Lawsuits against New Prime over the issue of contractor vs. employee status are about to be brought to a close with a $28 million settlement.
Two class action lawsuits against New Prime over the issue of driver classification and the company’s pay practices toward workers it deems as independent contracts will be the basis of that settlement that the parties have agreed to, according to a July 20 filing in Federal District Court in Massachusetts.
The more well-known of the two cases is that filed by New Prime driver Dominic Oliveira back in 2015. That case made it to the U.S. Supreme Court and in a ruling last year, the Court unanimously decided in favor of Oliveira that the Federal Arbitration Act did not compel his complaints and actions against New Prime to go to arbitration. It did not rule on the question of whether Oliveira was an independent contractor or an employee, but the denial of forcing that question to arbitration rather than litigation was seen as a significant decision. The vote was 8-0.
The other case in the $28 million settlement is a suit filed by a New Prime driver Rocky Haworth over some of the same issues. The Haworth suit was filed soon after the January 2019 decision in favor of Oliveira.
The $28 million will be distributed to a wide range of New Prime employees and contractors. The settlement document filed in the court in Massachusetts lists the possible recipients of the money as “all individuals who have attended training to become truck drivers for Prime and/or have driven for Prime as employee drivers and/or as independent contractor drivers who have leased their trucks through Prime.” The period covered by the settlement is October 2, 2012 through May 8, 2020, though there is a separate group of individuals who attended training in Missouri for New Prime between March 4 and May 8, 2020.
Attorney fees in the case will be one-third.
New Prime does not admit any liability in the settlement. The settlement “shall (not) be construed as evidence that any party has prevailed in this matter or that any alleged damages exist,” the settlement document says.
Paycheck went negative
In an earlier action, a document spelled out the issues at the heart of Oliveira’s action. “In May 2013, when Oliveira returned from his trainee driving, New Prime told Oliveira that he could make more money if he became an independent contractor,” the court summation said. “Oliveira then signed a document titled “Independent Contractor Operating Agreement.” In that document was a clause that compelled arbitration in the case of a dispute.
Oliveira’s time as both an independent contractor and as a New Prime company driver, according to the document, saw his pay deducted by $200 per week for expenses incurred during an apprentice program, lease payments on the truck and payments for other equipment that Oliveira was instructed to purchase. “On multiple occasions, Oliveira’s weekly pay was negative after spending dozens of hours on the road,” the document said. “Oliveira brought this class action in March 2015, arguing that he and other New Prime drivers were not paid the minimum wage under federal and state law.”
The Supreme Court decision that said New Prime could not compel arbitration came after lower courts had reached the same conclusion, based in part on a transportation/interstate commerce exception in the FAA.
Imre Szalai, writing in the Emory Law Journal last year, described the Oliveira decision as “landmark,” saying it “stands apart as representing the first decision in several decades where the Supreme Court has ruled in favor of workers and rejected an expansive interpretation of the (FAA), a statute which plays a central role in our civil justice system.”