The Stockton Record
By Reed Fujii
March 21, 2007
Hundreds of delivery truck drivers in California are being unlawfully forced to pay thousands of dollars apiece in annual expenses by a company that purposefully misclassifies them as independent contactors instead of employees, a class-action lawsuit charges.
The suit names Cardinal Logistics Management Corp. of Concord, N.C., as enlisting the drivers to provide delivery services for Home Depot stores. Plaintiffs in the case are represented by three California law firms, including Herum Crabtree Brown in Stockton.
That firm’s Jennifer Whipple characterizes the case as “one of the most blatant cases of deliberate misclassification” she’s ever seen.
Whipple said Tuesday that Cardinal Logistics and other companies use the tack to avoid many costs, such as unemployment and worker’s compensation insurance, as well as working expenses for equipment, supplies and uniforms, by shifting them onto their employee “contractors.”
A Cardinal Logistics spokeswoman Tuesday acknowledged the company has received the lawsuit, filed last week in Alameda County Superior Court. “We will address the questions at the appropriate time with the appropriate parties,” said Lynne Andrews in a telephone interview. However, under standing company policy, she said, “We can’t comment on pending litigation.”
The lawsuit claims that Cardinal directs and controls the work its delivery drivers perform, but has established an elaborate system and a series of documents to disguise the employer-employee relationship. For example, Cardinal requires the drivers to agree to provide their own equipment to perform deliveries, but also requires them to lease the trucks from the company and cover all costs, such as fuel and maintenance, the suit says. It also charges that as a condition of employment, the drivers are required to establish their own corporations or limited liability companies, which “serve no purpose other that to perpetuate and shield Cardinal’s scheme.”
The complaint stems from the specific case of Gerald Smith of Reno, Nev., represented by Whipple, who worked as a delivery driver for Cardinal, driving a Home Depot-labeled truck and wearing a uniform with both Home Depot and Cardinal logos from May 2004 to November 2006.
Smith worked eight to 10 hours a day, six days a week, receiving a weekly paycheck from Cardinal after the company deducted a substantial proportion of his earnings for expenses, calculated entirely by Cardinal, the suit said. All of his work was done at the company’s direction.
“This company ignores its legal responsibilities to its workers and is maximizing profits at the expense of its workers,” Whipple said. “It is illegal and grossly unfair, and we look forward to getting some justice for these drivers.”
The suit seeks certification as a class action, unspecified damages and restitution, and an injunction requiring Cardinal to change its business practices in California.
Cardinal Logistics provides logistics and transportation services to companies nationwide, with about $240 million in annual revenue. It is owned by the Chicago-based private equity firm GTCR Golder, Rauner.