## Facts

- Sleepy’s, LLC used delivery drivers to deliver mattresses to customers.
- The drivers signed “Independent Driver Agreement” contracts and performed delivery services for Sleepy’s.
- The drivers alleged they were misclassified as independent contractors, causing lost statutory wage protections and benefits.
- The drivers sued under the New Jersey Wage Payment Law (WPL) and Wage and Hour Law (WHL) in federal district court.
- The federal district court granted summary judgment to Sleepy’s, finding the drivers were independent contractors on the undisputed facts.
- On appeal, the United States Court of Appeals for the Third Circuit certified to the New Jersey Supreme Court the legal question of which test governs worker classification under the WPL and WHL.
- The New Jersey Supreme Court addressed only the governing legal standard, not the drivers’ ultimate status.

## Issues

1. What legal test determines whether a worker is an “employee” or an “independent contractor” for claims under the New Jersey WPL and WHL.

## Decision

- The court held that the “ABC” test from the New Jersey Unemployment Compensation Act, N.J.S.A. 43:21-19(i)(6), governs employee status for WPL and WHL claims.
- The court confirmed that workers are presumed employees for WPL/WHL purposes unless the employer proves independent-contractor status under the ABC test.
- The court returned the matter to the federal courts for further proceedings applying the ABC test.

## Legal Principles

- For WPL and WHL claims, New Jersey applies the ABC test in N.J.S.A. 43:21-19(i)(6), not the common-law “right to control” test or other federal formulations.
- Under the ABC test, a worker is an employee unless the employer proves all three prongs:
  - (A) the worker is free from the employer’s control or direction in contract and in fact;
  - (B) the service is outside the employer’s usual course of business or is performed outside all the employer’s places of business; and
  - (C) the worker is customarily engaged in an independently established trade, occupation, profession, or business.
- Failure to prove any single prong results in employee status for purposes of wage-payment and wage-and-hour liability.
- Remedial wage statutes are construed to provide broad worker coverage, and the agency’s established regulatory interpretation supporting the ABC standard carries substantial weight when not plainly unreasonable.

## Conclusion

The court answered a certified question by adopting the statutory ABC test as the governing standard for classifying workers under the WPL and WHL, creating a presumption of employee status and assigning employers the burden to prove all three ABC elements to treat a worker as an independent contractor.


Hargrove v. Sleepy's, LLC, 220 N.J. 289, 106 A.3d 449 (N.J. 2015)