Mega-carrier Swift Transportation has just lost a pivotal court decision in a lawsuit brought against it by five former owner-operators at the company over their employment classification. The decision could possibly have huge ramifications for up to 15,000 former Swift drivers, and even owner-operators with other companies. Swift now may have to pay drivers millions of dollars in back wages.
On January 5th, U.S. District Court Judge John Sedwick ruled in favor of the owner-operators who claimed that Swift had illegally classified them as independent contractors instead of employees. As employees, Swift would need to have paid drivers at least minimum wage, and drivers would have been eligible for benefits including health insurance.
During the legal battle, Swift argued that drivers could choose to refuse loads, or take loads from other companies. They claimed that this allowed drivers to make their own schedules, which would classify them as independent contractors. The judge however ruled that due to the terms of their lease agreements with Swift, the drivers “as a practical matter, had to drive for Swift,” and that because of that, the company was in total control of their schedule, making them employees.
It is yet to be determined how much each driver will receive in compensation and Swift is currently appealing the decision.
“This is a big milestone,” said driver attorney Dan Getman according to the Wall Street Journal. “Now we’ll find out how to go from here to a final resolution.”
Late last year, Swift estimated that it would need to pay $22 million to the 1,300 class-action members who brought a suit against Central Refrigerated (which Swift Transportation now owns). That works out to just shy of $17,000 per driver. Since Swift is the largest truckload carrier in the United States however, the number of drivers who could file claims against them could be as high as 15,000. It is not known what amount will be assigned to each driver, but if it is similar to the Central Refrigerated case, Swift could be looking at a payout of a quarter of a BILLION dollars.
It is worth noting however that the lawsuit that Judge Sedwick ruled on only concerns 5 specific drivers. In order for all 15,000 other drivers to see any payment from Swift, a new lawsuit will have to be filed on their behalf.
The ruling came just a few days after Swift Transportation founder (and newly minted billionaire) Jerry Moyes stepped down as CEO of the company. According to the SEC filing, Moyes will stay on as a board member, taking a salary of $200,000 per month or $2.4 million per year.