3rd Circuit confirms ABC test applies in wage theft case

In a recent decision, the U.S. Court of Appeals for the 3rd Circuit (whose rulings apply to all New Jersey employers) confirmed that the ABC Test—long used by the New Jersey Department of Labor—sets forth the proper analysis for determining whether a worker is an employee or an independent contractor under the state’s wage and hour laws.

Facts

Anthony Bailey was hired in 2014 by Millennium Group to work as a stock associate at a facility owned by NRG Energy, Inc. In March 2017, he was fired for breaching security protocols after opening a locked door for another employee, who had been terminated earlier that same day.

In 2018, Bailey filed claims against Millennium and NRG alleging his termination was motivated by racial discrimination in violation of Title VII of the Civil Rights Act of 1964 and the New Jersey Law Against Discrimination (NJLAD). The district court granted NRG’s request to dismiss the claims against it because he hadn’t sufficiently alleged he had an employment relationship with NRG.

Bailey filed an amended complaint, attempting to adequately allege he had an employment relationship with NRG. In addition to the Title VII and NJLAD claims, the amended complaint added claims against NRG under 42 U.S.C. § 1981, which prohibits racial discrimination by parties to a contract. He also alleged violations of the New Jersey Wage Theft Act.

NRG again asked to dismiss the claims, and the district court agreed. It found Bailey failed to establish an employment relationship with NRG. It denied his request for reconsideration, and he appealed.