XPO unit, California workers propose $5.5 million settlement to end classification fight

The last-mile delivery unit of XPO Logistics, Inc. (NYSE:XPO) and a class of nearly 3,800 workers under contract with the XPO unit’s trucking service providers have agreed to a $5.5 million settlement to resolve allegations the unit violated California labor laws by denying the workers proper minimum and overtime wages, meal and rest breaks.

The proposed settlement, which now awaits approval by a federal district court in California, would end a nearly three-year legal fight between the unit and the workers. Under the settlement’s terms, each class member will receive $931, while plaintiffs’ attorneys will be awarded $1.4 million in fees. The settlement was reached during mediation last February.

The dispute stemmed from the class’ allegation that the unit effectively employed the workers because it controlled how they conducted their day. However, attorneys for the class, which consists of 1,981 drivers and 1,781 helpers, said in a motion filed August 16 that there was no guarantee that the court would concur. Because an adverse ruling would destroy their case, reaching a settlement became a more pragmatic option, the attorneys said.

The validity of the workers’ claims rested on proving the XPO unit was their employer, an uphill battle considering it contracts operations to outside trucking firms that hire, fire, pay and schedule the workers. XPO Last-Mile could persuasively argue that the liability would turn on whether the contractors had meal and rest break policies in effect, not on whether the unit did, the plaintiffs’ attorneys admitted.