing IC status. On January 9, 2024, the Labor Department issued a new final rule on IC status under the FLSA. It rejected the Trump Administration regulation that gave greater weight to two factors and instead focused on a “totality-of-the-circumstances” approach in which none of the factors have a predetermined weight. The most meaningful impact of this approach was the Biden Administration’s effort to place more weight on one of the three “non-core” factors: whether the work is integral to the employer’s business. This factor almost universally favors employee status, thereby causing many courts to give it less weight than the other factors used to determine IC status. As we noted in our blog post[3] on the day the Biden regulation was issued, “it is unlikely the courts will change their precedent and give more weight to that factor.” No courts have relied on that 2024 rule in deciding if a worker is an IC or employee. 

There have been as many as five lawsuits seeking to enjoin the Biden 2024 rule, but all have been paused after the second Trump Administration filed court papers in each case that it was seeking to rescind the 2024 rule issued by the Biden Administration.

The Upcoming Second Trump Administration Regulation

It is anticipated that the next Trump Administration rule on IC status under the FLSA will mirror to a large extent the approach taken five years ago in the regulation issued by the Labor Department in the first Trump Administration – a rule that was essentially the Trump Administration’s interpretation of court decisions, with emphasis on the two “core” factors identified in the 2021 rule. If so, one should expect that the courts will continue to ignore Labor Department regulations on IC status and instead follow their own well-established precedents.

Another reason why the anticipated IC regulations will have an insignificant impact legally is that the position of the U.S. Department of Labor on the issue has virtually no influence on state laws, which vary considerably on the test for IC status. The overwhelming number of state laws permit the legitimate IC arrangements, although a few state laws strictly curtail all types of IC relationships. Thus, the upcoming federal regulation will not likely impact the legal status of the nearly 12 million U.S. workers that identified themselves as engaged in an IC relationship, according to a November 2024 study[4] by the U.S. Department of Labor.

Conclusions and Takeaways

Many commentators will likely report that this upcoming regulation on IC status under federal law will increase the use of ICs by many businesses, including the gig economy, which is one industry sector that makes great use of workers that companies classify as ICs. Another industry that will likely welcome the new regulation is transportation, which relies heavily on owner-operators, whom transport companies classify as ICs. That industry has been the subject of countless IC misclassification lawsuits by government agencies in certain states and plaintiffs’ class action lawyers in courts around the country. It is anticipated, however, that the issuance of the new regulation on IC status will have no meaningful impact on the end-result of IC misclassification lawsuits, the bulk of which are brought under state law in whole or in part.

For companies that rely on the use of ICs, prudence suggests that the issuance of the new regulation governing IC status of workers should not be treated as some type of assurance that their IC relationships will more likely withstand scrutiny under federal and state laws governing IC status. Plaintiffs’ class action lawyers and state government agencies will hardly be deterred by a new federal IC rule that will have little to no impact on IC misclassification cases. Rather, the renewed focus on IC status should serve as an impetus for companies using ICs to enhance their compliance with IC laws, particularly state laws governing IC status. Companies seeking to do so may wish to use a process that structures, documents, and implements IC relationships to maximize IC compliance in a customized and sustained manner.[5]

[1] https://www.independentcontractorcompliance.com/2015/07/15/new-different-dramatic-the-labor-departments-new-guidance-on-independent-contractor-misclassification-is-nothing-new-legally-but-will-reinvigorate-the-crackdown-on-the-proliferating-use/.

[2] https://www.independentcontractorcompliance.com/2021/01/06/no-major-changes-but-impact-of-independent-contractor-final-regulation-issued-today-is-questionable/.

[3] https://www.independentcontractorcompliance.com/2024/01/09/legally-nil-but-will-look-a-lot-like-a-score-labor-department-issues-its-final-rule-on-independent-contractor-status/.

[4] https://www.independentcontractorcompliance.com/2024/12/10/federal-government-study-shows-independent-contractor-working-arrangement-steadily-increasing-november-2024-ic-legal-news-update/.

[5] https://www.independentcontractorcompliance.com/ic-diagnostics/.

Reprinted with permission from the February 23, 2026, edition of the New York Law Journal© 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.

The Amazing Care Case

The DOL commenced this lawsuit against Amazing Care and its owner and manager in 2024. After pretrial discovery, the DOL made a motion for summary judgment, arguing that Amazing Care and the individual defendants misclassified the LPNs and HHAs as ICs instead of employees and failed to pay them overtime as required by the FLSA for all hours worked over 40 in a workweek.

The court, in entering summary judgment in favor of the DOL on liability, applied a six-part test for IC status under the FLSA, holding that all but one of the factors favored employee status. The first factor addresses the degree of the alleged employer’s right to control the manner in which the work is to be performed. Finding that the company unilaterally dictated the wage rates of the nurses, supervised them by monitoring patient care notes and visiting job sites, and created and instructed the LPNs to follow detailed patient care plans, the court concluded that this factor supported employee status.

The second factor was whether LPNs had an opportunity for profit or loss depending on each worker’s managerial skill. While the court noted that LPNs could decline work opportunities and could engage their own replacements, they did this infrequently and, in any event, any “managerial skill” they exercised was far outweighed by the defendants’ management of Amazing Care’s operations. The court concluded that this factor also favored employee status, although the court’s decision seems less than persuasive on this factor.

The third factor involves the workers’ investment in required equipment or materials and the workers’ employment of helpers. The court found that this factor favored IC status, “albeit slightly,” because the LPNs supplied their own PPE equipment.

The fourth factor addresses the use of special skills. Despite the fact that LPNs require considerable training and clinical experience, the court found that this factor favored employee status. It concluded that the skills were not used in an “independent way” because Amazing Care required them to adhere to care plans. Like the second factor involving opportunity for profit or loss, the court’s reasoning seems somewhat strained, but there is no indication in the court’s decision of any evidence submitted by the defendants as to how the LPNs applied their advanced skills.

The fifth factor is the permanence of the working relationship. The court found that this factor also favored employee status because 90% of the LPNs worked exclusively with Amazing Care and the company’s goal was to staff LPNs on a long-term basis in patients’ homes. The court concluded that the overwhelming majority of LPNs did not have a “transitory” working relationship with Amazing Care. Of interest here, those LPNs that did have a “transitory” working relationship seem to have been lumped together with those that did not for purposes of summary judgment.

The sixth and final factor is one that most often favors employee status: whether the services provided by the workers are integral to the alleged employer’s business. Not surprisingly, the court found that this factor also favored employee status.

The court also considered additional facts in the record bearing on the independence of the LPNs, but found most of them favored employee status. Those facts included that Amazing Care gave LPNs performance reviews like employees, directed LPNs to use the same time sheets as employees, subjected LPNs to Amazing Care’s employee handbook, employed some LPNs as W-2 employees despite the fact that they performed similar tasks, and used workplace forms that referred to all LPNs as “employees,” even those paid on a 1099 basis.

