Cremation Lawsuit Shines Light on Employee Misclassification

A class action lawsuit proposed by sales representatives selling pre-death cremation services has shined a light on a common problem among several industries in today’s world—employee misclassification.

Plaintiffs Nicole R., Jonathan B., and James D. presented in December of 2018, a complaint against four defendants engaged in the selling of these cremation services—SCI Direct Inc., Trident Society Inc., Neptune Society of America Inc., and Neptune Management Corp.

According to the lawsuit, the companies conspired to gain a competitive edge by saving labor costs. They purportedly consulted with counsel familiar the intricacies of the labor code and pushed the envelope through employee misclassification. Sales representatives were signed on as independent contractors while retaining many markers of the status of employee.

This allowed the defendants to withhold meal breaks, rest breaks, overtime pay, and other benefits allowed employees by law.

Yet, the plaintiffs indicate that the businesses exerted maximum control over them in terms of schedule, location, unpaid mandatory meetings and training, and the threat of termination. They claim that all sales representatives were treated in this fashion, qualifying this complaint as a class action.

What Are the Factors that Determine Whether One is an Employee or Independent Contractor?

According to human resources publication SHRM, the California Supreme Court adopted a basic three-factor test known as the ABC test to determine if a worker qualifies to be an independent contractor. Without all of these factors met, independent contractor status is likely an attempt at employee misclassification for cost-saving purposes.

The three factors are:

• The worker must perform duties that are outside the range of the normal course of business activities. A roofer hired to fix the roof of a retail store is outside the range of normal activities for the store, a salesclerk that handles and sells merchandise within the store is not.
• The “independent contractor” must be involved in an independent trade, business, or occupation like the work performed for the hiring company. A history of performing similar work, a business license or other credentials, are all examples of documentation that might support this fact.
• The worker must operate independently and without control and interference by the hiring business. There can be no direction for the performance of work or establishment of schedule to get work accomplished.

According to the California Department of Industrial Relations and quoted in the lawsuit, a previous “economic realities” test adopted by the California Supreme Court and known as the Borello test also outlines what the independent contractor’s situation should look like.

Some of the other issues brought up by the Borello test include whether or not the business or the tools to do the job and the place and whether the work is paid by job or by time put in.

As indicated in a May 22, 2019 Law360 article, a federal judge in California has allowed a potential settlement of $1.7 million to go forward between the defendants and the plaintiffs in the cremation employee misclassification class action. It is expected that the deal will be split evenly among 240 class members that allegedly suffered wage theft and resolve claims among the parties.

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Even if you are classified as an independent contractor, you may be entitled to minimum wage, overtime pay, reimbursement for expenses, and meal and rest breaks, among other employee benefits.

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This article is not legal advice. It is presented 
for informational purposes only.