Last month, there were only a couple of legal developments in the area of independent contractor (IC) compliance and misclassification, but they were significant because two more industries — home improvement and legal services — were added to those in the crosshairs of plaintiffs’ class action lawyers. As summarized below, one of the largest gutter protection companies was targeted in Colorado by class action attorneys representing salespersons who sell gutter protection systems to homeowners. And in Tennessee, intake and client retention consultants providing services for law firms sued their company for IC misclassification. There may well be defenses to both lawsuits, and the companies sued may be party to an arbitration agreement with a class and collective action waiver. But winning these types of lawsuits can be costly, so the objective is remaining free from these types of cases. Many savvy companies have resorted to a process such as IC Diagnostics (TM), which structures, documents, and implements IC relationships in a manner that enhances IC compliance and does so in a customized and sustainable manner, limiting exposure to IC misclassification liability.
In the Courts
GUTTER PROTECTION COMPANY SUED BY SALESPERSONS IN COLORADO FOR IC MISCLASSIFICATION. One of the largest nationwide gutter protection companies, LeafFilter, has been sued in a proposed collective action lawsuit brought in a Colorado federal court by a salesperson on behalf of himself and others similarly situated. The plaintiff claims that the company violated the overtime compensation provisions of the Fair Labor Standards Act (FLSA) because of its alleged misclassification of the salespersons as ICs instead of employees. The salespeople sell gutter systems for residential housing, meet with prospective customers at their homes, inspect their existing gutter systems, and seek to convince homeowners to purchase the company’s products and services. In 2024, the plaintiff had filed an administrative claim for workers’ compensation benefits after suffering an on-the-job injury at a LeafFilter customer location. Although LeafFilter asserted in that case that the plaintiff was an IC and not an employee, the workers’ compensation judge disagreed and concluded that, “As a practical matter, aside from the fact that [the plaintiff] was responsible for his own taxes and travel expenses, [he] was functionally indistinguishable from an employee.”
In the collective action complaint filed last month in federal court, the plaintiff reiterates his claim that the salespersons have been misclassified as ICs and not employees. He alleges they are required to wear shirts and carry IDs with the company’s name and logo; are economically dependent on the company; cannot “meaningfully negotiate the charge or pay for the work they provided” or accept or decline jobs; cannot make decisions to hire others, purchase materials and equipment or rent space; do not have the opportunity for profit or loss based on managerial skills; perform an integral part of the company’s business; and are not permitted to choose the order and/or time in which the jobs were performed. The complaint also alleges that the company sets the salespersons’ schedules, supervises their performance, exercises the right to discipline the salespersons, and requires them to work over 40 hours in a workweek without paying overtime compensation. Reussow v. Leaffilter North LLC, No. 1:25-cv-01910 (D. Colo. June 18, 2025).
CONSULTING COMPANY PROVIDING LEGAL SERVICES SUED FOR IC MISCLASSIFICATION IN TENNESSEE. A consultant has filed a proposed collective action on behalf of himself and others in a Tennessee federal court against a business providing client intake and retention services within the legal industry. The consultant has claimed the company violated the overtime compensation provisions of the federal FLSA by allegedly misclassifying the consultants as ICs and not employees. The company’s website states that its mission is “to improve the profitability of your personal injury law firm by helping increase conversion of leads to intakes and signed contracts.” The collective action complaint alleges that in order to provide such services to attorneys and law firms nationwide, the company engages and directs consultants to answer inbound calls, perform initial consultations, and complete the client retention process. According to the complaint, the company allegedly exercises significant control over the consultants by requiring that they routinely work in excess of 40 hours per week (for which they do not receive overtime compensation); mandating that the consultants follow company-wide rules and policies; setting the consultants’ compensation; and requiring the consultants use the company’s computer equipment, software, and operating systems. Johnson v. Legal Answer Edge LLC, No. 3:25-cv-00615 (M.D. Tenn. June 3, 2025).