Finally, the court determined whether the owner, who served as President and Administrator, and the principal manager, who served in the position of Director of Nursing, were also “employers” under the FLSA and equally liable to the LPNs as Amazing Care itself. The court found the Nursing Director to be an “employer” because she participated in deciding whether LPNs would be classified as ICs or employees, supervised the LPNs, reviewed their notes, disciplined them, and conducted their performance reviews.

While the court did not determine damages, because it was unclear if a two-year or three-year statute of limitations applies, the DOL submitted evidence that unpaid overtime exceeded $5.9 million and that the defendants should also be liable for an equal amount of liquidated damages under the FLSA. The issue of damages will be submitted to a jury. Thus, the corporate and individual defendants, personally, could face a judgment of nearly $12 million. Su v. Amazing Care Home Healthcare Services LLC, No. 2-24-cv-00190 (E.D. Pa. Feb. 13, 2026).

Lessons for Businesses Classifying LPNs and Other Nurses as ICs

Businesses can learn quite a lot from the court’s decision in Amazing Care, especially those that use LPNs and other nurses they classify as ICs. While this case is somewhat different from a lawsuit against a large health care system operating in seven states west of the Mississippi that was the subject of the December 2024 blog post referenced above, there are similarities worth mentioning. That health care system was sued in a class action for allegedly misclassifying registered nurses (RNs) as ICs instead of employees. The proposed class action was filed in a federal district court in Washington state by an RN who alleged that the health care system that engaged him as an IC and paid him on a 1099 basis had directed and controlled him and other similarly situated contract RNs, despite the fact that he and the other 1099 RNs performed duties quite similar to RNs working for the system but paid as W-2 employees. Ward v. Providence St. Joseph Health, No. 2-24-cv-01528 (W.D. Wash. Sept. 24, 2024).

The plaintiff nurse alleged in his complaint filed in that case that the health care system controlled and directed all aspects of the work by RNs that have been classified as ICs; required adherence to company policies and procedures; and maintained control, oversight and direction of the contract RNs, including their hiring, firing, and discipline. According to the latest court filing in that case, the parties have reached a settlement agreement that will soon be presented to the court for approval. It is anticipated that the settlement agreement will be for a substantial amount.

There are steps that nursing companies and health care systems can take to minimize their exposure to these types of lawsuits and place themselves in a position to successfully defend against legal challenges to their IC relationships — or settle such cases on modest terms.

First, it is critical to assess whether the role being classified as an IC and paid on a 1099 basis can likely be legally classified in that manner. Some nursing positions are simply not susceptible to being classified legally as ICs, although many are, as long as all of the i’s are dotted and t’s are crossed. Once determined that a role can likely be legally structured, documented, and implemented as an IC as a general matter, there are a variety of federal and state tests for IC status that may be applicable. In some situations, the position may be classified properly under some state laws but not under others.

Documentation of the IC relationship is often key. A February 8, 2022, article published in Law360 Employment Authority, titled “Nurses Are Becoming Gig Workers, Raising Wage Concerns,” discussed the nationwide nursing shortage and how online staffing platforms are seeking to meet that need with opportunities for nurses to provide their services as ICs. Regarding the specter of IC misclassification claims and the need for robust agreements that set forth details of the relationship between the business and IC nurses, the author of this blog post was quoted as follows: “You can have nurses who are independent contractors legitimately, and you can have nurses who are not legitimately independent contractors, who are misclassified. You shoot yourself in the foot if you don’t have an independent contractor agreement that is state-of-the-art.”

Where a health care system uses both employees and ICs to perform similar roles, as was the case with Amazing Care and the hospital system that was the subject of our December 2024 blog post, meaningful distinctions need to be implemented so that it is abundantly clear that the differences support the classification of some workers as ICs and others as employees.

Finally, structuring and documentation alone are not sufficient. Implementing an IC relationship in a compliant manner can be critical, and was something that Amazing Care did not do well, according to the court. Communications with ICs need to recognize and reflect that they are their own bosses. Health care systems need to treat them that way — and not in the same way management communicates with its employees.

Communicating in “IC-speak” does not come naturally to many, so management training is important. So, too, is eliminating “employee-centric” terms from documents used to communicate with ICs themselves and with patients that receive their nursing services. Giving internal documents an “IC bath” is a lot less challenging than it seems, but can and should be done. If not, a business’s own words will be used against it in a lawsuit, as was the situation in the Amazing Care case.

In the Courts (4 cases)

FEDEX SUCCEEDS IN DISMISSING JOINT EMPLOYER CLASS ACTION BY DRIVERS. A Massachusetts federal district court has granted FedEx’s motion to dismiss claims by drivers under the FLSA that FedEx is a joint employer along with ISPs that own and operate multiple routes. The drivers alleged that both FedEx and the ISPs violated the FLSA by failing to pay them overtime pay for hours worked in excess of 40 hours a week. Following the dismissal of two prior FLSA collective actions, 183 drivers filed two separate actions (consolidated for pretrial proceedings) against FedEx, which filed a motion to dismiss. In its motion, FedEx argued that the allegations by the drivers failed to sufficiently allege the existence of an employment relationship between the drivers and FedEx under the joint employment standard applied under the FLSA by the U.S. Court of Appeals for the First Circuit. The court agreed with FedEx, concluding that the drivers’ complaint allegations did not support an inference that FedEx had the power to hire or fire the drivers, determine the drivers’ rate of pay and method of payment, or maintain their employment records — three of the four factors examined by the First Circuit in determining if a company is an employer under the FLSA. The district court concluded that, on balance, the drivers failed to create a plausible inference that FedEx was the drivers’ joint employer. Although not required to proceed further, the court also addressed the remaining elements of the drivers’ FLSA claims “for the sake of completeness.” The court held that the drivers also failed to sufficiently allege unpaid overtime and actual or constructive knowledge by FedEx that the drivers worked overtime and were not compensated properly. An appeal by the plaintiffs is anticipated, unless they try to amend their complaint to address the inadequacies found by the court. Doyle v. Federal Express Corp., No. 24 -cv-12030 (D. Mass. Jan. 26, 2026), and Aleyne v. Federal Express Corp., No. 24 -cv-12031 (D. Mass. Jan. 26, 2026).

GIG STAFFING COMPANY TO PAY $4.5 MILLION TO SETTLE IC MISCLASSIFICATION LAWSUIT BY CITY ATTORNEY. San Francisco City Attorney David Chiu has reached a $4.5 million settlement with a gig staffing company, WorkWhile, resolving IC misclassification claims asserted by the city on behalf of thousands of California delivery drivers providing services to the company. Through its app, the company provides client businesses with workers, hired and paid directly by the company, to fill empty shifts in industries such as delivery, warehouse, hospitality, and food services. As reported in a news release issued by the City Attorney’s Office on January 21, 2026, the city claimed that the company misclassified the drivers as ICs instead of employees, resulting in the denial of state and local employee rights including overtime compensation, workers’ compensation, and paid sick and family leaves. The settlement requires the company to pay $4.1 million in restitution to the delivery drivers and $400,000 in civil penalties to the City Attorney’s Office. People of the State of California v. WorkWhile, No. CGC-24-615401(San Fran. Super. Ct. Cal. Jan. 21, 2026).  

