Diakon Logistics Inc. must face a certified class of delivery drivers who allege the company misclassified them as independent contractors, after the Seventh Circuit rejected a lower court’s conclusion as to which state’s employment laws apply.

Although the delivery and installation firm’s contracts with the Illinois-based workers specify that Virginia law governs their agreements, Illinois law “governs payment for work in Illinois regardless of what state’s law governs other aspects of the parties’ relations,” the US Court of Appeals for the Seventh Circuit said, reversing the lower court’s grant of summary judgment in Diakon’s favor.

Two delivery drivers accused ...

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