J.B. Hunt reportedly settles long-running California wage lawsuit for $15 million

JB Hunt truck.jpg

Months after the U.S. Supreme Court refused to take up its argument that drivers in California should be exempt from the state’s meal-and-rest break laws, and just weeks after a federal judge sided with the company and decertified a class of about 11,000 current and former drivers in the suit, J.B. Hunt has reportedly reached a $15 million settlement with the drivers, according to Law360.com.

The suit, Gerardo Ortega et al v. J.B. Hunt Transport Inc., was originally filed in 2007 and alleged that J.B. Hunt failed to pay drivers in the state correctly under California wage laws. In California, drivers are entitled to a 30-minute break for every five hours worked. The carrier argued that the law was preempted by a 1994 federal law that said states could not circumvent interstate trucking laws.  

The debate over this particular 1994 law continues as trucking interests have tried unsuccessfully for years to get a bill passed – the Denham Amendment – that would nullify California and other state’s attempts to set their own laws.

Earlier this year, J.B. Hunt (NASDAQ: JBHT) asked the U.S. Supreme Court to intervene in the lawsuit via a writ of certiorari. The high court declined to hear the case. J.B. Hunt, though, caught a legal break in August when a federal judge decertified the class six weeks before the case was set to go to trial. Now comes a settlement for $15 million.

The suit alleged that J.B. Hunt’s “activity-based pay” (ABP) model did not compensate drivers correctly, resulting in a failure to pay minimum hourly wages as well as meal and rest break violations under California law. The suit said that tasks such as pre- and post-trip inspections, time waiting at customer locations and other activities were compensated at a lower rate. Drivers were paid a piece-rate formula, the suit alleged, under which they were received mileage pay and separate pay rates for non-driving tasks and detention.

The federal judge in the Central District of California said the company’s piece-rate compensation system was not uniform across the class and in fact some drivers in the class received straight hourly pay, weekly pay, or other compensation methods.

“The Court emphasized that the only way to glean which pay plan applied to the each class member was to examine each individual driver’s payroll records and activity logs, and such individual issues predominated and were not appropriate for class adjudication,” according to an explanation of the decision on Lexology.

Lexology also explained that the court found the J.B. Hunt reasonably believed the Federal Aviation Administration Authorization Act of 1994, under which federal law would preempt state laws on worker rules, was the law under which it should operate.

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“Further, regarding those meal breaks, the named plaintiffs admitted they could take a meal break whenever they wanted, and the court found the company was not required to ‘police’ such breaks,” Lexology wrote. “The rest break claims, however, survived since the ABP formula did not separately list out the amount paid, if any, for rest breaks.”

J.B. Hunt has not responded to a request for comment on the settlement.