CELSO MORALES VS. V.M. TRUCKING, LLC (L-5411-15, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2898-16T4
CELSO MORALES and CARLOS
HERNANDEZ,
Plaintiffs-Appellants,
v.
V.M. TRUCKING, LLC, and GABRIEL
MELTSER c/o V.M. TRUCKING, LLC,
Defendants-Respondents,
and
TRUCKING SUPPORT SERVICES,
LLC, and ROBERT LEFEBVRE c/o
TRUCKING SUPPORT SERVICES,
LLC, and CONTRACTOR RESOURCE
SOLUTIONS, LLC,
Defendants.
__________________________________
Argued October 17, 2018 – Decided July 9, 2019
Before Judges Fuentes, Accurso and Vernoia.
On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-5411-15.
Matthew Dennis Miller argued the cause for appellants
(Swartz Swidler, LLC, attorneys; Matthew Dennis
Miller, on the briefs).
Frederick Conrad Biehl, III, argued the cause for
respondents (Soriano Henkel Biehl & Matthews,
attorneys; Frederick Conrad Biehl, III, on the brief).
PER CURIAM
Celso Morales and Carlos Hernandez (plaintiffs) appeal from February 3,
2017 orders denying their motion for summary judgment and granting summary
judgment to defendants V.M. Trucking, LLC (VMT), and Gabriel Meltser,
dismissing plaintiffs' putative class action, which alleged violations of the New
Jersey Wage Payment Law (WPL), N.J.S.A. 34:11-4.1 to -4.14. Having
reviewed the record in light of the applicable law, we affirm in part, reverse in
part, vacate in part and remand for further proceedings.
I.
The issues in this matter arise out of plaintiffs' association with VMT as
truck drivers providing transportation services to VMT's customers and turns on
whether plaintiffs were employees subject to the requirements and protections
of the WPL or independent contractors to whom the parties agree the WPL does
not apply. In July 2015, plaintiffs, on behalf of themselves and others similarly
situated, filed a complaint alleging defendants and their co-defendants, Trucking
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Support Services, LLC (TSS), Contractor Resource Solutions, LLC (CRS), and
Robert Lefebvre, violated the WPL by misclassifying plaintiffs as independent
contractors during their respective associations with VMT and deducting
"money from [their] paychecks each pay period ostensibly for payment for . . .
truck leases and associated fees." Plaintiffs also asserted a cause of action
alleging defendants and their co-defendants were unjustly enriched by their
retention of monies wrongfully deducted in violation of the WPL. Defendants
filed an answer, which included a counterclaim against the co-defendants for
contribution and indemnification.
Defendants subsequently moved for summary judgment, arguing the WPL
was inapplicable to plaintiffs as a matter of law because plaintiffs were
associated with VMT as independent contractors and not employees. Two
weeks later, plaintiffs moved for summary judgment and for class certification,
asserting the undisputed facts established they were VMT's employees under the
WPL and defendants violated the WPL by deducting various sums from their
compensation and the compensation of others similarly situated.1
1
TSS also moved for summary judgment. The court entered a February 3, 2017
order granting the motion. Plaintiffs do not appeal from that order and we
therefore do not address it.
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When a motion court is presented with cross-motions for summary
judgment, it is required to consider each motion independently because a party
does not relinquish the right to dispute the facts upon which an opposing party's
motion is based merely by filing a cross-motion. O'Keeffe v. Snyder, 83 N.J.
478, 487 (1980). Here, the cross-motions were centered solely on whether the
undisputed facts established as a matter of law that plaintiffs were employees
under the WPL and, if so, whether defendants improperly made deductions from
plaintiffs' wages in violation of the WPL. Thus, although the parties submitted
separate statements of material fact supporting their respective motions in
accordance with Rule 4:46-2(a) and opposition and counter statements of fact in
accordance with Rule 4:46-2(b), the parties' submissions as to each motion were
essentially identical. We have carefully considered all of the submissions and
distill the following undisputed material facts based on our de novo review of
the record.2
2
Although we conduct a de novo review of a court's grant or denial of a
summary judgment motion, "our function as an appellate court is to review the
decision of the trial court, not to decide the motion tabula rasa." Estate of
Doerfler v. Fed. Ins. Co., 454 N.J. Super. 298, 301-02 (App. Div. 2018). Here,
our review of the record is encumbered by the court's failure to sort through the
parties' submissions and make findings as to the undisputed facts upon which its
decision was based. We remind the motion court that it is not the role of this
court, even on a de novo review of a summary judgment motion, to find the
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A.
