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Nj Employee Vs Independent Contractor

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Nj Employee Vs Independent Contractor document sample

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									SMITH MULLIN, PC
By: Neil M. Mullin, Esq.
200 Claremont Avenue
Montclair, NJ 07042
www.smithmullin.com
(973) 783-7607
fax: (973) 783-9894
nmullin@SmithMullin.com
NMM-6020
Co-Counsel for Class Plaintiffs

NIEDWESKE BARBER, P.C.
By: Kevin E. Barber, Esq.
98 Washington Street
Morristown, New Jersey 07960
www.N-BLaw.com
(973) 401-0064
fax: (973) 401-0061
kbarber@N-BLaw.com
KEB-8629
Co-Counsel for Class Plaintiffs

                             UNITED STATES DISTRICT COURT
                                DISTRICT OF NEW JERSEY


MICHAEL D. MARTIN, SUNDER                          Civil Action No.:
MALKANI, VINOD P. PATEL, and others
similarly situated,
                                                         CLASS ACTION COMPLAINT
               Plaintiffs,
                                                                Jury Trial Demanded
v.

PUBLIC SERVICE ELECTRIC & GAS CO.,
INC., EMPLOYEE BENEFITS COMMITTEE
OF PUBLIC SERVICE ENTERPRISE
GROUP, INC., ABC CORPORATIONS 1 - 30
(fictitious corporate defendants),

               Defendants.

       Named Class Plaintiffs, Michael D. Martin (“Plaintiff Martin”), Sunder Malkani

(“Plaintiff Malkani”), and Vinod P. Patel (“Plaintiff Patel”) and others similarly situated
employees (“the Class”), through their attorneys Smith Mullin, P.C., 200 Claremont Avenue,

Montclair, New Jersey, 07042, and Niedweske Barber, P.C., 98 Washington Street, Morristown,

New Jersey, 07960, and by way of Complaint against Defendants, state:

                                STATEMENT OF THE CASE

       This class action is brought by former and current employees of Public Service Electric &

Gas Company, Inc. (“PSE&G”), who were intentionally misclassified as “independent

contractors” when, in fact, they functioned as and should have been classified and treated as

common-law employees to recover ERISA pension and employee welfare benefits.

       Defendant PSE&G sought to evade ERISA by entering into a relationship with various

outsourcing companies to provide “independent contractors”, who accomplished a variety of

vital and necessary tasks and functions for Defendant PSE&G, thereby providing a cover to deny

the individuals ERISA rights and privileges enjoyed by similarly, situated employees. By this

intentional misclassification of Plaintiffs and potential class members as “independent

contractors”, Defendants wrongfully denied them participation in valuable pension and

employment welfare benefit plans.

       This class action seeks to remedy the violations by Defendants PSE&G and its Employee

Benefits Committee (“EBC”) of ERISA’s strict fiduciary duties and its prohibitions against

interfering with attainment of rights under ERISA-governed pension and employee welfare

benefit plans. It seeks to strip away the protective covering of the “independent contractor” label

and obtain certain ERISA benefits for Plaintiffs and the potential class members that Defendant

PSE&G provided for its employees.




                                                2
       As set forth herein, Plaintiffs and potential class members were common-law employees

of Defendant PSE&G and, therefore, entitled to the full compliment of ERISA benefits (so long

as they met eligibility criteria) as other similarly situated employees of Defendant PSE&G.

                                JURISDICTION AND VENUE

       1.      This Complaint arises under Sections 404, 405, 502(a), and 510 of ERISA, 29

U.S.C. §§ 1104, 1105, 1132(a) and 1140 and, therefore, this Court has jurisdiction over the

subject matter of this action by operation of 29 U.S.C. § 1132(e)(1) and 28 U.S.C. §§ 1331.

       2.      Venue is proper in this district under 29 U.S.C. § 1132(e)(2) and 28 U.S.C. §

1391(b), because the duty and violations alleged herein occurred in this district and Defendant

PSE&G does business and is found in this district.