ILLINOIS LOGISTICS COMPANY SETTLES IC MISCLASSIFICATION CLASS ACTION WITH DELIVERY DRIVERS. An Illinois logistics company has agreed to settle an IC misclassification case under the Illinois Wage Payment and Collection Act by delivery drivers for just under $1 million. The drivers claimed that the company, HomeDeliveryLink, Inc., violated state law by misclassifying them as ICs and not employees and making deductions from their pay. According to the complaint, the drivers are required to make deliveries for the company six days a week; receive daily manifests listing their assigned deliveries for the day and the order in which the deliveries must be made; are mandated to attend meetings where they receive instructions such as how to interact with customers and assemble merchandise they deliver; are required to wear company uniforms; are bound by a one-year nonsolicitation clause; and are subject to termination by the company without cause. The drivers also asserted that the company deducted thousands of dollars from their pay for certain expenses such as fuel, insurance, and the cost of damaged goods. Vera v. HomeDeliveryLink Inc., No. 1:23-cv-14278 (N.D. Ill. Jan. 20, 2026).             

FLORIDA COMPANY TRANSPORTING RADIOACTIVE MEDICAL MATERIALS SUED BY DRIVERS FOR IC MISCLASSIFICATION. Drivers for a national transportation company that specializes in the secure transportation of radioactive medical materials have sued the company alleging misclassification as ICs instead of employees. The drivers’ proposed collective and class action lawsuit asserts claims under the FLSA and Virginia’s Minimum Wage Act, Overtime Wage Act, and Misclassification Law. The drivers seek to recover unpaid wages, compensation for lost benefits, and liquidated damages, plus attorney fees and costs. The complaint alleges that the company failed to pay overtime compensation for hours worked over 40 in a workweek, and failed to pay drivers the minimum wage by requiring them to pay for gas, vehicle maintenance, depreciation, and insurance, thereby reducing their pay below the minimum wage. The complaint further contends that the company instructs drivers how to handle the medicines, supervises drivers, prohibits them from resequencing assigned routes and from subcontracting their work, subjects them to discipline for not following company guidelines and protocols, continuously tracks their locations, and requires them to undergo drug testing and background checks. It is anticipated that the company will move to compel arbitration if their agreements with the drivers include an arbitration provision. Cline v. MCBC Medical Delivery Services LLC, No. 8:26-cv-00303 (M.D. Fla. Jan. 31, 2026).

In the Courts (3 cases)

MOBILE TOOL FRANCHISOR SUED IN CLASS ACTION LAWSUIT ALLEGING IC MISCLASSIFICATION. A mobile tool dealer that signed a franchise agreement with an automotive repair tools company commenced a class action lawsuit in a federal court in California alleging that the company misclassified him and other franchisees as ICs instead of employees. The dealer, who signed a “Dealer Franchise Agreement,” claims that the company violated California’s Labor Code and wage orders by failing to reimburse him and other dealers for their business expenses or pay for overtime hours. The court complaint states that the company’s website provides that it is the longest running mobile tool company selling direct to professional technicians across the country via mobile tool franchise owners. The complaint further asserts that the company requires the dealer franchisees to wear company-approved uniforms, undergo extensive training, participate in ride-alongs, attend meetings and other company-sponsored events, and pay for the costs of their fuel consumption, uniforms, truck payments, and insurance, and broadly reserves the right to terminate its relationship with the dealers. The complaint further alleges that the arbitration provisions of the franchise agreement are unenforceable in California. Florea v. The Cornwell Quality Tools Company, No. 5:25-cv-03343 (C.D. Cal. Dec. 11, 2025).

ANOTHER IC MISCLASSIFICATION LAWSUIT INVOLVING THE LEGAL INDUSTRY. We reported last month in a blog post that the legal industry was under attack for IC misclassification, noting two recent cases: one involving a worker who fielded inquiries by prospective clients for Lawyer.com, and the other involving a consultant providing client intake and retention services for personal injury law firms. This past month, a lawyer engaged by a personal injury law firm calling itself The Law Collective filed a lawsuit in a California state court claiming violations of the state’s Labor Code for wage and hour violations and for retaliatory discharge. The lawyer, who served as a settlement negotiator, claimed he worked an average of 84 hours a week, yet the law firm, which initially classified him as an employee but later reclassified him as an IC, did not pay him for his overtime hours. He also alleges the firm unlawfully terminated him because he complained about being misclassified as an IC and not being paid the wages he was allegedly owed under law. Israel Garcia-Wood v. The Law Collective, No. 25STCV35143 (Super. Ct. Los Angeles County Dec. 2, 2025).

PHARMACY DELIVERY COMPANY AND ITS CEO SUED BY DRIVERS FOR IC MISCLASSIFICATION. A group of delivery drivers has filed a proposed collective action lawsuit against a pharmaceutical delivery company and its CEO under the federal Fair Labor Standards Act (FLSA) as well as a proposed class action under Kentucky wage and hour laws, alleging that the drivers were misclassified as ICs instead of employees. According to the complaint filed in federal court in Kentucky, PharMerica Drug Systems, LLC d/b/a Diligent Delivery Systems classified as ICs the drivers it engaged to deliver medication to its customers, including senior living communities, hospitals, and behavioral facilities. The plaintiffs contend that Diligent paid the drivers a “route pay” per weekday regardless of the time it took them to complete their work each day, and that after accounting for the costs of providing their own “employee benefits” and transportation costs, the drivers were paid less than the statutory minimum wage and did not receive applicable overtime compensation. The drivers contend that the defendants dictated the details of the performance of the work, including how, when, and where to provide the services, and subjected them to supervision and monitoring. The drivers also claim that they exercised no independent judgment or discretion in performing their services; did not have an opportunity for profit; and did not make any significant investments in relation to their work for the defendants. In addition, the complaint alleges that Diligent and its CEO “consented that their ‘driver employees’ were employees instead of independent contractors in a similar case brought by the Secretary of the U.S. Department of Labor” in an Arizona federal court and that Diligent and the CEO paid the driver over $5.7 million in back wages and liquidated damages and $100,000 in civil monetary penalties. Carr v. PharMerica Drug Systems LLC, et al., No. 3:25-cv-00768 (W.D. Ky. Dec. 9, 2025).