VMT operates a trucking company in Newark and utilizes two types of
truck drivers to provide transportation services to its customers. VMT utilizes
employees it hires and designates as "company drivers" and putative
independent contractors it designates as "contract drivers." Regardless of their
designation, VMT drivers must have at least two years of driving experience and
a Transportation Worker Identification Credential card, which allows access to
ports for deliveries and pickups for VMT's customers. VMT also utilizes the
same interview process to hire employees and independent contractors, and
requires each to complete a drug and alcohol test and pass a driving test.
In 2007, Hernandez began his association with VMT when he was offered
a position as either an employee or an independent contractor. Hernandez opted
undisputed facts in the first instance. Ibid. However, rather than remand the
matter for the court to make the findings required by Rule 1:7-4, we have
considered the record presented on the motions and determined de novo the
undisputed facts. We limit our findings of the undisputed facts to those
presented in the statements of material fact and opposition submitted to the court
in accordance with Rule 4:46-2(a) and (b), and do not consider or rely on
purported facts that were not presented in accordance with the Rule's
requirements. Thus, we do not consider the parties' repeated reliance on
statements of purported fact made during deposition testimony where the
statements of fact were not presented to the motion court in accordance with
Rule 4:46-2.
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to be designated as an independent contractor and began providing truck driving
services for VMT. Two years later, Morales began his association as a truck
driver for VMT, also opting to be designated as an independent contractor.
Hernandez and Morales continued their associations with VMT until 2014.3
VMT utilized CRS to administer independent contractor services and
payroll for the individuals designated as independent contractors. VMT
required individuals hired as independent contractors to complete forms
contained in an Independent Contractor Enrollment Packet supplied by CRS.
VMT did not impose this requirement on drivers designated as employees.
When their associations with VMT began, Hernandez and Morales
completed and signed the Independent Contractor Enrollment Packet, which
included the following documents: a fleet operator and service agreement with
CRS; an owner-operator request for occupational accident insurance, with CRS
as each plaintiff's sponsor; a vehicle sublease with Lease Rite, LLC; and a
3
At Morales's request, he changed his status from independent contractor to
employee from July 15, 2013, through August 11, 2013. During this period, the
truck Morales leased as an independent contractor was assigned to someone else,
and he drove a different VMT truck. Following August 11, 2013, Morales
changed his status, again at his request, to independent contractor and resumed
use of the truck he previously leased in that capacity. We do not address the
legal significance of this period of Morales's association with VMT because it
is not at issue on appeal.
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membership enrollment form for the United Truckers & Independent
Contractors Association (UTICA). In pertinent part, the request for insurance,
sublease, and membership enrollment form authorized the deduction of these
costs directly from plaintiffs' compensation.
Stated differently, the owner-operator request for occupational accident
insurance authorizes CRS to deduct from plaintiffs' compensation payments for
"occupational accident insurance." The document provides that plaintiffs
requested the coverage because they are "not . . . employee[s] or eligible for
workers' compensation," but also states that plaintiffs "request coverage to be
bound under the above referenced If Any Workers' Compensation policy."
The vehicle sublease authorizes VMT's payroll processor, TSS, to deduct
directly from plaintiffs' weekly compensation a sum equal to the lease payment
for the truck owned by VMT. Furthermore, although the sublease provides
plaintiffs the option to purchase the leased trucks during the first twenty-four
months following the commencement of their leases, the payments made by
plaintiffs during this option period are not credited against the purchase price of
the truck. Finally, each plaintiff bears the risk of loss for his leased truck,
remains responsible for maintenance and repairs, and for the payment of the
truck's insurance premium.
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The UTICA membership enrollment form permits a $10 monthly
deduction from plaintiffs' compensation for UTICA membership dues. UTICA
is a Texas corporation "formed to offer discounted products and services to
eligible members." As described on the form, "UTICA simply provides access
to certain discounted pricing for products and services negotiated with existing
third party providers."
VMT owned the trucks plaintiffs operated and subleased from Lease Rite.
