“Cutthroat.” “Toxic.” “Fear.”
Those are some of the words current and former employees of Total Quality Logistics (TQL) used recently to describe the work culture at the United States’ second-largest freight brokerage — even as TQL has said it is deeply concerned for its workers.
Ken Oaks, chief executive and co-founder of Cincinnati-based TQL, has come under fire after hundreds of employees were terminated in mid-March from the company’s 57 offices across 26 states.
Current and former employees claim “as many as 700 employees” were let go over a three-day period amid the coronavirus pandemic.
Some told FreightWaves that workers were fired because the company simply didn’t have the technological bandwidth to support all of its employees working remotely.
Sources familiar with the matter allege the mass firings were “related to issues with setting up remote access” using Citrix, the company’s virtual network, and were not the result of employee “underperformance issues,” as Oaks and Tom Millikin, corporate communications manager of TQL, told FreightWaves at the time.
The exact number fired hasn’t been confirmed. Millikin told FreightWaves in a statement on Monday that TQL, whose website states it has more than 5,000 employees, doesn’t “comment on employee matters.”
Several current TQL employees reached out to FreightWaves to defend their former colleagues, saying many of those recently fired were meeting or exceeding sales goals but became “casualties of the coronavirus pandemic,” while others suggested greed was the motivating factor.
“I stopped counting at around 300, but I heard there were many more,” said one TQL employee, who didn’t want to be named for fear of retaliation.
A former employee claims she was hitting her sales goals and making her allotted number of daily cold calls when she was fired on March 18. She says she wasn’t “put on goals,” a strategy employees say TQL management uses to help struggling brokers boost their sales numbers if they aren’t “hitting their target.”
“I was caught completely off guard,” the source, who didn’t want to be named, told FreightWaves soon after the firings. “When I asked my manager why, I was told the company needed to ‘trim headcount’ to make sure there was enough server capacity for remote employees because our system kept crashing.”
TQL has denied suggestions that the firings were linked to server capacity issues.
“No other internal or external factors played a part in these decisions,” Millikin told FreightWaves around the time of the dismissals.
‘Casualties of the coronavirus’ — and protecting the bottom line
Seemingly overnight, some former TQL employees claim, they became “casualties of the coronavirus,” saying the company “put profits over people.”
As federal and state health agencies urged companies to practice social distancing and allow employees to work remotely if possible, some TQL employees say that wasn’t an option if they wanted to keep their jobs or remain in a leadership role.
One source says Oaks told managers he had “no intention of letting them [employees]” work from home unless there “was a government shutdown.” A logistics executive familiar with TQL made a similar observation.
“Never in the history of the company have they fired that amount of people on the same day — never,” the executive told FreightWaves. “The move was strictly about the coronavirus and how he [Oaks] was going to protect his money, 100%.”
While Oaks declined multiple interview requests from FreightWaves to address some of the issues raised by sources, Millikin provided limited responses on some of those issues, including denying the suggestion that employee safety during the pandemic took a back seat to other priorities.
“Since the COVID-19 threat began, any TQL employee who stated his or her discomfort with working in the office because of health concerns was immediately offered the opportunity to work from home, with no strings attached,” Millikin told FreightWaves on Monday.
Some say they expressed interest to their managers in working remotely amid the coronavirus outbreak — which would soon become a pandemic — via Skype, which the company uses for instant messaging. One source claims that leadership requested the company’s Sales Quality Assurance department monitor employees’ Skype messages. Those sending messages critical of the company’s leadership or complaints to managers about not being able to work remotely were added to a list of those to be fired, despite their title or value to TQL, one employee told FreightWaves.
Former employees claim they were allowed to work from home in “test waves,” but the company’s virtual network, Citrix, kept crashing in the days leading up to the mass firings.
A day before the terminations began, Oaks sent out two companywide emails addressing TQL’s “work-from-home bandwidth” progress as health officials were urging companies to allow employees to work remotely in an effort to curb the spread of the highly contagious coronavirus.