Regulatory Initiatives (1 case)

D.C. ATTORNEY GENERAL REACHES $1.5 MILLION SETTLEMENT WITH CONSTRUCTION COMPANY FOR IC MISCLASSIFICATION.  The Attorney General for the District of Columbia has reached a $1.5 million settlement with a mechanical services company resolving allegations that the company and its subcontractors misclassified hundreds of workers as ICs, resulting in their loss of wages and benefits. Brothers Mechanical Inc. specializes in design, installation, and service of air conditioning, heating, ventilation, plumbing, and control systems and has worked on construction projects in D.C. and nationwide. According to a press release issued on December 9, 2025 by the Attorney General, his office “uncovered evidence that from 2020 through the present [that] Brothers Mechanical entered into agreements with subcontractors to provide about 500 construction workers to staff its projects, and that these workers were illegally misclassified as independent contractors.” Because they were misclassified, these workers were not paid overtime premiums when they worked more than 40 hours in a week, were not provided with paid sick leave, and were excluded from unemployment insurance and workers’ compensation programs. The settlement requires the company to make payments to eligible workers and pay penalties to the District. In addition, it also requires the company to treat the workers as employees and mandates that any company subcontractors submit certified weekly payroll information.

In the Courts (3 cases)

LAWYER.COM SUED FOR IC MISCLASSIFICATION IN NEW JERSEY. A legal marketing and client support company was sued in federal court in New Jersey last month for allegedly misclassifying as ICs representatives and sales employees for Lawyer.com, a business that fields inquiries from prospective clients seeking legal representation. The plaintiff contends that Lawyer.com specified procedures and prepared scripts that he and others in his position needed to follow when responding to customer inquiries. He also asserts that Lawyer.com trained him and the other representatives, supervised them, and utilized performance metrics to evaluate workers’ performance. As a result, the complaint alleges that the plaintiff and other representatives should have been paid overtime for hours worked in excess of zero in a workweek, to which employees are entitled under the federal Fair Labor Standards Act (FLSA). Greenlee v. Lawyer.com Inc., No. 3:25-cv-17771 (D.N.J. Nov. 20, 2025).

APP-BASED STAFFING COMPANY SETTLES WITH COLORADO ATTORNEY GENERAL IN IC MISCLASSIFICATION CLAIM. Instawork, an app-based staffing company, has been sued for IC misclassification a second time in the past four months. As we reported in a blog post in August, Instawork was sued in federal court in Ohio for unfair competition and tortious interference with business and contractual relationships due to its alleged misclassification of gig workers as ICs and not employees. That lawsuit, which was filed “on behalf of a leading W2 [hospitality and light industrial] staffing platform that connects businesses with W2 employees,” claimed that Instawork unlawfully undercut competitors, such as the plaintiff hiring entity, who “follow the law.” Last month, Instawork assented to the entry of a judicial consent decree resolving a similar type of litigation initiated by the Colorado Department of Labor under the Colorado False Claims Act. The Colorado state Attorney General (AG) announced in a press release issued November 24, 2025, that he had reached a settlement with Instawork after a state audit found the company and its affiliate violated the Colorado False Claims Act and its Employment Security Act. The Colorado lawsuit alleged that Instawork failed to pay unemployment insurance premiums on behalf of workers called “pros,” who provide services on an hourly basis to company clients in industries such as hospitality, warehousing, manufacturing, and cleaning. It also contended that Instawork engaged in a complex vetting process, conducted multistep background checks, undertook location tracking and performance evaluations of the “pros,” and required them to undergo training. If approved by the court, the proposed settlement requires payment of over $400,000 in unemployment insurance contributions and liquidated damages, and provides that henceforth all “pros” will be classified by Instawork as employees in Colorado. State of Colorado v. Garuda Labs Inc. d/b/a Instawork, No. 2025CV34220 (Colo. Dist. Ct. for the City and County of Denver Nov. 24, 2025).

TRUCK DRIVING SCHOOL SETTLES WITH NEW JERSEY ATTORNEY GENERAL IN IC MISCLASSIFICATION LAWSUIT COVERING INSTRUCTORS. A New Jersey truck driving school that engages instructors to provide students with Commercial Driver License (CDL) course instruction has entered into a judicial consent decree with the State’s Attorney General in a lawsuit alleging that the school misclassified the instructors as ICs instead of employees. The New Jersey AG announced the settlement against Jersey Tractor Trailer Training, Inc. in a press release issued on November 25, 2025. The settlement followed an investigation by the New Jersey Department of Labor that led to a determination that the company misclassified CDL instructors as ICs. The lawsuit alleged violations of state wage and hour and other employment laws, including failure to pay overtime and earned sick leave. Under the terms of the $345,000 settlement, the driving school will pay damages to eligible driving instructors and pay $125,000 to the state to satisfy all penalties, fees, and costs associated with bringing the lawsuit on behalf of the workers. The settlement also requires the school to treat all current and future instructors as employees under all applicable state labor and employment laws. Robert Asaro-Angelo v. Jersey Tractor Trailer Training, Inc., No. BER-L-005236-24 (N.J. Super. Ct. Law Div. Bergen County Nov. 25, 2025).

Other Noteworthy News

THIS BLOG’S PUBLISHER QUOTED ON IC MISCLASSIFICATION ACTIONS BY ATTORNEYS GENERAL. The recent surge in AG lawsuits for IC misclassification was the subject of an article last month by Max Kutner for Law360. In the article published on November 5, 2025, titled “State AG Actions Secure Workers’ Pay But Not Status,” the publisher of this blog was quoted as follows: “On the whole, state agency enforcement actions represent a nuisance and not an existential threat,” and “despite their high profile, such cases tend to result in lower amounts in judgments or settlements.” The quote by this publisher continued: “They are effective at putting independent contractor misclassification claims into public light. On the other hand, they do not present anywhere near the same financial risk to companies as do independent contractor misclassification class actions.” As noted in the article, many enforcement actions by state AGs result in a financial recovery but do not require companies to reclassify their workers. The two AG enforcement actions noted above in this month’s blog post are two notable actions that required the defendant business to reclassify workers as employees.

Cases (5 cases)

NEW JERSEY APPELLATE COURT DECISION UNDERMINES PROPOSED REGULATIONS ON TEST FOR IC STATUS. The New Jersey Appellate Division has affirmed a decision by the state’s Labor Commissioner concluding that a disc jockey (DJ) services company is liable for $45,000 in unpaid unemployment compensation and disability benefits contributions due to its misclassification of DJs as ICs instead of employees. The New Jersey Department of Labor and Workforce Development conducted an audit of the business, which provides DJ services for weddings, proms, and other events. The Labor Commissioner applied New Jersey’s three-part, conjunctive ABC test used to determine employee/IC status in the state. Applying the ABC test, the court concluded that the company failed to meet two of its three components. Although the court agreed with the Labor Commissioner that prongs A and C were not met by the DJ services company, the court held that prong B was satisfied. In a decision that undermines the current proposed regulations issued by the Labor Commissioner on the ABC test, the court rejected the Commissioner’s finding that the clients’ venues were the DJ services company’s “places of business” in light of New Jersey Supreme Court case law. As noted above, this ruling echoed the same argument we articulated in our publicly filed comments on the new proposed ABC regulation. ZJN, LLC v. New Jersey Department of Labor and Workforce Development, No. A-3983-23 (Super. Ct. App. Div. NJ Oct. 3, 2025).