Defendants' vehicle insurance policy covered plaintiffs. During plaintiffs'
respective associations with VMT, the trucks were stored at VMT's Newark
location when not in use by plaintiffs. VMT did not charge plaintiffs to store
the trucks at VMT's facility. Plaintiffs were permitted to use the trucks to
provide transportation services for other motor carriers when the trucks were not
being used to provide services for VMT's customers. When plaintiffs' leased
trucks were being repaired, VMT assigned plaintiffs a different truck for their
use if one was available. VMT installed GPS tracking devices on the trucks
leased by plaintiffs from Lease Rite. The GPS information allowed VMT to
advise its customers when deliveries and pickups could be expected. Use of the
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GPS devices also allowed VMT to receive discounts on its motor vehicle and
general liability insurance policies. 4
Defendants paid some, but not all, of the tolls, fuel, repair and
maintenance costs associated with plaintiffs' leased vehicles. Plaintiffs "swore
under oath in their federal tax returns that they were independent contractors ,"
and their returns showed that, as independent contractors, they paid expenses
related to their trucking businesses, including the CRS program fee, Lease Rite
lease payments, fuel and lubricant, tires, tolls, vehicle repairs, office expenses ,
freight fees and tracking fees.
Plaintiffs traveled to VMT's customers' locations in the leased trucks to
pick up and deliver loads. VMT employees were required to report to the facility
each morning, make the deliveries assigned by VMT and sequence the deliveries
as directed by VMT.5 Plaintiffs had the right to reject any assignments VMT
4
In their opposition to defendants' counter statement of material facts, plaintiffs
assert that VMT used the GPS tracking devices "to monitor their wo rk." The
assertion will not be considered because it is untethered to a citation to any
competent evidence in the record as required by Rule 4:46-2(a).
5
Plaintiffs assert they were also required to report to VMT's facility each day,
and cite to Meltser's deposition testimony to support the claim. Meltser,
however, testified that independent contractors, such as plaintiffs, were not
required to report to VMT's facility each day and could come to the facility
"[w]henever they want[ed]." Thus, there is no competent evidence supporting
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offered and, during their associations with VMT, plaintiffs rejected assignments
VMT had available. Defendants had the right to terminate plaintiffs' services at
any time.
Defendants paid plaintiffs a per diem rate for their services. The per diem
rate was paid regardless of the number of assignments plaintiffs performed in a
day. Defendants paid plaintiffs the same amount for a day during which they
completed multiple assignments as it did on a day they completed one
assignment.
Defendants paid plaintiffs through CRS by advising CRS of plaintiffs' per
diem rate and the number of days plaintiffs provided services during a pay
period. CRS invoiced VMT for the amount due to plaintiffs and VMT remitted
the amount due to CRS. CRS then issued checks made payable to plaintiffs and
mailed the checks to VMT, which delivered the checks to plaintiffs. CRS
deducted from plaintiffs' checks the sums due for lease payments under the
sublease with Lease Rite, insurance, and the UTICA membership dues. 6
plaintiffs' claim, and the record does not establish that it is undisputed that
plaintiffs were required to report to VMT's facility each day.
6
Plaintiffs contend deductions for insurance were for workers' compensation
insurance. Defendants assert the amounts deducted were for occupational
accident insurance. In addition, plaintiffs contend that VMT determined the
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B.
Following oral argument on the motions, the court issued a written
decision and separate orders granting defendants' summary judgment motion
and dismissing the complaint, and denying plaintiffs' cross-motion. The court
observed that it was required to apply the "ABC" test under N.J.S.A. 43:21 -
19(i)(6)(A)-(C), see Hargrove v. Sleepy's, LLC, 220 N.J. 289, 312 (2015), to
determine if plaintiffs were employees under the WPL.
The court separately addressed each prong of the ABC test and concluded
that the undisputed facts established as a matter of law that defendants failed to
sustain their burden of establishing any of the prongs. The court determined
plaintiffs were employees under the WPL because defendants failed to
demonstrate that plaintiffs were not under their control in the performance of
their work, that plaintiffs performed work outside of the usual course of
defendants' business or performed work outside of defendants' places of
business, and that plaintiffs had enterprises that existed independently of their
relationship with defendants.
amounts CRS deducted from plaintiffs' compensation. Defendants assert the
amounts were determined by CRS. These genuine disputes of fact cannot be
resolved on summary judgment. See Brill v. Guardian Life Ins. Co. of Am., 142
N.J. 520, 536 (1995).
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The court further concluded, however, that defendants did not violate the
WPL by making deductions from plaintiffs' compensation. More particularly,
the court found plaintiffs properly authorized the deductions for insurance, lease
payments and UTICA dues under N.J.S.A. 34:11-4.4, which allows employers
to withhold or divert portions of employee wages under certain defined
circumstances.
The court therefore entered orders granting defendants summary judgment
and denying plaintiffs' motion. Plaintiffs appealed from the court's orders.