                                         THE PARTIES

       3.      Plaintiff Martin was hired as an employee by Defendant PSE&G in the fall of

1981. Plaintiff Martin was employed by Defendant PSE&G and its affiliated entities in a variety

of capacities including the design department, controls department, and -- when his employment

ended on October 4, 2004 -- in the facilities department as a project designer.

       4.      Plaintiff Malkani was hired through an outsourcing firm by Defendant PSE&G on

August 21, 1989. Plaintiff Malkani’s affiliation with this outsourcing firm ended in April 22,

2002. From April 23, 2002 through June 24, 2005, Defendant PSE&G directly hired Plaintiff

Malkani as an employee. When Plaintiff Malkani’s service with Defendant PSE&G concluded

on June 24, 2005, he was working in the project engineering department as a construction staff

engineer.




                                                 3
       5.      Plaintiff Patel was hired as an employee through various outsourcing firms by

Defendant PSE&G from 1986 to 1999 and from February 2, 2004 through September 30, 2005.

Plaintiff Patel performed electrical design tasks for Defendant PSE&G.

       6.      Defendant PSE&G is a publicly held company registered in New Jersey with its

principal place of business located in Newark, New Jersey. Defendant PSE&G provides energy

products and services to consumers in the Northern New Jersey area.

       7.      Defendant PSE&G is the named fiduciary and statutory administrator of the

Defendant PSE&G pension and employee welfare benefit plans.

       8.      Defendant PSE&G also has functioned during a relevant period of time as the

appointing and supervising authority for Defendant Employee Benefits Committee (“EBC”) of

its pension and employee welfare benefit plans and otherwise has exercised discretion and

control over the administration and management of Defendant PSE&G’s pension plan and

Defendant PSE&G’s 401K plan. Defendant PSE&G thus has been and is currently a fiduciary,

within the meeting of § 3 (21)(A) of ERISA, 29 U.S.C. § 1002(21)(A).

       9.      As the named fiduciary and statutory administrator of its pension and employee

welfare benefit plans, Defendant PSE&G has the strict ERISA fiduciary duties to act with

undivided loyalty; to act solely in the interest of participants and beneficiaries of the plans; to

follow and implement the terms of the plans as written; and to otherwise comply with the law.

       10.     Defendant EBC is the named fiduciary and statutory administrator of Defendant

PSE&G’s pension plan, a qualified, non-contributory, defined benefit pension plan.




                                                  4
       11.     Defendant EBC had and continues to have responsibility for the administration of

the plan, including the strict ERISA administrative duties to act with undivided loyalty; to act

solely in the interest of participants and beneficiaries of the plan; to follow and implement the

terms of the plans as written; and to otherwise comply with the law.

       12.     Corporations 1 - 30 are fictitious defendants who supplied staffing personnel to

Defendant PSE&G during the relevant period of time. Upon information and belief, these

Defendants conspired and acted in concert with Defendants to wrongfully classify employees as

independent contractors so as to deny these employees ERISA benefits and protections provided

to similarly situated Defendant PSE&G employees.

                              CLASS ACTION ALLEGATIONS

       13.     Plaintiffs file this Complaint as a class action pursuant to Rule 23 of the Federal

Rules of Civil Procedure on behalf of the following class:

               All persons who are current or former workers for PSE&G who are
               classified by the company as independent contractors, not as
               employees, at any time from January 1, 1981 to the present and
               who worked at least 1000 hours during any given year.

       14.     The members of the class are so numerous that joinder of all class is impractible.

The exact number of class members is currently unknown to Plaintiffs. However, the 2003

Internal Revenue Service Form 5500 Annual Report, Schedule T for Defendant PSE&G

identifies 6,779 independent contractors, leased employees and other workers who were

classified by the company as “excludable” and therefore potential members of the employee

welfare benefit plans. Accordingly, the potential class members are sizable.

