Freight Carrier Gets Win in Classification Dispute

   Compensation & Benefits Library™ gives you accurate answers and practical guidance to help you design, analyze, compare, administer, and communicate compensation and benefits...

By Lisa Nagele-Piazza

Oct. 19 — A federal court in New York entered a judgment Oct. 14 dismissing the lawsuit of two delivery drivers asserting that a freight transportation company violated federal and state wage and hour laws by misclassifying drivers as independent contractors.

The judgment followed a Sept. 30 order by Judge Sandra J. Feuerstein of the U.S. District Court for the Eastern District of New York, which granted summary judgment to TXX Services Inc. on the drivers' purported collective and class action claims under the Fair Labor Standards Act and the New York Labor Law.

Feuerstein had adopted a magistrate judge's 40-page report and recommendation in its entirety. Among other things, the magistrate judge found that the “limited control” the company exercised over the drivers was directed by the nature of the business, the type of freight—prescription medicines—and the customers' requirements.

Additionally, the court said, the terms of the independent contractor agreements allowed the drivers to bid on geographic areas and the freight to be delivered within those areas. The contracts also permitted drivers to negotiate the rate they were paid for each delivery stop.

Thus, the court found that the drivers “have ultimate control over their routes in the sense that if they do not prefer a particular delivery route, they can bid on a different geographic area as it becomes available.”

“This is an independent contractor platform that works for both sides of the contract,” Jeffrey W. Pagano of Crowell & Moring LLP in New York, lead attorney for TXX, told Bloomberg BNA Oct. 19.

The platform may be distinguishable from those in other misclassification claims brought by drivers, such as lawsuits filed in the U.S. District Court for the Northern District of California against Uber Technologies Inc. and Lyft Inc. In the Uber and Lyft cases, the drivers claimed that the companies set pay rates without input from drivers.

Counsel for the TXX drivers didn't immediately respond to Bloomberg BNA's request for comment.

For more information, see Compensation and Benefits Library’s Fair Labor Standards Act: General Principles chapter.

To contact the reporter on this story: Lisa Nagele-Piazza in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at