II.
We review orders granting or denying summary judgment by applying the
same standard that the trial court applies in ruling on a summary judgment
motion. Templo Fuente de Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh,
224 N.J. 189, 199 (2016). The moving party is entitled to summary judgment if
the record shows "there is no genuine issue as to any material fact challenged
and . . . the moving party is entitled to a judgment or order as a matter of law."
Ibid. (quoting R. 4:46-2(c)). When determining whether a genuine issue of
material fact exists, the court must view the evidence in the light most favorable
to the non-moving party. Brill, 142 N.J. at 523. Issues of law are subject to the
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de novo standard of review, and the trial court's determination of such issues is
accorded no deference. Kaye v. Rosefielde, 223 N.J. 218, 229 (2015).
A.
Plaintiffs do not challenge on appeal the court's determination that they
are employees under the WPL. Instead, they appeal only from the court's
findings that the deductions from their compensation are authorized by N.J.S.A.
34:11-4.4 and, therefore, defendants did not violate the WPL. Thus, plaintiffs
argue the court erred by denying their summary judgment motion and granting
defendants' summary judgment motion.
Defendants do not appeal from the court's orders but nonetheless argue
the court erred by finding plaintiffs were employees under the WPL. We reject
plaintiffs' assertion that defendants' failure to file an appeal bars consideration
of defendants' argument that the court erred by finding plaintiffs were
employees. An appeal is from an action or judgment of a lower court, not from
a court's reasoning, see Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199
(2001) (explaining "appeals are taken from orders and judgments and not from
. . . reasons given for the ultimate conclusion"), and a respondent on appeal may
assert any arguments supported by the record in defense of the action or inaction
below without filing a cross-appeal, see Kimball Int'l, Inc. v. Northfield Metal
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Prods., 334 N.J. Super. 596, 604 n.1 (App. Div. 2000) ("[A] respondent may
present alternative arguments for affirmance without filing a cross appeal .").
Thus, we consider whether the court erred by finding plaintiffs were employees
under the WPL.
Plaintiffs' status as employees under the WPL is governed by application
of the ABC test set forth in N.J.S.A. 43:21-19(i)(6)(A)-(C). Hargrove, 220 N.J.
at 312. Application of the ABC test requires a fact sensitive analysis to
determine the "totality of the facts surrounding the parties' relationship." Phila.
Newspapers, Inc. v. Bd. of Review, 397 N.J. Super. 309, 321 (App. Div. 2007).
"The 'ABC' test presumes an individual is an employee unless the
employer can make certain showings regarding the individual employed. . . [.]"
Hargrove, 220 N.J. at 305. N.J.S.A. 43:21-19(i)(6) sets forth the ABC test under
the WPL,7 ibid., and provides as follows:
Services performed by an individual for remuneration
shall be deemed to be employment . . . unless and until
it is shown . . . that:
(A) Such individual has been and will continue to be
free from control or direction over the performance of
7
The ABC test is included in the Unemployment Compensation Law, N.J.S.A.
43:21-1 to -24.30, but is utilized to determine an individual's employment status
under the WPL and the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a to
-56a38. Hargrove, 220 N.J. at 312.
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such service, both under his contract of service and in
fact; and
(B) Such service is either outside the usual course of
the business for which such service is performed, or
that such service is performed outside of all the places
of business of the enterprise for which such service is
performed; and
(C) Such individual is customarily engaged in an
independently established trade, occupation, profession
or business.
[N.J.S.A. 43:21-19(i)(6).]
"[T]o be classified as an independent contractor, the retained individual
must satisfy all criteria." Hargrove, 220 N.J. at 314. The test is founded on the
presumption that plaintiffs are "employee[s] and imposes the burden to prove
otherwise on" the putative employer. Ibid. Here, if defendants fail "to satisfy
any one of the three criteria," plaintiffs shall be classified as employees. Carpet
Remnant Warehouse, Inc. v. N.J. Dep't of Labor, 125 N.J. 567, 581 (1991).
Prong A of the ABC test is referred to as the "control test," Hargrove, 220
N.J. at 306, and requires that "the employer . . . show that it neither exercised
control over the worker, nor had the ability to exercise control in terms of the
completion of the work," id. at 305. "[T]he inquiry extends to all the
circumstances attendant to the actual performance of the work." Id. at 314. "[I]t
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is not necessary that the employer control every aspect of the worker's trade;
rather, some level of control may be sufficient." Id. at 305.
