Cargill Agrees to Pay Up to $185,000 in Unpaid Minimum Wages
There was a time when putting in long hours as an over-the-road truck driver was a sure ticket into the middle class. While a driver spent much of their time on the road, they could afford a home, an occasional vacation, and savings for tuition or a new car. Things are no longer so certain.
This is due, in part, to the rise in prevalence of the “owner operator” system. A person can drive a truck for a freight company, moving goods from point A to point B, collecting a salary and benefits. Unquestionably, this person is an employee of the freight company. Freight companies asked themselves: how can we cut costs? Increase profit? The answer was to shift drivers from being labeled employees (which are expensive given payroll taxes, health insurance, vacation, etc.) to being labeled independent contractors, or “owner operators.”
In order to make this scheme a reality, freight companies teamed up with truck leasing companies. Here’s how it works: the leasing company will lease a truck to a driver, usually with exorbitant terms and maintenance obligations. The freight company will then agree to dispatch that driver, newly minted an “owner operator,” from point A to B. Typically, the freight company will also agree to send the driver’s pay directly to the leasing company, thus ensuring the freight company and the leasing company are able to deduct whatever payments or other monies they feel are owed. The driver gets what’s left over, if anything.
Now the “owner operator” (sometimes, literally the same former employee-driver working for the same freight company) performs identical work as when they were an employee, but the freight company no longer pays payroll taxes or benefits, and the driver must bear the cost of fuel and maintenance. In other words, the freight company effectively shifts its operating costs to its employees by way of bestowing the title “owner operator” upon its workforce.
Making matters worse, if a driver’s truck breaks down, the leasing company is happy to finance the repair through additional deductions from pay, but this means the driver might drive for weeks, or longer, earning virtually no take-home pay.
If this seems unconscionable, it is.
The freight company increases its bottom line.
The leasing company gets its payments, guaranteed.
Meanwhile, the driver, or “owner operator,” has unwittingly been lured into indentured servitude.
I represent two truck drivers that experienced the “owner operator” system firsthand. They leased their trucks from Pathway Leasing LLC (based here in Colorado) and were placed with Cargill Meat Logistics Solutions, Inc. (“Cargill”), a large trucking company based out of Kansas.
In some weeks they received $100 or less, despite working 70+ hours. On the road, this hardly covers the cost of meals, let alone other necessities. They filed suit in the United States District Court for the District of Colorado, on behalf of themselves and all other similarly situated drivers, seeking unpaid minimum wages pursuant to the federal Fair Labor Standards Act.
While Pathway Leasing LLC thus far refuses to correct any wrongdoing, Cargill agreed to settle its liability, by paying up to $185,000 in unpaid wages to approximately 40 drivers. Remember: minimum wage is just $7.25 per hour. So while my clients can celebrate this small victory, Cargill, even when made to pay for its exploitative labor practices, still walks away having made a sizable profit off their labor.