The third circuit recently ruled that in wage theft cases brought by your contingent workers, the ABC test applies, JD Supra reported.

The Third Circuit’s ruling in Bailey v. Millennium Group of Delaware reinforced that employers need to pay careful attention to all workers within their facilities, including those hired by independent contractors to perform certain business functions, JD Supra reported. If questions arise regarding unpaid wages, employers could face lawsuits brought by these workers and will need to satisfy every prong of the ABC test or face serious consequences for misclassifying them as independent contractors.

The case. In the case, Anthony Bailey, who was hired by Millennium Group to work at a facility owned by NRG Energy, was fired for breaching security protocols after opening a locked door for an employee who had been terminated earlier that same day.

Bailey sued Millennium and NRG alleging that his termination was motivated by racial discrimination, in violation of Title VII of the Civil Rights Act of 1964 and the New Jersey Law Against Discrimination. He later amended his suit, alleging he had an employment relationship with NRG and that NRG violated the New Jersey Wage Theft Act.

Bailey’s discrimination claims were dismissed by the district courts, which found that at no point did he raise an inference of racial discrimination or allege that any specific individual took any discriminatory action against him. The district court also found Bailey had not sufficiently alleged that he had an employment relationship with NRG.

While the Third Circuit concurred with the lower court’s rulings on the discrimination claims, it found that the district court failed to use the proper test — the ABC test — to determine employment status for the wage theft claim. The Third Circuit noted that the Supreme Court of New Jersey had already established that the ABC Test was not coextensive with the test applied under Title VII and NJLAD to evaluate the existence of an employment relationship.

The judges also noted that the ABC test presumes that an individual is an employee and places the burden on the employer to prove otherwise. Accordingly, the Third Circuit vacated the dismissal of Bailey’s WHL claim and remanded it back to the District Court to reconsider under the appropriate analysis.