Although defendants did not exercise complete control over the manner
in which plaintiffs performed their work, the undisputed facts establish that
defendants exercised some control over the circumstances attendant to the actual
performance of the work primarily by exercising control over the trucks utilized
for the performance of their services. For example, but not by way of limitation,
defendants required plaintiffs to execute the fleet operator and service
agreement with CRS as a condition of their retention and performance of their
work. The agreement reserved to defendants the right to require that plaintiffs
place on their leased trucks defendants' "lettering, advertisement, slogans,
designs or logos" to identify the truck as defendants' during plaintiffs'
performance of services on defendants' behalf. In other words, defendants
retained plaintiffs to provide trucking services as purported independent
contractors while maintaining the legal authority to require plaintiffs advertise
and suggest, through the use of logos and other truck signage, that defendants
were providing the trucking services directly. The fact that defendants did not
"exercise[] control in fact" is irrelevant because they otherwise "reserved the
right to control the [plaintiffs'] performance" of services rendered on defendants'
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behalf while operating the leased trucks. Carpet Remnant Warehouse, Inc., 125
N.J. at 582.
Defendants also exercised at least some control over plaintiffs by
reserving the right to terminate plaintiffs' retention at any time for any reason
and requiring that plaintiffs' subleases of the trucks from a third party, Lease
Rite, automatically terminate if defendants ended plaintiffs' retention.
Defendants further exercised control over circumstances attendant to the
performance of their work by requiring plaintiffs to execute the documents in
the CRS Independent Contractor Enrollment Packet, which mandated that
plaintiffs pay for an insurance policy selected by CRS and for membership dues
in an organization, UTICA, selected by CRS. Defendants also exercised control
by directly incurring expenses in connection with plaintiffs' delivery of trucking
services, including by fueling and repairing plaintiffs' trucks, and by assigning
plaintiffs trucks owned by defendants when plaintiffs' trucks were being
repaired. Cf. Trauma Nurses, Inc. v. Bd. of Review, 242 N.J. Super. 135, 144-
46 (App. Div. 1990) (finding in part that nurses were not employees under the
first prong of the ABC test because the employer did not offer the nurses any
supplies or benefits).
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Whether or not plaintiffs were "instructed as to [their] working hours and
the details of the route[s they were] to take . . . [does] not, in our opinion, under
the circumstances, establish the fact that [plaintiffs were] not under control . . .
within the meaning of" N.J.S.A. 43:21-19(i)(6)(A). Superior Life, Health &
Accident Ins. Co. v. Bd. of Review, 127 N.J.L. 537, 540 (1942). The undisputed
facts demonstrate defendants exercised at least some control over the
circumstances attendant to the performance of plaintiffs' work. Thus, because
the undisputed facts demonstrate defendants exercised some control over
plaintiffs and the performance of their work under prong A of the ABC test, we
are satisfied the motion court correctly determined plaintiffs were employees
under the WPL. See Carpet Remnant Warehouse, Inc., 125 N.J. at 581.
The second prong of the ABC test "requires the employer to show that the
services provided were 'either outside the usual course of the business . . . or
that such service is performed outside of all the places of business of the
enterprise.'" Hargrove, 220 N.J. at 305 (alteration in original) (quoting N.J.S.A.
43:21-19(i)(6)(B)). "[S]atisfaction of either of the B standard's alternatives is a
prerequisite for avoiding designation as an employee." Carpet Remnant
Warehouse, Inc., 125 N.J. at 584. Defendants have the burden of satisfying this
prong of the ABC test, id. at 581, and do not dispute that they did not present
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evidence establishing plaintiffs provided services outside of defendants' usual
course of business. In fact, the evidence establishes plaintiffs provided
services—trucking services—identical to those defendants provide to their
customers through the individuals they identify as their employees.
Defendants argue plaintiffs performed their services for defendants
outside of all of the places of defendants' business enterprise. The inquiry under
the second prong of the ABC test "identifies . . . the usual . . . places at which
the employer performs its business." Hargrove, 220 N.J. at 314. Plaintiffs
stored their trucks at defendants' location when the trucks were not being used,
and when they accepted assignments from defendants, plaintiffs went to
defendants' facility to obtain their trucks and traveled to defendants' customers'
locations to pick up, transport and deliver loads. Based on the nature of
defendants' operations, "the 'business of the enterprise' . . . was at no fixed place
but the services were to be performed at any place within the prescribed area
where [defendants' customers] were located." Superior Life, 127 N.J.L. at 540.
