Worker Misclassification Lawsuit Ends in $3.7 Million Jani-King Settlement

A worker misclassification class action lawsuit has been resolved, with the defendant agreeing to pay $3.7 million to the plaintiffs as part of the Jani-King settlement.

Jani-King was accused of misclassifying approximately 300 of its employees as independent contractors, taking deductions from their paychecks that were allegedly in violation of Pennsylvania wage and hour statutes.

Case Background

The lawsuit was originally filed in 2009 by three former employees, one of who has since died. The complaint named Jani-King, Inc., a commercial cleaning franchise operating in the Philadelphia area. It was another six years before the lawsuit was certified as a class action.

The lead plaintiffs alleged that Jani-King sold them rights to its cleaning service franchise, which required franchisees to establish themselves as a corporate entity, pass a background check, make an initial investment of between $14,625 and $142,750 and sign the company’s franchise agreement. In return, Jani-King guaranteed franchisees a minimum amount of gross sales in cleaning services within a certain timeframe. Franchisees were also granted licenses to use the Jani-King trademark, the company’s proprietary cleaning system, and support with advertising, sales, and billing.

Once a franchisee’s business was in operation, Jani-King allegedly imposed numerous requirements and procedures. Plaintiffs claimed that “Jani-King’s universal policies and procedures were so controlling that they created an employment relationship.” As a consequence of this alleged relationship, plaintiffs say the defendant took illegal deductions from their wages.

Pennsylvania’s Wage Payment and Collection Law (WPCL)

The law under which this worker misclassification lawsuit was filed is Act No. 329, which has been in force for nearly six decades.

This Pennsylvania wage and hour law does not specifically define what constitutes an “employee,” nor does the law apply to independent contractors. When the issue of worker misclassification arises, it is up to the court to determine whether or not the worker is an employee or an independent contractor. The court’s decision is based on a number of factors, including:

• worker control over how tasks are carried out
• terms of any agreements
• worker’s degree of independence
• manner of payment

In general, there is a “right of control” test that is applied to worker misclassification cases. If a company dictates the manner, schedule and conditions under which a worker carries out this or her duties, that person is considered to be an employee, regardless of any contractual agreements. If on the other hand, the worker has the right to control over how duties are performed – regardless of whether or not they choose to exercise that right – he or she is considered an independent contractor.

A Satisfactory Settlement?

Both the judge in the case and plaintiffs’ counsel expressed satisfaction with the worker misclassification settlement. According to U.S. District Judge R. Barclay Surrick, negotiating the settlement was facilitated by an “experienced mediator” in addition to lawyers on both sides.

Defendant Jani-King has not commented on the case, but under the terms of the settlement, denies “any liability or wrongdoing of any kind associated with the alleged claims.”

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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.