Class Action Lawsuit Highlights Risks of Employee Misclassification

In her complaint, Tomasello asserted that “as a result of this misclassification, Defendants have deprived their workers of the right to be paid the minimum wage and the protection against illegal deductions from pay.”

The case is in its early stages and attorneys for the opposing parties did not respond to requests for comment, leaving the documents filed in court thus far as the sole source of information. While ICF has filed an initial answer (and an amended version) to the complaint, the response does not fully develop the defendant’s legal arguments, instead offering a blanket denial of Tomasello’s claims and objection to her characterization of the facts.

It remains to be seen how ICF defends itself against Tomasello’s claims, but the courts’ disposition in other cases involving employee classification doesn’t appear to offer an encouraging outlook for the defendants. As YNOT noted in previous coverage of a lawsuit involving exotic dancer and a club in Nebraska, “the same legal test the court employed in making its determination in this case applies in any dispute over whether a worker is an employee or an independent contractor – including, presumably, performers in adult videos and webcam shows.”

While the analogy between dancers at a strip club and live cam performers clearly is an imperfect one, the underpinning legal questions when it comes to employee classification appear to be the same.

In their answer to her complaint, ICF argued that Tomasello’s claims “are specifically barred because neither she nor any individual in the putative class or collective are ‘employees’ under federal or New Jersey law. Instead, all performers on Streamate, including Plaintiff, are independent contractors.”

The plain text of the New Jersey law, and the manner in which courts have interpreted text of statutes governing the employee classification question, could prove a significant obstacle in ICF successfully making that argument, however.

“Some states, such as New Jersey, have adopted a strict test to determine whether a worker must be deemed an employee, rather than an independent contractor,” attorney Larry Walters of FirstAmendment.com told YNOT. “While the contract in place with the worker is some evidence of the intended relationship, it is not determinative. Courts will look at other factors such as the level of control exerted over the worker’s activities, and the nature of the work performed.”

Walters also noted that adult nightclubs “have faced numerous lawsuits from performers seeking to be classified as employees in the last two decades. Now, as work has migrated largely onto the internet, online platforms are encountering these same issues in the courts.”

“Platform operators should undertake a comprehensive review of these potential employment law issues and evaluate both their contractual agreements along with their business policies and practices,” Walters advised. “Misclassification of workers can result in significant exposure including payment of back wages, costs, and attorney’s fees.”

What comes of the Tomasello lawsuit remains to be seen. On its face, the situation doesn’t look great for the defendants, but it’s also true that at this point we’re left with little but the plaintiff’s factual claims and legal arguments, along with ICF’s bare bones confirmation or denial of those claims in its amended answer to the complaint.

In a joint proposed discovery plan filed in the case November 14, ICF asserted that the “plaintiff cannot pursue an FLSA collective action on a nationwide basis because there is no personal jurisdiction over performers who do not have sufficient contacts with Defendants in the State of New Jersey.”

“In addition, the putative collective and class actions fail because the questions of law and fact asserted by Plaintiff are not common and do not predominate to the proposed class or collective,” the defense added in the summary offered in the joint discovery plan. “Therefore, the case cannot be certified as a collective action under the FLSA, 29 U.S.C. § 216(b) or as a class action under Rule 23 of the Federal Rules of Civil Procedure.”

According to the discovery plan, no settlement discussions have taken place in the case to this point, although the parties did meet in September to exchange information as required under the Federal Rules of Civil Procedure. The discovery plan also states that while “no substantive settlement discussions have taken place” as of the date of the discovery plan’s filing, “counsel have discussed the possibility of settlement with the assistance of private mediation after some discovery and/or other materials under Rule 408 are exchanged.”

YNOT will continue to track the case and report on any significant developments.

Courtroom photo by Zachary Caraway from Pexels