A federal judge has dismissed a putative class action against Northwestern Mutual filed by a longtime insurance agent who claimed the company improperly classified him and his counterparts as independent contractors…[Senior Judge] Martini wrote in his May 6 opinion: “Because the court holds that the undisputed facts support a finding that defendants have met their burden on each of the three requirements of the ABC Test, the court need not address defendants’ statutory argument regarding the incorporation of the NJUCA into the NJWPL nor defendants’ argument regarding plaintiff’s consent to the ‘deductions’ he claims were impermissible under New Jersey law.”
The ABC test presumes an individual is an employee unless an employer can show that: A) that person is free from direction relating to performance of service; B) That service is either outside the usual course of the business or performed outside of the normal place of business; and C), the individual is routinely engaged in an independently established trade, occupation, profession or business.
Tackling part A, Martini said, “The court is unwilling to find that, by promulgating certain rules to ensure regulatory compliance, Northwestern exercised control and direction sufficient to fail Part A of the ABC test. Were that so, any business operating in a regulated industry would necessarily no longer be able hire workers under an independent contractor relationship unless it was willing to risk regulatory non-compliance.”
He added, “Defendants have also met their burden under Part B under either of the alternative methods of satisfying that prong. As to the course-of-business method, the uncontroverted testimony demonstrates that Northwestern does not ‘sell’ insurance.”
As for part C, Martini said Walfish did not contest Northwestern Mutual’s argument that it met its burden. And even after the termination of Walfish’s association with Northwestern, Fred Walfish Insurance continued “’to exist independently of and apart from the particular service relationship,’” the judge said.
“The undisputed facts demonstrate that plaintiff was free from control and direction in the sale of their insurance products, performed his services outside the normal place and course of defendants’ business, and continued Fred Walfish Insurance after the termination of his association with defendants,” Martini said. “The Court thus finds that Plaintiff was an independent contractor.”