Calif. Truck Drivers Seek Court Approval of $5M Settlement

Port truck drivers alleged they were misclassified as independent contractors

A California trucking company agreed on July 14 to a $5 million deal settling class-action claims brought on behalf of about 400 immigrant Latino and Korean drivers asserting wage and hour violations under the state labor code (Talavera v. QTS Inc., Cal. Super. Ct., No. BC501571).

The truck drivers claimed that QTS Inc. and several related companies misclassified them as independent contractors instead of employees.

As a result, the drivers said, they are due minimum wages, expense reimbursement and other benefits that are afforded to employees—but not to independent contractors—under California law.

The proposed agreement includes $1.5 million in attorney fees and a $9,000 service payment for each driver who served as a class representative.

QTS and its affiliates didn't admit to any wrongdoing in the terms of the pact. However, the parties agreed that the settlement is fair and reasonable in light of the risk and expense of continued litigation.

Ongoing Industry Dispute

The employment classification of drivers in California is a closely watched issue, especially as high-profile cases like those against ride-hailing services Uber and Lyft continue to be fiercely litigated.

Transportation companies and sharing economy proponents have argued that many drivers enjoy the flexibility that comes with being an independent contractor because drivers are free to set their own hours and to work for other companies.

However, the employment classification of truck drivers who work at Southern California ports, such as those working for QTS, has increasingly come under scrutiny.

In December 2015, the California Labor Commissioner's Office ordered Pacific 9 Transportation to pay nearly $7 million to 37 port drivers who were found to be misclassified as independent contractors.

"Unfortunately, misclassification is the port industry norm," Nicole Ochi, an attorney for the drivers in the present case, said in a statement. "Nearly two-thirds of all port truck drivers nationally are misclassified as independent contractors, resulting in an impoverished, mostly immigrant workforce," said Ochi, who works for Asian Americans Advancing Justice—Los Angeles, a nonprofit organization.

Bankruptcy Added Complication

The drivers in the QTS case claimed they were classified as independent contractors despite having no control over their schedules or assignments and despite being unable to work for other companies.

They further alleged that QTS attempted to avoid liability by filing for bankruptcy protection.

The parties reached the settlement after the drivers asked the bankruptcy court to consolidate the related entities' assets, according to a press release issued by the drivers' attorneys.

"The settlement is the first to successfully attack this dual scheme of misclassification and corporate shell games that is endemic in the port trucking industry," Ochi said.

Pending Court Approval

The $5 million pact still must be accepted by the Los Angeles Superior Court, where a hearing on the drivers' motion for preliminary approval is scheduled for Aug. 12.

For settlement purposes, the drivers' attorneys asked the court to approve a class that includes "all persons who worked as truck drivers for at least one week" for QTS, Win Win Logistics Inc. and/or LACA Express Inc. any time between Feb. 22, 2009, and March 1, 2016. The case also includes a subclass of drivers who claim they were retaliated against for refusing to sign a waiver of their legal rights.

If the court grants the motion, the drivers' attorneys will send notice of the settlement to the class members. Drivers will have an opportunity to object to the deal either in writing or during a final fairness hearing that will be scheduled by the court.

If approved, the companies will pay half of the $5 million upfront and will pay the other half in installments over a five-year period.

The deal "is the product of hard-fought arms' length negotiations reached after three years of extensive discovery and is the best outcome in the view of experienced class counsel," according to the agreement.


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