ELEVENTH CIRCUIT ISSUES IC MISCLASSIFICATION OPINION REVERSING SUMMARY JUDGMENT IN FAVOR OF INSURANCE ADJUSTING COMPANY. The U.S. Court of Appeals for the Eleventh Circuit has reversed a federal district court’s grant of summary judgment that three insurance claims adjusters providing services during Hurricane Harvey were ICs and not employees under the federal Fair Labor Standards Act (FLSA). An outsourcing company provided licensed insurance adjusters to an association of wind and hail insurers in Texas. In 2017, three plaintiff adjusters were assigned to adjust claims arising from Hurricane Harvey. They later brought an action in federal district court against the outsourcing company and the association claiming that they were misclassified as ICs and were not paid overtime compensation for any week in which they worked in excess of 40 hours. Cross-motions for summary judgment were filed and the district court granted the company’s and association’s motions, concluding that four out of the six factors considered by the Eleventh Circuit when determining worker status under the FLSA favored the IC status of the adjusters. On appeal, the Eleventh Circuit reversed the grant of summary judgment and concluded that the district court failed to assess the economic reality of the relationship and whether the adjusters were economically dependent on the company and the association under the totality of the circumstances. After considering the evidence submitted to the court in the light most favorable to the adjusters (which is the standard on a motion for summary judgment), the appeals court found that there was evidence that five of the six factors favored employee status and overall suggested economic dependence. In those circumstances, the Eleventh Circuit concluded that summary judgment should not have been issued and that the adjusters are entitled to a jury trial on their claims. Galarza v. One Call Claims, LLC, No. 23-13205 (11th Cir. Oct. 10, 2025).

NEW JERSEY LABOR COMMISSIONER FILES IC MISCLASSIFICATION LAWSUIT AGAINST AMAZON REGARDING STATUS OF FLEX DRIVERS. The New Jersey Attorney General’s Office has filed suit in the name of the state’s Labor Commissioner alleging that Amazon.com and Amazon Logistics misclassified Flex drivers as ICs and not employees, in violation of various New Jersey wage and hour, benefits, and tax laws. Amazon sells and delivers products to consumers through its engagement of drivers who pick up packages from Amazon’s warehouses and stores to be delivered to its customers’ doorsteps. The complaint alleges that Amazon Flex was launched in 2015 to provide same- and next-day deliveries of products sold through the company’s retail platform. The complaint contends that the company’s website states that “[w]ith Amazon Flex, [delivery drivers] can deliver packages using your own vehicle, on your own schedule.” To support his IC misclassification claim, the Labor Commissioner argues that the company requires drivers to use the company’s app to complete training before providing services, prohibits drivers from negotiating their rate of pay, evaluates drivers’ performance, directs drivers to deliver packages in a specified time and manner through digital surveillance, collects information about drivers’ moment-to-moment activities, penalizes drivers whose deliveries are untimely, and requires drivers to comply with company policies and undergo background checks. While New Jersey’s test for IC status is one of the more stringent in the nation, it is nonetheless anticipated that Amazon will vigorously defend its Flex business model in this lawsuit, which likely will take years to litigate to a conclusion. Asaro-Angelo v. Amazon.com, Inc., No. ESX-L-008049-25 (N.J. Super. Ct. Oct. 20, 2025).

U.S. SUPREME COURT TO REVIEW TRANSPORTATION WORKER EXEMPTION UNDER FAA FOR INTRASTATE WORKERS DELIVERING GOODS TRAVELING IN INTERSTATE COMMERCE. The U.S. Supreme Court has agreed to review the scope of the transportation worker arbitration exemption under the Federal Arbitration Act (FAA) as it applies to distributors and workers regarded as delivery drivers. The case under review is the Tenth Circuit’s decision that distributors of products manufactured by a nationwide baking company qualified for the FAA’s arbitration exemption for interstate transportation workers. The Tenth Circuit held that the distributors were covered by the exemption to the extent they delivered the company’s baked goods, which were manufactured in other states, to stores retailing such products, even though the distributors themselves did not “physically cross state borders when delivering [the company’s] products from the warehouse to his customers.” The Supreme Court granted review to consider the following question: “Are workers who deliver locally goods that travel in interstate commerce – but who do not transport the goods across borders nor interact with vehicles that cross borders – transportation workers ‘engaged in foreign or interstate commerce’ for purposes of the Federal Arbitration Act’s § 1 exemption?” Flowers Foods, Inc. v. Brock, No. 24-935 (U.S. Oct. 20, 2025).

HOME HEALTH SERVICES COMPANY AND ITS FORMER AND CURRENT OWNERS FOUND LIABLE FOR $10 MILLION FOR IC MISCLASSIFICATION. California Attorney General Rob Bonta recently announced a $10 million judgment and permanent injunction against a company providing in-home caregiver services due to its misclassification of hundreds of workers as ICs instead of employees, in violation of California’s labor laws. According to a press release issued on October 2, 2025, by the AG’s office, a Los Angeles County Superior Court granted the AG’s motion for summary adjudication against Care Specialist HCS Inc. and its former and current owner-operators. The court’s judgment requires payment of over $10 million in restitution and civil penalties and includes a permanent injunction barring defendants in the future from improperly classifying employees as ICs. People of the State of California v. Cabrera d/b/a TLC Home Care Services, No. 23STCV 14203 (Super. Ct. Los Angeles County Oct. 2, 2025).

Administrative and Regulatory Initiatives (2 matters)

CAR DETAILING AND RENTAL CAR COMPANY SETTLES DISTRICT OF COLUMBIA IC MISCLASSIFICATION INVESTIGATION. The Attorney General for the District of Columbia has secured a settlement with a car detailing and rental car management company to resolve allegations that the company paid 84 workers less than the minimum wage and deprived them of overtime wages when they worked more than 40 hours in a week as a result of having misclassified them as ICs instead of employees. In a News Release issued October 7, 2025, the Attorney General reported that an investigation by his office had uncovered evidence that Unique On the Go Corporation had classified 84 of its District workers as ICs despite exercising sufficient control over them that they should be classified as employees under D.C. employment laws. The Press Release stated that as a result of this misclassification, the workers routinely made less than D.C.’s minimum wage, were never paid overtime wages when they worked over 40 hours in a week, and did not receive sick and safe leave under the District’s Accrued Sick and Safe Leave Law. The settlement between the parties includes a requirement that the company properly classify the D.C. workers as employees.