Thus, the places of defendants' business enterprise not only included its facility,
but also extended to the various locations the truck drivers—both those
designated as employees and independent contractors—were required to travel
to perform services on defendants' behalf.
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The record before the motion court supports its determination that
defendants failed to present evidence satisfying the second prong of the ABC
test. The record affirmatively establishes that plaintiffs performed the same
services that defendants provided in the usual course of their business and at
locations at which defendants conducted their business. Defendants' failure to
satisfy the second prong of the standard provides an independent basis fo r the
court's determination plaintiffs are employees under the WPL.
We have also considered the court's finding that plaintiffs are employees
because defendants failed to present sufficient evidence establishing the ABC
test's third prong—that plaintiffs constitute "enterprise[s] that exist[] and can
continue to exist independently of and apart from the particular service
relationship." Hargrove, 220 N.J. at 306 (quoting Gilchrist v. Div. of Emp't
Sec., 48 N.J. Super. 147, 158 (App. Div. 1957)). Prong C is satisfied "when an
individual has a profession that will plainly persist despite the termination of the
challenged relationship." Ibid. If the worker joins "the ranks of the
unemployed" upon termination of the working relationship, prong C is not
satisfied. Ibid. (quoting Schomp v. Fuller Brush Co., 124 N.J.L. 487, 491-92
(1940)).
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The motion court found plaintiffs "were able to become truck drivers
because VMT provided them with a truck and covered related expenses of
operating that truck" and that plaintiffs "have joined the ranks of the
unemployed" upon termination because defendants reclaimed the truck and
would not continue leasing it. The evidence does not support the court's finding.
The undisputed facts gleaned from the parties' submissions pursuant to
Rule 4:46-2 do not permit a dispositive analysis of plaintiffs' status following
the termination of their associations with defendants. For example, the record
is devoid of any undisputed statements of material fact submitted in accordance
with Rule 4:46-2 establishing plaintiffs joined the ranks of the unemployed
following the termination of their associations with defendants. In addition,
plaintiffs' tax returns permit a fact-finder to draw the reasonable inference that
that plaintiffs operated truck transportation operations independent of their
associations with VMT. In any event, in our view, there are fact issues
concerning plaintiffs' status following the termination of their relationships with
defendants that preclude an award of summary judgment on the issue of whether
defendant satisfied its burden under the third prong of the ABC standard. The
motion court erred by finding otherwise.
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We are satisfied the motion court correctly determined plaintiffs were
employees under the WPL. Defendants' failures to sustain their burden under
the first and second prongs of the ABC test provide separate but equally
dispositive reasons supporting the court's determination. See Carpet Remnant
Warehouse, Inc., 125 N.J. at 581.
B.
Plaintiffs challenge the motion court's determination that the undisputed
facts established defendants did not violate the WPL by requiring deductions
from their wages for insurance, lease payments and UTICA membership dues.
Plaintiffs argue the WPL authorizes only certain limited deductions from
employee wages, and the insurance, lease payments and UTICA membership
dues deductions are not within the limited deductions permitted under the WPL.
Defendants argue that even if plaintiffs may be properly considered employees
under the WPL, the undisputed facts establish that the deductions are authorized
by the WPL as a matter of law.
The WPL "was designed to protect employees' wages and to guarantee
receipt of the fruits of their labor. Generally, unless expressly provided by the
[WPL], employers may not withhold or divert any portion of an employee's
wages." Rosen v. Smith Barney, Inc., 393 N.J. Super. 578, 585 (App. Div.
A-2898-16T4
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2007), aff'd, 195 N.J. 423 (2008). "No employer may withhold or divert any
portion of an employee's wages unless . . . required or empowered to do so by
New Jersey or United States law" or such deduction falls within one of the
eleven exemptions found in N.J.S.A. 34:11-4.4. Ibid. (quoting N.J.S.A. 34:11-
4.4). In addition, it is unlawful to "withhold or to pay" an employee's wages "to
any other person on the basis of any assignment or purchase" prohibited by the
WPL. N.J.S.A. 34:11-4.14(a).
N.J.S.A. 34:11-4.4 provides that "[n]o employer may withhold or divert
any portion of an employee's wages" unless the specific conditions defined in
the statute are satisfied. In pertinent part here, the statute permits employers to
withhold or divert portions of an employee's wages for:
(1) Contributions authorized either in writing by
employees, or under a collective bargaining agreement,
to employee welfare, insurance, hospitalization,
medical or surgical or both, pension, retirement, and
profit-sharing plans, and to plans establishing
individual retirement annuities on a group or individual
basis, as defined by section 408(b) of the federal
Internal Revenue Code of 1986 (26 U.S.C. § 408(b)),
or individual retirement accounts at any State or
federally chartered bank, savings bank, or savings and
loan association, as defined by section 408(a) of the
federal Internal Revenue Code of 1986 (26 U.S.C.§
408(a)), for the employee, his spouse or both.
