Fleet Management News & Business Info | Commercial Carrier Journal
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LEADING NEWS, TRUCKING MARKET CONDITIONS AND INDUSTRY ANALYSIS F acing a pair of lawsuits over worker misclassification, inter- modal giant Hub Group Inc. will be converting its drayage drivers in California from independent contractors to employees, the $3.4 billion company reported. In an investor filing with the U.S. Securities and Exchange Commission, the Oak Brook, Ill.-based company stated that its California contract drivers were classified properly. Nonetheless, noting that lawsuits are "expensive, time-consuming and could interrupt our business opera - tions," the company also reported it has made offers to settle lawsuits against subsidiary Comtrak Logistics, now known as Hub Group Trucking. Hub Group estimates the settle - ment offer, if every driver accepts, will come to $9.5 million, with another $1 million for associated legal and transition costs. In another California case, A federal court in the state ruled last month that a lawsuit brought by drivers against Wal-Mart Transportation may proceed as a class-action lawsuit. The plaintiffs claim that between 1993 and now, they did not receive the minimum wage required by state law, nor were they allowed to take their state-required meal and rest breaks. – Kevin Jones A federal appeals court last month ruled that certain FedEx Ground drivers in California between 2000 and 2007 were classified incorrectly as independent con- tractors and should have been classified as employees of the company, making them eligible for such state-required benefits as overtime compensation, rest periods and more. The 9th Circuit Court of Appeal – the last stop before the Supreme Court – issued the ruling in the class-action suit that covers about 2,300 drivers that worked for the company in that time period, the plaintiffs' attorneys said. Circuit Judge W. Fletcher issued the majority opinion in the case, overturning a lower court's ruling in FedEx Ground's favor, saying that the drivers' contractor status did not stand up to California's "right-to-control" test, thereby mak- ing the plaintiffs employees of the company. Judges Stephen Trott and Alfred Goodwin, who heard the case with Fletcher, concurred. FedEx Ground is seeking a review of the decision. "We fundamentally disagree with these rulings, which run counter to more than 100 state and federal findings – including the U.S. Court of Appeals for the D.C. Circuit – upholding our contractual relationships with thousands of independent businesses," said Cary Blancett, FedEx Ground's senior vice president and general counsel. "The operating agreement on which these rulings are based has been significantly strengthened in recent years," she said, referring to a new contracting model FedEx started using in 2011. The company has taken "a number of steps in recent years to enhance its operating agree- ments with the independent businesses that contract with the company," FedEx Ground said. The 9th Circuit court's ruling stems from FedEx Ground's control over the drivers in question, according to court documents. The company required a certain amount of on-duty time each day, deter- mined their pay relative to a per-stop and per-day formula, required them to wear FedEx uniforms, required certain facial hair configurations and required them to drive FedEx-branded trucks. The drivers did have to provide the truck, but it had to be white, be a certain type of truck, have certain dimensions and have a FedEx logo. The 9th Circuit ordered the case be sent back to a lower court to determine the amount to award the plain- tiffs and the class. – James Jaillet Scan the QR code with your smartphone or visit ccjdigital.com/news/subscribe-to-news- letters to sign up for the CCJ Daily Report, a daily e-mail newsletter filled with news, analy- sis, blogs and market condition articles. COMMERCIAL CARRIER JOURNAL | OCTOBER 2014 9 Hub Group changes driver model in California Court says FedEx Ground drivers are employees, not contractors The court ruled the drivers' contractor status with FedEx Ground did not stand up to California's "right-to-control" test.