       15.     Common questions of law and facts exist as to all members of the class and these

questions predominate over any questions solely affecting individual members of the class.

Among the questions of law and facts common to the class are:



                                                 5
               a.      Whether the members of the class are/were employees under applicable

       legal tests while they worked for Defendant PSE&G, and whether Defendants’

       misclassification of them as independent contractors violated ERISA;

               b.      Whether the members of the class are/were employees, who are/were

       eligible to participate in Defendant PSE&G’s ERISA employee welfare benefit plans;

               c.      Whether the members of the class are/were wrongfully excluded from and

       deprived participation in Defendant PSE&G’s ERISA pension and employee welfare

       benefit plans, and whether Defendants breached their strict ERISA fiduciary duties by

       misclassifying Plaintiffs and potential class members as independent contractors or by

       otherwise failing to notify them of their eligibility to participate in Defendant PSE&G’s

       pension and employee welfare benefit plans and failing to enroll them in the pension and

       employee welfare benefit plans in which they were entitled to participate; and

               d.      Whether Defendants discriminated against Plaintiffs and potential class

       members so as to interfere with their attainment of and participation in rights and benefits

       under Defendant PSE&G’s ERISA pension and employee welfare benefit plans.

       16.     Plaintiffs are members of the class and their claims are typical of the claims of the

potential class members.

       17.     Plaintiffs will fairly and adequately protect the interest of the potential class

members and have retained counsel who are competent and experienced in ERISA and

employment litigation. Plaintiffs do not have interests that are antagonistic to, or in conflict

with, the potential members of the class.




                                                  6
        18.     Class certification is appropriate under F.R.Civ.P. 23(b)(1)(B) and F.R.Civ.P.

23(b)(2) because adjudication with respect to individual members of the class would as a

practical matter be dispositive of the interest of other non-party members, and Defendants have

acted on grounds generally applicable to the class, making appropriate declaratory, injunctive

and other equitable relief available on a class wide basis.

        19.     Class certification also is appropriate under F.R.Civ.P. 23(b)(3) in that common

issues of law and fact predominate over any individual issues. A class action is superior to other

available methods for the fair and efficient adjudication of this controversy, since joiner of all

members is impractible. Furthermore, the expense and burden of individual litigation makes it

impractible for the members of the class to pursue individual litigation in order to vindicate their

rights. Plaintiffs are not aware of any problems that would militate against the maintenance of

this action as a class action.

                                  FACTUAL BACKGROUND

        20.     Defendant PSE&G promotes itself on its website (www.pseg.com).

        21.     Upon information and belief, Defendant PSE&G characterized the Plaintiffs (and

other potential members of the class) as independent contractors and not employees to avoid the

significant financial costs of providing these employees with pension and employee welfare

benefits to which they were entitled, and to mislead these employees into believing that

Defendant PSE&G could exclude them from participation in their valuable ERISA pension and

employee benefit plans.

        22.     These so-called independent contractors, including Plaintiffs, actually were

treated in the same in all material respects as similarly situated employees of Defendant PSE&G;

that is, they performed the same job duties; they were subject to the same employer supervision;




                                                  7
and they were subject to same employer control over the manner and means in which their work

was performed.

        23.    Plaintiffs and potential class members worked side-by-side with similarly situated

employees of Defendant PSE&G. They performed the same tasks, under the same direct

supervision of the same company managers utilizing the same tools and resources.

        24.    Supervision of named Plaintiffs and potential class members was by Defendant

PSE&G managerial staff. These managers controlled the means and manner of their work and

production. All work performed by independent contractors was ordered by Defendant PSE&G

managers and the methods utilized by independent contractors to complete this work was

authorized, ordered, or approved by those managers.

        25.    Defendant PSE&G provided all the Plaintiffs and potential class members with

the necessary materials and equipment for completion of their assigned duties, including office

space, computers and software, drafting tables, telephones, individual assigned telephone

numbers, e-mail addresses, other necessary equipment, business cards, office supplies and the

like.