CALIFORNIA USES JOINT EMPLOYER LIABILITY TO ASSESS PENALTIES FOR IC MISCLASSIFICATION. The California Labor Commissioner issued a citation to Costco, Ryder Last Mile Inc., and Mega Nice Trucking LLC for $868,128 for IC misclassification and labor violations affecting 58 delivery drivers. According to a news release issued on October 30, 2025, the Bureau of Field Enforcement in the Labor Commissioner’s Office announced that it has issued citations as a result of an investigation commenced in July 2024. The investigation was prompted by two former Mega Nice Trucking employees, who filed complaints alleging wage theft and IC misclassification. Mega Nice Trucking is a subcontractor for third-party logistics companies, including Ryder Last Mile, which contracted with drivers to deliver large items from big box retailers across the San Diego region. The investigation reportedly revealed that drivers working under Mega Nice Trucking were not paid minimum wages or overtime pay and were not provided with legally mandated meal and rest breaks. The Labor Commissioner also concluded that Costco and Ryder Last Mile exercised both direct and indirect control over the delivery drivers by scheduling deliveries, mandating uniforms, enforcing specific protocols, and closely monitoring driver performance. According to the news release, these actions established a joint employer relationship with Mega Nice Trucking and allegedly made Costco and Ryder Last Mile equally liable for the IC misclassification and Labor Code violations. All three companies have appealed the citations.

Cases (5 cases)

APP-BASED DELIVERY COMPANY SETTLES IC MISCLASSIFICATION CASE WITH MINNESOTA. Minnesota Attorney General (AG) Keith Ellison, has reached a settlement with app-based same day shopping and delivery company, Shipt, resolving a lawsuit brought by his office alleging IC misclassification of delivery workers referred to as “Shoppers.” A news release issued by the AG’s office on September 26, 2025, announced that the company will pay $800,000 to the state of Minnesota and agreed to improve working conditions for Shoppers by providing them with a written statement explaining which provision of the company’s contract was violated before deactivating a Shopper from the company’s app; formalizing an appeal process for Shoppers to challenge a deactivation decision; continuing to provide Shoppers with certain insurance at no cost; instituting an electronic process by which Shoppers can request forgiveness of customer ratings and late delivery; not retaining any portion of gratuities given to Shoppers; providing Shoppers with timely chat support through the company’s app; not retaliating against any Shopper for cooperating with the AG; and maintaining policies prohibiting discrimination in any way against a Shopper. Nothing in the release appears to suggest that Minnesota required Shipt to reclassify Shoppers as employees. State of Minnesota v. Shipt, Inc., No. 27-CV-22-15991 (Dist. Ct. Hennepin County 4th Jud. Dist. Minn. Oct. 27, 2022).

SECOND IC MISCLASSIFICATION ATTACK ON TV REALITY SHOW. A contestant on the Netflix reality TV series “Love is Blind” has filed a class action lawsuit in California state court against Netflix and other production companies alleging Private Attorneys General Act (PAGA) claims and violations of California wage and hour laws due to misclassification of reality show participants as ICs instead of employees. The plaintiff brought the action on behalf of himself and any individuals such as contestants, participants, or cast members who applied for and/or participated in all non-scripted content (reality shows) produced on behalf of Netflix and Kinetic Content within a specific time period. According to the class action complaint, the companies exercised substantial control over every aspect of the cast’s lives during production, including among other things, the cast’s time, access to food and drinks, sleeping arrangements, and contact with family and friends and other persons outside of production. The complaint further asserts that “[a]s a result of Defendants’ encouraging the cast to perform work in a hazardous work environment while in an altered mental state, Defendants failed to provide a safe and healthful place of employment.” This case is not the first challenge to the cast’s worker classification. As discussed in our blog post of December 14, 2024, the National Labor Relations Board’s regional director issued a complaint against the companies that created and produce the “Love is Blind” TV series, contending that the contestants on the show were misclassified as ICs instead of employees. Richardson v. Kinetic Content, LLC, No. 25STcv27096 (Super. Ct. Los Angeles County Sept. 15, 2025).

MARYLAND FEDERAL COURT GRANTS SUMMARY JUDGMENT AGAINST COMPANY ENGAGING HOME HEALTH AIDES AS CONTRACTORS. A Maryland federal district court has granted partial summary judgment to the U.S. Department of Labor (DOL), finding that a home health care company misclassified home health aides as ICs. The court, however, did not grant summary judgment on the status of licensed practical nurses providing services to the home health company’s clients. The DOL had initiated an action against Jerry’s Caring Hands, Inc. and its owner alleging minimum wage, overtime, and record-keeping violations under the Fair Labor Standards Act due to the misclassification of home health aides (HHAs) and licensed practical nurses (LPNs). The company provides home health care services to the elderly and disabled population around the Baltimore area. In granting the motion for summary judgment regarding the employee status of the HHAs, the court applied the six-part economic realities test and concluded that the company exercised a high degree of control over the HHAs; the HHAs’ profits or losses were not dependent on their managerial capacities or skills; there was minimal investment required of the HHAs; some if not most of the HHAs are not skilled workers; the HHAs did not work in a temporary, project-related capacity typically associated with independent contracting; and the HHAs’ services were integral to the company’s work. Chavez-DeRemer v. Jerry’s Caring Hands Inc., No. 1:24-cv-00213 (D. Md. Sept. 19, 2025).

ROOFING COMPANY ASSERTS “REVERSE” IC MISCLASSIFICATION DEFENSE IN WORKERS’ COMPENSATION CLAIM. A roof installation company sued in New York for personal injuries suffered by a roofing worker for an on-the-job injury has taken an unusual litigation approach. In an odd twist, the company’s workers’ compensation carrier sought a ruling with the Workers’ Compensation Board (the Board) that the claimant was not an IC but rather was an employee, thereby limiting the worker’s remedy to the relatively modest compensation amount awarded in New York for workers’ comp injuries. Following a hearing before the Board at which claimant maintained that he was an IC and not an employee, the Workers’ Compensation Law Judge applied the presumption of employment in the New York Construction Industry Fair Play Act, concluding that claimant was an employee of the roofing company and not an IC. That decision was affirmed on an administrative appeal. The claimant then appealed to the Third Department Appellate Division. Under the Construction Industry Fair Play Act, there is a statutory presumption that a person performing services for a construction contractor shall be classified as an employee unless it is demonstrated that such person is either an IC, in accordance with a three-prong ABC test, or is a separate business entity, which can only be established by satisfying 12 specific criteria enumerated in the law. The Third Department concluded that, although the Board had properly determined that the roofing company did not satisfy the 12-factor criteria to support the separate business entity test, the Board’s decision did not address the three-part ABC test. It therefore remanded the case to the Board to determine whether application of the ABC test rebutted the presumption of an employer-employee relationship. This type of defense can, however, backfire on companies, which may be at risk of establishing in a separate legal proceeding that workers have been misclassified as ICs – and unwittingly end up owing unpaid overtime and employee benefits. Trickey v. Black River Plumbing, Heating & Air Conditioning, Inc. and Workers’ Compensation Board, No. CV-24-0287 (3d Dep’t App. Div. Sept. 25, 2025).

