Dive Brief:

• A California federal judge granted preliminary approval to a $16.5 million settlement last week in which XPO Logistics will pay 847 plaintiffs who accused the company of driver misclassification in a lawsuit filed in 2016.
• The settlement says plaintiffs will be paid about $70 for each day they worked for XPO. The average estimated payment will be $14,222.82 ranging from $70 to over $138,700. The council for the plaintiffs will walk away with $4.1 million, according to the preliminary approval of the agreement written by Judge William Orrick.
• A hearing will be held on Oct. 16, 2019 to determine if the settlement should be given final approval. The agreement notes the plaintiffs were willing to settle because continued litigation risked the possibility their "claims could fail entirely."

Dive Insight:

"The parties reached a settlement at the conclusion of two days of mediation before a nationally recognized class action wage and hour mediator, following receipt of a mediator’s proposal," the agreement reads. This mediation took place last year.

A spokesperson for XPO said the settlement had been "fully disclosed" in its last 10K. The payment is listed as part of " litigation charge of $26 million" in the filing. This means the money for the payout has been fully accounted for, but the payout will happen after the final approval later this year.

The original complaint, filed in 2016, accused XPO of misclassifying drivers as independent contractors, which the plaintiffs said allowed the logistics provider to skirt obligations such as paying the minimum wage, paying for overtime, compensating for expenses related to employment and providing meal breaks. The complaint said the workers, by their terms and conditions, are employees and not contractors.

The complaint said delivery drivers are not given the level of autonomy one would expect for an independent contractor. The suit alleges XPO maintains the ability to determine when and where drivers pick up deliveries, the uniforms drivers wear, what kind of vehicle they drive and what kind of insurance drivers use.

The XPO spokesperson declined to comment when asked if the company agrees some drivers may have been misclassified. A settlement is not an admission of guilt, according to the agreement. The preliminary agreement does outline some of the ways in which XPO disputes the allegations, including that some drivers were able to deliver for other companies while working with XPO and some drivers could refuse deliveries without consequence.

XPO is not the only carrier to deal with claims of driver misclassification from its drivers. The L.A. City Attorney is also suing three companies owned by NFI Industries for misclassifying workers in an attempt "to avoid providing benefits and paying applicable taxes."

Union members and trucks drivers recently called on Lowe's to break ties with NFI Industries over these concerns. A spokesperson for NFI Industries told Supply Chain Dive earlier this year union members were "spreading misinformation and outright lies."

This isn't the first time XPO has dealt with a misclassification suit. In 2017 however, it was the result of a court order rather than a settlement. A federal judge ruled in favor of drivers in the 2017 case awarding them $958,660, according to Heavy Duty Trucker.