....
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(4) Payments for company products purchased in
accordance with a periodic payment schedule contained
in the original purchase agreement . . . .
....
(7) Labor organization dues and initiation fees, and
such other labor organization charges permitted by law.
....
(10) Payments authorized by employees for employer-
sponsored programs for the purchase of insurance or
annuities on a group or individual basis, if otherwise
permitted by law.
[N.J.S.A. 34:11-4.4(b)(1), (4), (7) and (10).]
The motion court applied these statutory provisions to support its determination
that defendants established as a matter of law that the challenged deductions
from plaintiffs' wages were lawful.
As a condition of plaintiffs' employment, defendants required that
plaintiffs execute the documents in the CRS Independent Contractor Enrollment
Packet, which included an authorization for deductions from their wages for
insurance the form characterizes as occupational accident insurance but also
refers to as workers' compensation insurance. The motion court found the
deduction was properly authorized under subsections (b)(1) and (b)(1 0) of
N.J.S.A. 34:11-4.4 because those subsections permit employers to make
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deductions for insurance that are authorized by employees. The court erred in
doing so.
N.J.S.A. 34:11-4.4(b)(1) allows deductions from wages, when authorized
in writing by an employee, for "employee . . . insurance . . . plans," but the record
here is devoid of any evidence establishing that the insurance for which
deductions were made from plaintiffs' wages was part of an employee insurance
plan. Similarly, N.J.S.A. 34:11-4.4(b)(10) permits deductions "authorized by
employees for employer-sponsored programs for the purchase of insurance," but
the record is bereft of evidence establishing the insurance was part of an
employer-sponsored program. Indeed, other than the deduction form's
references to "occupational accident insurance" and workers' compensation
insurance, there are no undisputed facts establishing the nature of the insurance,
or whether it was part of an employee insurance plan, an employer-sponsored
program or something else.
There is also a genuine issue of material fact concerning the type of
insurance for which the deductions were authorized. Plaintiffs contend the
insurance was workers' compensation insurance, and defendants assert
otherwise, claiming the insurance was occupational accident insurance and not
workers' compensation insurance. Resolution of the factual dispute is essential
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to a determination as to whether either subsection (b)(1) or (b)(10) of N.J.S.A.
34:11-4.4 permits the insurance deductions because employers are required to
provide workers' compensation for their employees. See N.J.S.A. 34:15-71.
Defendants do not cite to any legal authority allowing an employer to shift its
legal obligation to provide workers' compensation insurance to its employees
through the guise of requiring the employees to pay the costs of the insurance,
and we find nothing in the WPL authorizing a wage deduction for that purpose.
In sum, there is an insufficient base of undisputed material facts
permitting a conclusion that the wage deductions for insurance were either
lawful or unlawful under N.J.S.A. 34:11-4.4(b). We therefore vacate the court's
orders granting defendants summary judgment on plaintiffs' claim that the
deductions for insurance violated N.J.S.A. 34:11-4.4 and denying plaintiffs'
summary judgment on their claim that the insurance deductions violated
N.J.S.A. 34:11-4.4, and remand for further proceedings.
We agree with plaintiffs' argument that the motion court erred by
concluding defendants were entitled to summary judgment on their claim that
the deductions for UTICA membership dues are lawful under N.J.S.A. 34:11-
4.4(b)(7). As noted, the statute authorizes wage deductions for "[l]abor
organization dues and initiation fees, and such other labor organization charges
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26
permitted by law." N.J.S.A. 34:11-4.4(b)(7). The motion court, however, did
not address whether UTICA is a labor organization within the meaning of
N.J.S.A. 34:11-4.4(b)(7), or recognize that the undisputed facts establish it is
not.
The WPL does not define the term "labor organization." We therefore
give the words "their generally accepted meaning, according to the approved
usage of the language," mindful that "words and phrases having a special or
accepted meaning in the law, shall be construed in accordance with such . . .
special and accepted meaning." N.J.S.A. 1:1-1; see also In re Plan for the
Abolition of the Council on Affordable Hous., 214 N.J. 444, 467-68 (2013).
The term "labor organization" has a well-established meaning in the law.