In the emails, obtained by FreightWaves, Oaks states: “Currently, we have 2,200 employees working from home, testing systems. IT will be adding more servers to our network to improve the speed and quality for our work-from-home users. Until that process is complete later this week, we’re holding on sending any additional employees home for testing or work-from-home moves.”
One former employee said he was allowed to work from home on March 16 but received an email from his manager early the next morning requesting that he come into the office.
“I had reached out to my boss voicing my concerns about the coronavirus and that I preferred to work from home,” the former employee told FreightWaves. “I was told it was ‘business as usual’ so I am required to come into the office.”
He said his concerns were justified as an employee on his floor was later quarantined after displaying coronavirus symptoms. (TQL confirmed to FreightWaves that one worker had tested positive for the coronavirus at one of its offices.)
The former TQL employee said prior to his firing, he and other employees had discussed remote strategies with managers and the process they would use to “sign out and take monitors and other equipment home.”
Later that day, he told FreightWaves, he was called into a meeting and fired. He says he was the first of many who lost their jobs that day.
The former employee claims he didn’t receive any notification from management about possible exposure to the virus, but instead received a text from a current TQL employee alerting him to the news.
Employment attorney Carolyn Wheeler said employers don’t have a “duty to disclose a particular person has tested positive [for COVID-19], but terminated employees may have a retaliation claim with the Occupational Safety and Health Administration.”
“There are no new legal rights in this regard because of COVID-19, so they would be relying on the general right to work in a safe environment,” said Wheeler, of Washington, D.C.-based Katz, Marshall & Banks LLP. “Their request to telework would probably be viewed as reasonable protected conduct if they were saying they felt unsafe due to knowledge there were sick co-workers in the workplace.”
Better feared than loved?
Citing the company’s ranking for the second straight year as one of Fortune’s “100 Best Companies to Work For,” TQL denies the claims by current and former employees over the criteria and reasoning behind the firings.
“You have questioned the very core of TQL, which is the care and concern we have for every single employee,” Millikin told FreightWaves. “We wouldn’t be consistently ranked — through anonymous, third-party employee surveys — as one of the best places to work by numerous publications, including Fortune last year and again this year, if we treated our employees as you have reported.”
However, multiple current and former TQL employees said they do not consider the company “one of the best places to work” and told FreightWaves they fear retaliation by TQL’s “aggressive legal team” if they are named.
Ex-employees claim they did not receive severance packages and that their health benefits were canceled within hours after they were terminated. Managers also reminded them of the noncompete agreements they signed on their first day of employment with the logistics firm and that it would be enforced if they sought work with another brokerage firm within one year of leaving TQL.
Former TQL employees also told FreightWaves they may be on the hook for other “company benefits.”
If they received a sign-on or relocation bonus or received educational benefits but didn’t “meet the specified continued employment stipulations,” any money owed would be taken out of their last paycheck.
Recently, Arrive Logistics announced it was cutting approximately 10% of its workforce in response to the coronavirus pandemic’s effect on freight markets. It offered severance packages, extensions on health insurance by several months and waivers of noncompete clauses.
When FreightWaves posed the question to TQL about Arrive’s different approach to its mass layoffs, Millikin replied, “As previously shared with you, we don’t comment on employee matters.”
With U.S. Department of Labor statistics showing approximately 16.8 million Americans have filed for unemployment benefits in the past three weeks amid the pandemic, former TQL employees told FreightWaves they have few options because of the company’s “ironclad” noncompete agreements.
Logistics executives were quick to support Arrive Logistics’ policy of waiving its noncompete agreements in the extremely tight job market.
“The noncompete clauses in the industry need to go away,” said Nate England, manager of supply chain transportation for Stein Mart. “It is sad that it takes a pandemic to recognize how hurtful they are.”
“Waiving [a] noncompete in this circumstance is not commendable, it’s absolutely expected,” said Jorge Boose, an operations manager at a logistics firm.
One former TQL employee started working at the company fresh out of college. When she received her new-hire paperwork, she asked to take it home and have a family member review the documents, including the noncompete agreement, prior to signing them. She claims she was told her offer would be pulled immediately if she refused to sign the documents on the spot.
She was among those recently fired.
