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Delivery Drivers Face Misclassification, Wage Violations

June 25th, 2015 Christopher Davis

Two recent settlements involving company delivery drivers have called attention to potential injustices faced by drivers, truckers, and other personnel who deliver products on behalf of businesses.

On June 11, a New York federal court filing disclosed that Fresh Direct LLC will pay more than $1.2 million to current and former delivery drivers employed by the grocery company. The settlement is in response to a class action lawsuit that claims that the company withheld $23 million in wages and gratuity. The plaintiffs, a group of delivery workers, argued that the delivery fee that Fresh Direct charged should have been treated as a driver gratuity. They claimed that the fee, which was charged separately from the fuel surcharge and other fees, misled customers, who were under the impression that the extra charge went towards the drivers’ pay. By keeping all delivery fees, the suit alleged, Fresh Direct had wrongfully denied the delivery drivers overtime wages under the Fair Labor Standards Act. According to the terms of the settlement, all workers employed by the company between March 2008 and March 2015 are eligible for cash-redeemable grocery vouchers whose value correlates to the length of their employment period.

One day after the Fresh Direct case filing, it was announced that FedEx Corp. will also pay out millions to its company drivers, reimbursing the workers $228 million in compensation for lost wages and benefits. In the FedEx case, drivers in California claimed that the company misclassified them as independent contractors, costing them overtime wages and the additional benefits that come with W-2 employee status. The settlement, while tentative, will reimburse over 2,300 California truck drivers who worked for the company between 2000 and 2007. In a statement, an attorney for the plaintiffs said the settlement is one of the largest employment deals in recent years. “[The settlement] sends a powerful message to employers in California and elsewhere that the cost of independent contractor misclassification can be financially punishing, if not catastrophic, to a business,” said Beth Ross of Leonard Carder LLP.

The latest in a series of worker misclassification claims across a slew of national companies, the FedEx settlement came about after the Ninth Circuit Court determined that FedEx’s operating agreement gave the company broad authority and control over its delivery drivers. For instance, the company required drivers to maintain trucks of a certain size and condition, and mandated that deliveries take place within a certain geographic area and time window. “Accordingly,” wrote U.S. Circuit Judge William A. Fletcher in the opinion, “we hold that plaintiffs are employees as a matter of law.”

Even if delivery drivers are already classified as employees, such workers still face potential abuse, as the Fresh Direct case demonstrates. Drivers and delivery workers can help prevent employee abuse by remaining aware of their workplace’s policies and ensuring that their employers are abiding by wage and hour laws.