At its essence, the term refers to an organization that represents employees for
collective negotiations or bargaining, and represents the collective interests of
employees concerning the terms and conditions of their employment. See, e.g.,
Dzwonar v. McDevitt, 177 N.J. 451, 457 (2003) (identifying a labor union that
served as the employees' collective bargaining representative as a labor
organization); Lullo v. Int'l Ass'n of Fire Fighters, 55 N.J. 409, 413 (1970)
(noting that "a labor organization in the usual sense" is an entity that is the
"negotiating agent" for employees); Commc'ns Workers of Am., AFL-CIO v.
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27
Christie, 413 N.J. Super. 229, 267-68 (App. Div. 2010) (equating a labor
organization with a labor union that is the collective bargaining representat ive
of employees); N.J.S.A. 10:5-5(c) (defining "labor organization" as "any
organization which exists and is constituted for the purpose, in whole or in part,
of collective bargaining, or of dealing with employers concerning grievances,
terms or conditions of employment, or of other mutual aid or protection in
connection with employment"). Defendants agree. In their brief, they rely on
the Labor Management Relations Act of 1947, 29 U.S.C. § 141 to 187, to define
"labor organization," asserting the term means:
[A]ny organization of any kind, or any agency or
employee representation committee or plan, in which
employees participate and which exists for the purpose,
in whole or in part, of dealing with employers
concerning grievances, labor disputes, wages, rates of
pay, hours of employment, or conditions of work.
[29 U.S.C. § 152(5).]
The undisputed facts establish UTICA is neither a labor union nor
defendants' employees' collective bargaining representative, and it does not exist
for the purpose of dealing with defendants' employees' grievances or the terms
and conditions of their employment. To the contrary, the record establishes only
that UTICA provides access to discounted products and services for its members
who pay its dues. Defendants correctly argue that "getting a discount on goods
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and services is a benefit to members of UTICA," but the record is barren of any
evidence UTICA constitutes a labor organization. We therefore reverse the
court's order finding defendants are entitled to summary judgment on their claim
that the deductions of UTICA membership dues are lawful under the WPL, and
reverse the court's order denying plaintiffs summary judgment on their claim
that the UTICA membership dues deductions are unlawful under the WPL.
We are also convinced the court erred by finding that the truck lease
payment deductions are lawful under subsection (b)(4) of N.J.S.A. 34:11-4.4.
The statute permits employee-authorized deductions for "[p]ayments for
company products purchased in accordance with a periodic payment schedule
contained in the original purchase agreement." N.J.S.A. 34:11-4.4(b)(4). The
court found that the lease deductions constituted payments for company
products and are authorized by the WPL. We disagree.
N.J.S.A. 34:11-4.4(b)(4) does not authorize or permit the deduction for
the truck lease payments. Even if we assumed, as defendants contend, that an
employee leasing a vehicle from an employer constitutes the purchase of the
employer's product, 8 the undisputed facts establish plaintiffs did not lease the
8
It is unnecessary that we consider or decide the merits of defendants' claim
that, under the circumstances presented, a lease of a vehicle from an employer
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29
trucks from defendants. For whatever reason, VMT transferred its rights to lease
the trucks to Lease Rite and, thus, as a matter of undisputed fact, any purported
product plaintiffs allegedly purchased through their sublease was from Lease
Rite and not defendants. See N.J.S.A. 34:11-4.4(b)(4). We reverse the court's
orders granting defendants summary judgment on plaintiffs' claim the lease
deductions violated the WPL and denying plaintiffs' motion for summary
judgment on their claim the lease deductions were unlawful under the WPL.
In sum, we affirm the court's orders finding plaintiffs are employees under
the WPL. We vacate the court's orders granting defendants summary judgment
on their claim that the insurance deduction does not violate the WPL and
denying plaintiffs' claim the insurance deduction violates the WPL and remand
for further proceedings on that issue. We reverse the court's orders granting
defendants summary judgment on their claims that the UTICA membership dues
and lease payment deductions are lawful under the WPL and denying plaintiffs'
motion for summary judgment on their claim that the UTICA membership dues
deduction and lease payment deductions violate the WPL. We remand those
constitutes the purchase of the employer's "company products" under N.J.S.A.
34:11-4.4(b)(4).
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claims for further proceedings on the issue of damages. On remand, the court
shall also consider and decide plaintiffs' request for class certification.
Affirmed in part, reversed in part, vacated in part, and remanded for
further proceedings. We do not retain jurisdiction.
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31