        26.    Plaintiffs and potential class members were also required to work at a Defendant

PSE&G’s facility according to a schedule that was indistinguishable from the schedules of

similarly situated Defendant PSE&G’s employees and were forbidden to work in other locations

without prior company approval. In addition, Defendant PSE&G’s independent contractors were

not permitted to leave Defendant PSE&G’s facility without notifying their manager and

receiving approval.




                                                8
       27.     Plaintiffs and potential class members were required to work the same schedule

and hours as similarly situated Defendant PSE&G employees and were paid based on the time

they actually expended - - i.e., by the hour not by the completion of specific projects. Indeed,

independent contractors remained at Defendant PSE&G’s facility during working hours even if

they had no current project assigned.

       28.     Plaintiffs and potential class members were also required to seek permission from

Defendant PSE&G management for time off, just as similarly situated Defendant PSE&G

employees.

       29.     Defendant PSE&G maintained the right to assign additional projects to Plaintiffs

and potential class members due to the continuing nature of their employment. In fact, there was

no durational limits on Plaintiffs and potential class members employment as they were not hired

on a project specific basis. Defendant PSE&G assigned Plaintiffs and potential class members

multiple projects and they were often responsible for the completion of projects on a daily basis

just as similarly situated Defendant PSE&G’s employees.

       30.     Defendant PSE&G also prohibited Plaintiffs and potential class members from

hiring their own assistants to aid in the completion of projects. If projects required additional

workers, Defendant PSE&G provided additional staffing.

       31.     Plaintiffs and potential class members did not negotiate their rate of pay. Instead

Defendant PSE&G determined their salaries and unilaterally provided periodic increases in

wages, just as they did for similarly situated Defendant PSE&G employees.

       32.     Defendant PSE&G’s managers had the authority to discipline Plaintiffs and

potential class members and had the right to terminate their employment with the company at

any time without input or approval from the outsourcing firms.




                                                 9
       33.     Plaintiffs and potential class members’ work was part of and integral to the

normal business operations and activities of Defendant PSE&G and thus were indispensable to

its business success and viability.

       34.     Plaintiffs and potential class members were told when, where, and how to work - -

just as all similarly situated Defendant PSE&G employees were - - and even were held out as

employees of Defendant PSE&G to outside parties.

       35.     Defendant PSE&G maintained valuable pension and employee welfare benefit

plans that were available to persons who were classified by the company as “employees”, who

worked the specified number of hours for particular periods of time, as required under the

respective benefit plans agreements and programs. These plans and programs include a pension

plan, a 401K plan and other ERISA employee welfare benefit plans.

       36.     As of December 31, 2003, the actuarial value of Defendant PSE&G’s defined

benefit pension plan exceeded its actuarial liability by $329.7 Million.

       37.     Plaintiffs and the potential class members have been wrongfully excluded from

participating in Defendant PSE&G’s pension and employee welfare benefit programs due to

Defendants’ intentional and wrongful misclassification of them as independent contractors, and

their discrimination against them by interfering with their attainment of ERISA rights under the

respective plans.

       38.     Plaintiffs and potential class members are or were, in fact, employees of

Defendant PSE&G under the common law, ERISA’s definition of employee at 29 U.S.C. §

1002(6), and other applicable statutory and regulatory criteria. As such, they are entitled to

participate in Defendant PSE&G’s pension and employee welfare benefit plans to the extent that




                                                10
the plans did not otherwise expressly and permissibly exclude persons in their position, and so

long as they met the other eligibility requirement specified in each such benefit plan.

       39.     Plaintiffs and potential class members have been injured and damaged by

Defendants’ wrongful exclusion of them and discrimination against them from participating in

these ERISA pension and employee welfare benefit plans.

                                     COUNT I
                       VIOLATION OF ERISA’S FIDUCIARY DUTIES

       40.     Plaintiffs and the potential class members reallege and incorporate herein by

reference the previous paragraphs herein.

