In Prime’s $28M settlement with drivers and trainees, lessons for other fleets to ward off lawsuits

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Updated Oct 6, 2020

This story was originally published in July. A court has since granted preliminary approval to Prime’s settlement.

Prime, Inc. operates a fleet of roughly 9,000 trucks out of Springfield, Missouri. The company last week filed a notice with a U.S. District Court in Massachusetts saying it had agreed to pay $28 million to more than 26,000 drivers to settle two class-action lawsuits.Prime, Inc. operates a fleet of roughly 9,000 trucks out of Springfield, Missouri. The company last week filed a notice with a U.S. District Court in Massachusetts saying it had agreed to pay $28 million to more than 26,000 drivers to settle two class-action lawsuits.

Prime, Inc., (CCJ Top 250, No. 13), announced last week it had reached a $28 million agreement to settle two class-action lawsuits brought against the carrier by former drivers.

One of the cases within Prime’s settlement agreement was fairly high-profile, having gone all the way to the U.S. Supreme Court in late 2018 to settle a procedural issue about whether the driver in question – independent contractor Dominic Oliveira – could have sued the fleet in the first place. (The Supreme Court ruled that, yes, he could.)

In short, drivers accused Prime of not paying at least an average of minimum wage ($7.25 an hour) for all hours worked, with paycheck deductions for items like truck lease payments and insurance (in the case of drivers claiming to be misclassified) and reimbursement to the fleet for its CDL training program sometimes eroding drivers’ take home pay.

Though larger carriers often grab the headlines in lawsuits dealing with misclassification and other wage- and hour-law issues, Chris Eckhart, a partner at the nationwide transportation-focused law firm Scopelitis, Garvin, Light, Hansen & Feary, said carriers of all sizes can be susceptible to such litigation.

“Larger carriers are the biggest targets,” Eckhart said, but drivers and plaintiff attorneys have been “suing smaller companies, too, for these same types of theories.”

How can carriers ward off facing a lawsuit or, maybe worse, being forced to shell out millions to drivers in a settlement?

Here are a few tips from Eckhart and attorney Elena Adang, of the national firm Taylor & Associates:

Treat driver orientation more like an interview, not as employment. According to the Fair Labor Standards Act (FLSA), time in orientation at a fleet might be considered compensable time depending on what is covered. “This is a common area that attorneys and truck drivers are attacking,” said Eckhart. Some companies pay drivers for time during orientation, and others don’t.

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For fleets that don’t pay for time at orientation, it needs to be clear that’s part of the pre-hiring process. “Treat orientation as an interview and qualification process rather than an opportunity to inform the driver about the job and about the company,” he said. “Make it clear that the driver has to successfully complete orientation to be offered a job.”

Don’t let driver training programs be a trap. CDL training offered directly by fleets can be mutually beneficial for carriers and drivers, said Adang. Drivers have the ability to earn a CDL and employment opportunities thereafter, while fleets can invest in their future workforce.

“But fleets need to be cautious about thinking that the training is free labor they’re getting” later, said Adang. For fleets that offer CDL training programs, they still need to comply with FLSA requirements, particularly minimum wage laws, when later deducting training costs from drivers’ pay.

Also, the focus of the training needs to be on just that – training to become a CDL holder, not training about being an employee at that company, said Eckhart. “It’s important that carriers limit the instruction they give on specific policies and practices,” he said.

Likewise, newer drivers training with more experienced drivers still must be paid while they’re working. Plaintiffs in the Prime cases argued that was another FLSA violation by the fleet, said Eckhart. “They said they were employed and that they should have been paid minimum wage.”

Avoid exerting control over independent contractors. “If you have employees and you have owner-operators, they shouldn’t be treated the same,” said Adang. “They can’t be both an employee and an independent contractor, so the lines become blurred when you treat them the same.”

That means avoid telling independent contractors when they can and can’t drive, what loads to take and how to set their schedules. “Treating them like an employee by telling them when to drive and where to drive and exhibiting the type of control we saw in this case, then at that point it seems like they’re an employee,” Adang said, which could create legal traps for trucking companies.

Likewise, for contractors within a carrier’s own truck leasing program, such as the one Prime offered and like those offered by other fleets, operators need to maintain the ability to use that truck elsewhere. That was a key element of Oliveira’s misclassification claims — that he allegedly was prohibited from using the truck as he wanted for other courses of business.