“I am just sad that I won’t be able to use my skills and experience because of something I signed on the first day of work, along with my other new-hire paperwork,” she told FreightWaves. “I knew better, but I wanted the job so bad that I signed it. Now what am I going to do for the next year?”
Using the legal system to stay on top?
TQL posted revenues of around $3.6 billion in 2019. As of 2016, Oaks was listed as Cincinnati’s wealthiest person, with a net worth estimated at $980 million, according to Forbes.
Attorneys representing former TQL employees and a rival logistics firm claim in a filing in a noncompete case that TQL is the “bully on the block,” filing noncompete actions “with alarming frequency” to prohibit “former brokers from working within their area of expertise, but also shutting down TQL’s competitors.”
Brett M. Renzenbrink of Cincinnati-based Buechner Haffer Meyers and Koenig Co. estimates TQL files more than 100 lawsuits over its noncompete agreements each year.
“Most of the people who worked at TQL have tangled with them at some point because a large percentage of people who leave TQL get sued by TQL,” Renzenbrink told FreightWaves. “If you talked to Ken Oaks, I bet he would say that ‘we are protecting our trade secrets. We trained all of these people, so we’re not going to train them just to send them across the street and take all of our customers that we’ve given them.’”
Some former TQL employees who left to start their own logistics firms told FreightWaves that TQL’s “aggressive legal team” has slapped them with temporary restraining order lawsuits and allegations of stealing trade secrets.
“They have the most expensive lawyers in the state and let’s say there’s a judgment in a case for like $2,500 of lost profits. They then submit what is called a fee application in excess of $200,000,” one attorney told FreightWaves. “A judgment, which would be laughed out of small claims court, [TQL attorneys] then submit a fee app for $400,000 because of what they’ve done over the course of the last two years.”
The chief executive of another large logistics firm says TQL employs an aggressive strategy to crush competitors.
“They just discredit anything that you say and they have the resources to push people into signing these agreements,” another logistics executive told FreightWaves.
Oaks and Ryan Legg co-founded TQL in 1997, but the two parted ways 14 years ago.
Legg later formed MegaCorp Logistics, which has a nonsolicitation agreement in lieu of a noncompete agreement.
“It states that when someone leaves or is fired, for one year they cannot call on any customer that we’ve moved a load with in the last 12 months, nor can they actively recruit or share our information for one year,” Bob Klare, president of MegaCorp, told FreightWaves. “We always thought people should be able to practice their trade; all we ask is that they don’t call on our customers for a year.”
Klare said his company has filed litigation related to a nonsolicitation agreement only once in its 11-year history.
Legg told FreightWaves he and Klare have sent letters to their lawmakers in an effort to “try to get these noncompetes off the table” so logistics companies could potentially hire brokers who were fired as a result of the economic downturn.
Another logistics executive told FreightWaves that TQL recruits a lot of high-quality people but that firms are wary of hiring a former TQL broker over fears of a lawsuit, “and it isn’t worth the time and effort and all of the headaches.”
Oaks on YouTube: Let’s ‘overcommunicate in times like these’
In recent days, current TQL employees say they have received “inspirational” YouTube videos from Oaks, stating the company is doing everything possible to “be prepared for all this corona stuff that’s going on.”
“We just need to keep in mind all the time, what are our priorities, right?” Oaks states in one such video that was forwarded to FreightWaves before the video was disabled. “No. 1, TQL employees, their families, then customers and carriers. We got a lot of people counting on us out there to make sure that their freight is moved. I think we’re doing a great job getting prepared for the worst. I got to tell you, this is what really separates the good from the great, and I got to tell you we are doing big things behind the scenes and in front of the scenes, making sure that we’re prepared for absolutely anything that comes at us.”
He encouraged employees to submit questions, which he stated he would address in a future video.
“You’ve got questions, make sure you ask your managers or your manager’s manager,” Oaks said. “Everything is a total open book here. And I’m just wanting to do things the right way and want to do things the right way for our customers, our carriers and especially our people.”
In another message, he stated that “It’s important that we all work to overcommunicate in times like these.”
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