       41.     At all pertinent times, Defendants PSE&G and EBC acted as either the statutory

administrator, named fiduciary and/or fiduciary of Defendant PSE&G’s pension and employee

welfare benefit plans. In these capacities, the conduct of the Defendants was governed by the

strict fiduciary duties of Section 404(a) of ERISA, 29 U.S.C. § 1104(a). These fiduciary duties

include, but are not limited to, the duty to act solely in the interest of plan participants and

beneficiaries, to act with utmost loyalty to them, to administer the plans in accordance with the

written plan documents, to disclose truthful information about the plans and to identify and

enroll all persons who are identified to participate in each plan.

       42.     Defendants violated their strict ERISA fiduciary duties on a continuing basis

by, among other things:

               a.      failing to review the facts applicable to the entitlement of Plaintiffs and

       potential class members under the pension and employee welfare benefit plans and to

       correct or prevent the exclusion of these employees from the plans;




                                                  11
               b.      failing to distribute to Plaintiffs and potential class members’ documents

       relating to the pension and employee welfare benefit plans which they were entitled to

       receive under ERISA and by otherwise misleading and concealing from them the facts

       showing that they were entitled to participate in the plans; and

               c.      making misrepresentations to Plaintiffs and potential class members who

       were classified as independent contractors that they were not entitled to participate in the

       pension and employee welfare benefit plans when in fact they were entitled to participate

       in the plans.

       43.     Defendants’ intentional and wrongful conduct harmed Plaintiffs and potential

class members and, therefore, committed a continuing violation of ERISA Section 404(a) of

ERISA, 29 U.S.C. § 1104(a).

       44.     Defendants are liable for all losses that the violation caused the Plaintiffs and

potential class members.

                               COUNT II
             UNLAWFUL INTERFERENCE WITH ATTAINMENT OF ERISA
                               BENEFITS

       45.     Plaintiffs and the potential class members reallege and incorporate herein by

reference the previous paragraphs herein.

       46.     Under the terms of Defendant PSE&G’s pension and employee welfare benefit

plans, Plaintiffs and potential class members were qualified to be participants.

       47.     By reason of the intentional and wrongful conduct, Defendants on a continuing

basis took specific actions to discriminate against Plaintiffs and potential class members for the

purpose of interfering with their right to attain and participate in and receive benefits under the

respective plans.




                                                 12
       48.     Defendants acted with specific intent to interfere with this right to plan

participation and benefits.

       49.     Defendants thereby committed a continuing violation of ERISA Section 510, 29

U.S.C. § 1140 and are liable for all losses at this continuing violation caused to Plaintiffs and

potential class members.

                                 COUNT III
             CONDITIONAL CLAIM FOR RETROACTIVE BENEFITS UNDER
                                ERISA PLANS

       50.     Plaintiffs and the potential class members reallege and incorporate herein by

reference the previous paragraphs herein.

       51.     This conditional count is plead hypothetically pursuant to F.R.Civ.P. 8(e)(2).

Plaintiffs assert and pursue this conditional count only if the Court were to determine that

Plaintiffs and potential class members are entitled to retroactively obtain benefits under

Defendant PSE&G’s pension and employee welfare benefit plans.

       52.     Defendant PSE&G’s pension and employee welfare benefit plans are

arrangements governed by ERISA.

       53.     As a result of their employment with Defendant PSE&G, Plaintiffs and potential

class members were eligible to receive benefits from Defendant PSE&G’s 401K plan, pension

plan and Defendant PSE&G’s employee welfare benefit plans.

       48.     Defendants continuing intentional and wrongful misclassification of Plaintiffs and

potential class members as independent contractors had the effect of denying to Plaintiffs and

potential class members benefits to which they otherwise would be entitled under these

respective plans.




                                                 13
       54.        Defendants uniformly but wrongfully informed Plaintiffs and potential class

members that they were not eligible to receive benefits from the plans and, in so doing,

Defendants violated their duties as administrators and fiduciaries of the plans.

