There have been many cases in which trucking companies have classified drivers as independent contractors, because this is common within the industry. However, as these cases have shown, if the relationship is not established according to the legal principles applicable to them, and if, most importantly, the drivers are not in their own independent business, a lawsuit, generally a class action, follows with mixed (at best) results for the employer.
Following this trend is the recent class action brought by drivers against Cardinal Logistics Management Corporation, alleging misclassification. The drivers are now asking a federal court to approve a $3.75 million dollar settlement in the case, that is entitled Smith v. Cardinal Logistics Management, Corporation, filed in the U.S. District Court for the Northern District of California.
The plaintiffs claimed they were employees, as opposed to independent contractors. They claimed that the misclassification allowed their employer to be relieved of the obligation to reimburse the drivers for any and all employment claims. The drivers charged that the company avoided giving them statutorily required meal and rest breaks, failing to give them wage statements and not pay for workers’ compensation insurance
What is quite interesting about this case is that the plaintiffs have settled because they were evidently worried that the financial condition of the company, including an alleged “the risk of insolvency” militated that case be settled for the sum referenced above, rather than continue the action, win a possibly larger judgment, but not be able to collect on it. The plaintiffs also faced the possibility that the employer would file a motion to decertify the class, a motion that, under recent Supreme Court precedent, might have had additional clout to it.
The case has evidently led to a change in the employer’s compensation practices. It has converted a number of workers from independent contractors to employees. New drivers will also be hired as statutory employees. I believe this is a very sound decision by Cardinal. Unless an employer is fairly certain that an individual is a true independent contractor and has proof for itself that the contractor sells his services to the general public and can prove it, the odds are heavily weighted against a finding of independent contractor status.
The moral—better safe than sorry, as highlighted by the fact that the lawyers for the class are seeking more than one-million dollars in fees and expenses.