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XPO settles 2 California worker classification cases for nearly $30M

Consolidated class action covered familiar questions about contractor vs. employee status

The wheels are turning, but it ain't earning...enough (Photo: Jim Allen/FreightWaves)

XPO has settled a pair of worker classification cases in California that will pay out close to $30 million to a group of almost 800 drivers.

The settlement documents were filed with the U.S. District Court for the Central District of California last week. The final settlement, approved by the court, covers two cases that were consolidated in the class action, both of them filed in the same court. The suits were originally filed in September 2018 and certified for class action in September 2020. 

One case settled for $9.5 million, the other for $20 million. The number of workers covered by the two cases totals more than 775, all of them drivers.

According to court documents, the plaintiffs in the case filed suit against XPO (NYSE: XPO) on a series of charges familiar to anybody who has read driver misclassification litigation. The plaintiffs, according to the documents, said XPO misclassified them as independent contractors rather than employees; failed to reimburse business expenses; owed them waiting time penalties; didn’t pay them in a timely manner; didn’t give them meal periods; didn’t provide rest periods; didn’t provide itemized wage statements; engaged in “unfair competition”; and owed them penalties under California labor law.

On the key charge of whether the workers were independent contractors or employees, in an earlier filing, XPO’s response focused on the question of “control.” The workers, XPO said in a filing from August 2021, had the ability to accept or reject loads; could provide services to companies other than XPO; and could pay their second-seat workers whatever they wanted. The list of points made by XPO in the filing is a lengthy one, with “control” as the key determinant.

The points are now moot given the settlement. But in one of the settlement documents, the court said that XPO had raised arguments “that posed a risk to plaintiffs’ chance for success.”

“While the court declines to opine on the relative strengths of the parties’ arguments at this stage in the case, the court notes that XPO raised colorable arguments that posed a degree of risk to plaintiffs’ potential for success,” the settlement document said.

The Teamsters aided the suit against XPO, a longtime nemesis. In a prepared statement, the union declared the settlement a “significant victory for working people.”

James Hoffa, the outgoing Teamsters president, said in that statement, “Today, we commend these brave XPO drivers, who decided not to back down and instead fought hard to demand that XPO pay them the money they were rightfully owed.” 

Hoffa added, “If XPO and other companies didn’t misclassify and steal these workers’ wages, there wouldn’t be a shortage of drivers.” 

An XPO spokesman said the case had been settled at “very advantageous terms” for the company.

Attorneys’ fees in the settlement were set at approximately one-third.

The named plaintiffs in the larger settlement, $20 million, with a worker named Angel Omar Alvarez as the lead plaintiff, will see a division of the payout as follows: Five named plaintiffs will get $30,000 each and four others will receive $10,000. The settlement document in the Alvarez case said the settlement was only 40% to 50% of what the class expected to obtain.

Other members of the class action will be notified by mail of their eligibility to file for compensation from the remaining $12.3 million left after other payouts are completed.

The six named plaintiffs in the second case, with Victor Cortez Arrellano as the lead plaintiff, will each receive $10,000. The settlement figure of $9.5 million was said in the court document to be 18.5% of what was requested in the initial lawsuit. Other members of the class action also will be notified by mail to file for their part of the settlement.

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  1. J

    Saw a news article saying XPO is sponsoring a gay pride parade. What a waste of resources. First world problems, submitting to the nutjobs. Stand up against these social tyrant imbeciles.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.