CANNABIS BROKERAGE COMPANY SUED FOR IC MISCLASSIFICATION. Cannabis10X, self-described as “the first international cannabis-only business brokerage” has been sued by a plaintiff engaged as a broker to generate leads and sell cannabis franchises to prospective franchisees. The broker sued the Florida-based company in a Massachusetts federal court asserting violations of the Massachusetts IC statute and wage laws, due to his alleged misclassification as an IC and not an employee. In support of his misclassification claims, the broker contends that the company paid him no base wages or benefits, required him to pay quarterly fees for the use of the company’s technical services and properties, determined the rate and method of his compensation, made the unilateral decision to hire and fire him, established policies and practices to be used by him for generating leads and making sales, provided training, was permitted to immediately terminate his relationship with the company for violating company policies, and required him to adhere to nonsolicitation and noncompete provisions. The broker also claims in his complaint that the company “later terminated [him] without paying him any compensation for the hundreds of hours he had worked as a ‘broker’ for the company.” It is anticipated that the company will vigorously defend the case and, if the parties had entered into an arbitration agreement, seek to compel arbitration of the broker’s claims. Quinn v. Cannabis10XLLC, No. 1:25-cv-12829 (D. Mass Sept. 30, 2025).

Administrative and Regulatory Initiatives (1 matter)

RIDE-SHARING COMPANY PAYS $19 MILLION ASSESSMENT TO NEW JERSEY FOR ALLEGED IC MISCLASSIFICATION OF DRIVERS. The New Jersey Department of Labor and Workforce Development (NJDOL) has assessed Lyft more than $19 million following an audit that found it had misclassified over 100,000 New Jersey drivers as ICs instead of employees. According to a news release issued September 18, 2025, by the NJDOL, “[a]n audit was triggered when Lyft drivers filed for unemployment insurance (UI) and disability benefits, revealing that Lyft had not made contributions to the state funds on their behalf.” The audit, covering the four-year period of 2014 to 2017, resulted in an assessment of $10.8 million in past due contributions, plus penalties and interest of over $8.5 million. The news release reported that in 2022, Lyft contested the NJDOL’s findings and awaited a hearing before New Jersey’s Office of Administrative Law (OAL).  Lyft initially paid the $10.8 million assessed for contributions to stop the accumulation of interest, while continuing to contest the assessment. In August 2025, shortly before the OAL hearing date, Lyft withdrew its request for a hearing and paid the remaining balance of over $8.5 million in penalties and interest. Lyft stated, “While we disagree with the NJDOL’s findings, we will not be pursuing further challenges to the assessment.”

Other Noteworthy News

THIS BLOG’S PUBLISHER QUOTED ON ENACTMENT OF NEW YORK CITY LAWS AFFECTING GIG WORKERS. The New York City Council on September 10, 2025, voted to override Mayor Adams’ veto of two pieces of legislation that extend the same wage and workplace protections to contracted grocery delivery workers that food delivery workers currently enjoy in New York City. As described in a September 10, 2025, press release from the City Council, one of the bills (Introduction 1133-A) will require the Department of Consumer and Worker Protection (DCWP) to study the working conditions of such delivery workers, and promulgate rules establishing for them a minimum pay rate. The other bill (Introduction 1135-A) will require third-party grocery delivery services to pay delivery workers a minimum pay rate that would meet or exceed that set by DCWP. Neither of the bills require that the delivery workers be re-classified as employees instead of ICs. In a September 5, 2025, article titled “Grocery Workers at Center of Latest NYC Wage Debate” by Max Kutner for Law360, the publisher of this blog was quoted that the grocery delivery legislation “like the restaurant delivery law, presupposes that these individuals are validly classified as independent contractors.” The quote by this publisher continued: “The companies that provide grocery store deliveries, like those that provide restaurant deliveries, have succeeded in large measure in getting legislators to acknowledge that it is better to try to improve the lot of these individuals by increasing their compensation, rather than by litigating their classification.”

Court Cases (4 cases)

GRUBHUB TO PAY OVER $24 MILLION IN CLASS ACTION SETTLEMENT WITH CALIFORNIA DELIVERY WORKERS. For the past 10 years, GrubHub, a global online food delivery marketplace, has been vigorously defending itself in a California class action lawsuit brought by a delivery driver alleging IC misclassification in California. See our prior blog posts of February 8, 2018, and April 4, 2023. But the lawsuit is finally coming to a close, as GrubHub and the driver, as the class representative, have reached a $24.75 million settlement covering a class of 60,000 food delivery drivers in California. The lawsuit alleged that, in classifying the drivers as ICs, GrubHub violated California’s minimum wage, overtime, and employee reimbursement laws covering employees. The proposed agreement includes a payment of $1.5 million to the California Labor and Workforce Development Agency under the state’s Private Attorneys General Act. But notably, the agreement is only a monetary settlement and does not require GrubHub to reclassify delivery drivers, whom GrubHub continues to maintain have been properly classified as ICs under California law. Lawson v. Grubhub Inc., No. 3:15-cv-05128 (N.D. Cal. Aug. 13, 2025)

EAST COAST LOGISTICS COMPANY SETTLES 10-YEAR IC MISCLASSIFICATION CLASS ACTION FOR $5.75 MILLION. Two logistics/transportation companies, National Freight, Inc. and NFI Interactive Logistics, Inc., have entered into a settlement agreement with drivers in an IC misclassification lawsuit filed in 2015 under the New Jersey Wage Payment Law. The settlement, which is subject to court approval, follows 10 years of litigation, including a motion for class certification, summary judgment motions, and five mediations. See our prior blog posts of July 11, 2018, August 20, 2020, and July 5, 2022, for a detailed procedural history of this case. The plaintiffs, owner-operator truck drivers from Pennsylvania and Rhode Island who made deliveries to stores throughout many East Coast states on behalf of NFI, claimed that the company violated the New Jersey Wage Payment Law by making deductions from its delivery drivers’ compensation for items such as fuel, occupational accident insurance, physical damage insurance, equipment, and fines. About $3.75 million of the $5.75 million proposed settlement amount will be paid to the participating class with each of the 119 class members receiving an average of $31,000 to $50,000 depending on their length of service. Approximately $2 million is earmarked for attorneys’ fees and litigation and administrative costs. Portillo v. National Freight Inc., No. 1:15-cv-07908 (D.N.J. Aug. 15, 2025).

