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Hub Converting California O-Os to Company Drivers Following Lawsuits

September 9, 2014

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Photo: Evan Lockridge
Photo: Evan Lockridge
UPDATED -- Due to litigation and upcoming settlements, one trucking operation is abandoning its owner-operator business model in California.

Hub Group Trucking, the drayage operation of the logistics provider The Hub Group, and formerly known as Comtrak Logistics, says it will convert these 350 truckers to company drivers in the next two weeks, according to a statement sent to customers and obtained by the Journal of Commerce for a story published Tuesday morning.

“It appears that the legal climate in California is becoming unfavorable to the common trucking industry practice of using independent truck drivers,” said Dan Burke, president of Hub Group Trucking, in the statement.

Another, and far more likely reason for the change in driver classification is due lawsuits, including one that sought class action certification on behalf of present and former California-based truck drivers for Hub Group Trucking, who were classified as independent contractors from January 2009 to the present.

The complaint alleges Hub Group Trucking misclassified these truck drivers as independent contractors rather than employees. A second complaint alleging substantially similar claims was filed in July, but the company says it has not been served with a copy of that complaint.

Both lawsuits were disclosed by the Hub Group in a disclosure filed later on Tuesday with the Securities and Exchange Commission.

“Because lawsuits are expensive, time-consuming and could interrupt our business operations, we have decided to make settlement offers to individual drivers with respect to the claims alleged in the lawsuits, without admitting liability,” Hub Group said in the filings. “The company estimates that the total settlement amount, if all drivers accept the offers, is approximately $9.5 million. To date, a substantial number of the independent contractors have decided to accept the settlement offer.”

This change in status for Hub’s California based drivers also comes as there are an increasing number of lawsuits against other companies in the state and elsewhere, claiming some truckers are wrongly classified as independent contractors/owner operators by trucking fleets and should instead be regarded as company drivers.

Also, a federal court in late August ruled two classes of drivers working for FedEx Ground were misclassified as independent contractors, a decision that could cost the company millions of dollars.

Hub Group Trucking has reportedly already met with drivers about the change in status, while Burke defended the company’s classification of its drivers as independent contractors, adding, “To avoid potential issues with the usage of owner/operators as the California legal environment changes and because we need to manage our business for the long-term, we decided to change our model and build around employee drivers.”

Update adds SEC disclosure information.

Comments

  1. 1. Steve P [ September 10, 2014 @ 05:55AM ]

    What the trucking industry needs to do is Abandon the Republic of California. Leave them to their own Evils and see how well the state and it's Government succeed with out Trucking. Their goal is to steal as much money as they can and that goes for all of the California Agencies you know who the are.

  2. 2. Richard [ September 10, 2014 @ 07:13AM ]

    Not that I agree with everything that goes on in The Peoples Republic of California, but from what I have personally found with most so called - Owner Operator programs is that the Owner Operator is actually a "OWNED/CONTROLLED" Operator by the carrier they are leased to. Remember the Midwestern Distribution "Dollar Truck" ? It's about time the government stepped in and put and end to these so called "Owner Operator" programs....

  3. 3. Curry [ October 04, 2014 @ 07:39PM ]

    Coming from a place of true knowledge the recent ruling and change from independent status to employee status is long over due. Now the next step of the process is to move to a fair and profitable place for everyone involved, pay a fair days work for a fair days pay. Stop the piece work of local truck drivers pay. Pay per hour with OT after 8 (not 40) is what should be done! The past and current structure is obsolete and should not depend on the Carrier act of 1934.

  4. 4. Robert [ November 25, 2014 @ 02:28PM ]

    As a former driver of Comtrack/Hub I can personally speak about this issue! first and foremost we were never independent contractors as a true independent contractor when you are not making any money with one company you have the option to look elsewhere for that work and that was never the case with this companhy!! After 3 years of not making any money and leasing a truck from this company I left but that was only after losing my home and any personal savings I had!! I payed to operate their business and that is what the class action law suit is really about and since I classified as an IC and not an employee I had to pay for fuel and operating cost well now that the courts are ruling in drives favors companies like HUB are being sued to pay back those expenses and you can imagine how much that ads up after about 350 drivers trust me 9.5 million is a drop in the bucket as to what is truly owed drives

  5. 5. Elijah Mumford jr [ January 11, 2015 @ 02:46PM ]

    the way it should be ..either you make $20.00..per/hour..or..$40(c.p.m.)..which is what I was making...right ..B-4...I retired....Boss..Linco...&...Maislin ..Freight Lines..Outta Baltimore......Sitton Motor Lines ..(Joplin..Missouri)...THK/s..for.."POSTING"..?

 

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