Dana Herra Feb. 16, 2016, 12:26pm

A federal class action lawsuit claims cookie and cracker maker Pepperidge Farm has exploited the workers who deliver, set up and maintain its product displays in supermarkets and other stores, treating these workers like employees, but classifying them as independent contractors, contrary to labor law.

In the lawsuit filed Feb. 12 in Chicago federal court, plaintiff Daniel Mulhern claimed Pepperidge Farm should have classified him and other sales development associates, or SDAs, as employees, not as independent contractors. Mulhern asked the court to award damages and court costs.

SDAs are responsible for delivering Pepperidge Farm merchandise to stores in their territory, stocking shelves, merchandising the products, setting up promotional displays and removing unsold product. According to the lawsuit, they have also been expected to solicit new stores and other sales locations in their territory in order to expand Pepperidge Farm’s footprint in the area.

The suit claimed the SDAs are required to sign an agreement establishing them as contractors with Pepperidge Farm, but the terms of the agreements cannot be negotiated.

The suit claimed that SDAs do not have the freedoms one would expect of independent contractors. They are not permitted to sell or sublet all or part of their route or territory without the consent of Pepperidge Farm, and they cannot act as distributors for any of Pepperidge Farm’s competitors. Pepperidge Farm determines the amount and type of product to be delivered to each customer and the retail price of those products, and does not permit the SDAs to have input on such matters. The company also sets each SDA’s delivery schedule, and expects them to visit retailers in their personal vehicle on non-delivery days to check on their inventory.

Though SDAs are generally treated as employees, Mulhern claimed their classification as independent contractors has allowed the company to charge them for expenses the company would have to absorb if they were regular employees. For example, SDAs have been required to purchase and maintain specialized handheld computer units to perform their work tasks, and to purchase or lease and insure an appropriate delivery truck. Each quarter, the company has advised SDAs how much damaged or expired merchandise they may return to the company; they are charged for returning merchandise over that amount. As contractors, SDAs also have not been eligible for benefits such as insurance, retirement plans, paid time off or overtime pay.

The average SDA would routinely work between 55 and 70 hours a week for Pepperidge Farm, the lawsuit said, making it difficult, if not impossible, for them to contract with any other clients.

The suit alleged three violations against Pepperidge Farm. In the first count, the lawsuit asserted the company violated the Illinois Wage Payment and Collection Act by charging SDAs for such things as returned merchandise and the purchase and maintenance of computer equipment. The second count alleged the company violated the Illinois Minimum Wage Law by failing to pay overtime. The third count charged the company with unjust enrichment, claiming it avoided obligations like payroll tax contributions and workers’ compensation coverage by classifying the SDAs as independent contractors and shifting the burden on to them.

The putative class covered by the suit would include all SDAs in Illinois who were under contract with Pepperidge Farm between Feb. 12, 2006, and Feb. 12, 2016.

Muhern and the putative class is represented by the firms of Freed Kanner London & Millen, of Bannockburn; Shapiro Haber & Urmy, of Boston; and Rudolph Friedmann LLP, of Boston.

The case is docketed in the U.S. District Court for the Northern District of Illinois as 16-CV-02199 Mulhern vs Pepperidge Farm.

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Organizations in this Story

Freed Kanner London & Millen LLC
2201 Waukegan Rd
Bannockburn, IL 60015

Shapiro Haber & Urmy
2 Seaport Lane
Boston, MA 02210

Rudolph Friedmann LLP
92 State Street
Boston, MA 02109

Pepperidge Farm Inc.
595 Westport Avenue
Norwalk, CT 06851

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