LOGISTICS COMPANY IN ILLINOIS SETTLES NINE-YEAR LITIGATION FOR IC MISCLASSIFICATION FOR $2.1 MILLION. An Illinois federal court has preliminarily approved a $2.1 million class action settlement between a logistics company and delivery drivers that alleged they had been misclassified as ICs under an Illinois wage and hour law. Two delivery drivers initially brought the action on behalf of themselves, and others similarly situated alleging that Diakon Logistics, a company that coordinates delivery and installation of merchandise for retailers nationwide, misclassified them as ICs instead of treating them as employees under the Illinois Wage Payment and Collection Act. The drivers alleged that, as a result of being misclassified, the company violated that Illinois law by making unlawful deductions from the drivers’ wages. On March 31, 2025, a federal court agreed that the drivers had been misclassified, as we noted in our blog post of May 12, 2025. After nine years of litigation, including a motion for class certification, competing summary judgment motions, and an appeal to the U.S. Court of Appeals for the Seventh Circuit, the company settled the case, agreeing to pay each class member at least $130 for every week they provided services to the company. A fairness hearing is scheduled for October 31, 2025. Johnson v. Diakon Logistics, No. 1:16-cv-06776 (N.D. Ill. Aug. 8, 2025).

WORKERS’ RIGHTS ORGANIZATION FILES UNFAIR COMPETITION CLAIMS AGAINST GIG STAFFING COMPANIES CLASSIFYING WORKERS AS CONTRACTORS. A nonprofit workers’ rights organization, Fair Work Alliance, has sued a group of staffing companies claiming unfair competition and tortious interference with business and contractual relationships due to the staffing companies’ alleged misclassification of workers as ICs and not employees. According to the complaint, which was removed from state to federal court in Ohio, the Fair Work Alliance initiated this action “on behalf of a leading W2 [hospitality and light industrial] staffing platform that connects businesses with W2 employees.” Those workers are classified as employees by their hiring entity company which “bears the typical costs of being an employer, such as paying minimum wage and overtime and complying with other state and federal protections, maintaining workers’ compensation insurance, and paying significant payroll taxes, and bearing administrative payroll costs associated with collecting and maintaining employee tax forms.” The Fair Work Alliance claims that gig economy staffing platforms allegedly misclassify their workers as ICs and by doing so “have been able to save significantly on their labor costs, which in turn has allowed them to unlawfully undercut competitors, such as the plaintiff [hiring entity], who follow the law.” The complaint also alleges that “investors backing those staffing platforms have engaged in racketeering by encouraging them to profit from this misclassification,” that the companies exercise a high degree of control over the performance of work by the hospitality workers, and that the Fair Work Alliance’s client’s revenue has been significantly impacted. Fair Work Alliance v. Instawork, No. 25-cv-00551 (S.D. Ohio Aug. 6, 2025).

Administrative and Regulatory Initiatives (2 matters)

ONLINE GROCERY STORE IN MASSACHUSETTS SETTLES IC MISCLASSIFICATION CASE COVERING DRIVERS. Massachusetts Attorney General (AG) Andrea Joy Campbell and related online grocery delivery companies and their president have reached an $865,000 settlement resolving alleged violations of Massachusetts state wage and hour and earned sick time laws due to the alleged misclassification of approximately 160 drivers as ICs instead of employees. In a press release issued on August 5, 2025, the AG’s Office announced its settlement with Weee! Logistics LLC, Weee! OD Foods LLC, and their president individually. Weee! is an online-only supermarket, self-described as “America’s Largest Online Asian Supermarket,” and engages delivery drivers to complete online delivery services. According to the press release, the AG’s Office began investigating this matter upon receiving a complaint from the Chinese Progressive Association and “found that in violation of Massachusetts’ wage and hour laws, Weee! misclassified its delivery drivers as independent contractors, preventing drivers from obtaining employee-related legal protections,” and failed to provide them with legally required sick time. Under the settlement, in addition to agreeing to issue restitution checks to the affected drivers, Weee! has agreed to classify its drivers as employees and comply with all relevant wage and hour laws.

PUBLISHER OF THIS BLOG QUOTED ON NEW JERSEY PROPOSED REGULATION EXPANDING THE STATE’S TEST FOR IC STATUS. The publisher of this blog was quoted at length in an article appearing in the August 12, 2025 issue of FreightWaves on the New Jersey Department of Labor and Industry’s proposed regulation regarding the so-called ABC test for IC status in New Jersey. The article quoted sections from comments that were submitted by this blog’s publisher to the Department of Labor on July 31, 2025, critiquing the proposed regulation. See our blog post dated August 8, 2025, for a verbatim re-print of the comments, as well as our blog post on April 30, 2025, titled “New Jersey May Soon Become Even Less Favorable to [the Use of] Independent Contractors Than the Golden State.” The FreightWaves article noted our view that “if finalized in their final form, [the proposed regulations]would create a hostile and unworkable legal environment in this State for legitimate ICs and the companies that engage legitimate ICs, which would likely prompt freelancers and other New Jersey-based ICs to lose work opportunities and cause many businesses in New Jersey that use ICs to cease operating their businesses in the State – similar to what has occurred when California enacted Assembly Bill 5, which codified the ABC test in that state back in 2020.”

Legislative Developments (2 matters)

COLORADO ENACTS PENALTIES FOR IC MISCLASSIFICATION. An amendment to the Colorado Wage Act that took effect August 6, 2025, provides graduated penalties for employers that misclassify workers as ICs. Under Colorado House Bill 25-1001, an employer that misclassifies an employee as a nonemployee in a way that may affect a wage and hour payment or reporting obligation under a state, federal, or local law, rule, or regulation shall pay a fine in the following amounts: $5,000 for a willful violation; $10,000 for a violation not remedied within 60 days after the Division’s finding of misclassification; $25,000 for a second or subsequent willful violation within five years; or $50,000 for a second subsequent willful violation not remedied within 60 days after the Division’s finding of misclassification. Among other things, the law also amends the definition of “employer” for purposes of wage and hour laws to include an individual who owns or controls at least 25% of the ownership interest in an employer; prohibits an employer from making a payroll deduction below a worker’s applicable minimum wage; and enhances retaliation protections.

CALIFORNIA LAW WILL ALLOW UNIONS TO REPRESENT IC RIDESHARE DRIVERS. California Governor Newsom and the state legislature have struck a deal to support landmark legislation in partnership with ride-sharing companies and the union SEIU California, creating a means for over 800,000 gig workers to unionize while remaining ICs. As described in a news release from the governor’s office on August 29, 2015, AB 1340, called the Transportation Network Company Drivers Labor Relations Act, establishes a legal framework for over 800,000 California rideshare drivers to have the choice to join a union and negotiate for better wages, benefits, and protections. It also specifically provides: “A sectoral agreement shall not contain a provision that . . . (3) Alters or purports to alter the legal status of [Transportation Network Company] drivers as independent contractors . . . .” Another related bill, SB 371, will reduce the cost of providing rideshare services for Californians as it will no longer require that rideshare drivers carry $1 million in coverage for accidents caused by other drivers who are uninsured or under-insured, a cost currently passed on to riders. That amount would be reduced to $60,000 in uninsured motorist coverage per individual and $300,000 per accident. The legislation is novel and may be challenged on antitrust and labor law preemption grounds.