       55.        Defendants never allowed Plaintiffs and potential class members to apply for

benefits under the plans, and the plans do not provide to employees who are misclassified as

independent contractors any administrative procedures for challenging the denial of benefits

under the plan.

       56.        Any attempt by Plaintiffs and potential class members to obtain relief by recourse

to administrative procedures was futile, as demonstrated by Defendants continuing practice of

excluding Plaintiffs and potential class members from participating in the plans and their

continuing conduct to mislead Plaintiffs and potential class members into believing that

Defendant PSE&G lawfully could exclude them from these plans.

       57.        Proof of this improper conduct and motive is demonstrated by Defendant

PSE&G’s response to Plaintiff Martin’s administrative request for benefits. Defendant PSE&G’s

response to this request focused exclusively on Plaintiff Martin’s claimed status as an

independent contractor rather than an employee. As all potential members of the class are

situated similarly to Plaintiff Martin, each such individual is entitled to benefits notwithstanding

any claim that each member of the class has failed to exhaust his or her administrative remedies.

       58.        If they are entitled to recover actual benefits under these plans in which they

never became participants, then pursuant to § 502(a)(1)(B) of ERISA, 29 U.S.C. §

1132(a)(1)(B), Plaintiffs and potential class members are entitled to payment of all back benefits

that were intentionally and wrongfully denied to them.




                                                   14
                                  COUNT IV
             ERISA DISCLOSURE VIOLATIONS ON BEHALF OF PLAINTIFF
                                   MARTIN

       59.     Plaintiffs and the potential class members reallege and incorporate herein by

reference the previous paragraphs herein.

       60.     29 U.S.C. § 1132(c)(1)(B) specifies that a participant’s request for disclosure

must be processed within 30 days. Failure to do so is subject to monetary penalties of up to $110

per day under regulations issued by the United States Secretary of Labor.

       61.     In June 2005, Plaintiff Martin’s counsel directed requests to the Plan

Administrator and Plan’s counsel requesting certain items of disclosure.

       62.     Defendant PSE&G failed to adequately respond to Plaintiff’s request.

       63.     By letter dated July 5, 2005, Defendant PSE&G’s labor counsel replied to

Plaintiff Martin’s counsel and indicated that Defendant PSE&G would not respond to the

disclosure demand because Plaintiff Martin was never employed by Defendant PSE&G.

       64.     On July 6, 2005, Plaintiff’s counsel renewed the disclosure request and, in

addition, informed Defendant of its violation pursuant to ERISA law.

       65.     Plaintiff Martin’s counsel’s July 6, 2005 request was not processed at all.

       66.     Despite Plaintiff Martin’s good faith efforts, Defendant PSE&G failed to provide

the information ERISA requires to be provided.

                                    PRAYER FOR RELIEF

       WHEREFORE, Plaintiffs pray as follows:

               A.     That the Court certify this action as a class action under F.R.Civ.P.

       23(b)(1)(B) and 23(b)(2);




                                                15
       B.      That the Court compel Defendants to make restitution to each Plaintiff and

potential class members in an amount equal to the greater of: (a) the value of

participation in the benefit plans from which they were wrongfully excluded, or (b) the

amount of financial advantage gained by defendants as a result of their violations, and

also compel Defendants to identify and enroll in the ERISA plans all persons who are

currently eligible to participate in any plan or program but who are being misclassified by

Defendants;

       C.      That the Court enter injunctive relief to ensure that Defendants’ violations

are remedied and that appropriate procedures are established to prevent further

misclassification and exclusion of employees from benefit plans;

       D.      That the Court award Plaintiffs and potential class members costs and

expenses, pre- and post-judgment interest, and attorneys fees;

       E.      That the Court enter judgment against Defendants for disclosure penalties,

attorneys’ fees, costs of suit, interest, and any relief determined by the Court to be

equitable and just; and

       F.      That the Court grant such other relief as may be just and proper.




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