Cargomatic ordered to stop threatening drivers involved in wage lawsuit

Cargomatic has been ordered to stop intimidating a group of independent contractor drivers who are suing the company for unpaid wages.

The U.S. Department of Labor (DOL) recently obtained a permanent injunction in a federal court in California ordering the logistics company to end “repeated intimidation and threats directed toward drivers” who deliver freight in California for a Ceva Logistics subsidiary that relies on Cargomatic to contract and pay drivers to haul for Ceva and its customers.

The group of current and former drivers filed a lawsuit in January 2023 alleging that Ceva Freight LLC failed to pay them in accordance with California and federal labor codes, according to court documents.

Cargomatic sent letters in November to some of the drivers, asserting that the contracts they had signed with Cargomatic required them to pay Cargomatic and its customer – in this case Ceva – for the cost of defending the lawsuit.

“In February and March 2024, Cargomatic managers contacted certain of the plaintiffs … and told them that they should drop their lawsuit against Ceva,” according to the complaint. The managers stated that if the plaintiffs did not dismiss their claims, they would be terminated and Cargomatic would countersue the drivers for more than $150,000 in attorneys’ fees.

Although Cargomatic claimed that the drivers are contractually obligated to indemnify Cargomatic, the Fair Labor Standards Act (FLSA) “does not allow claims for indemnification against any party and contractual clauses which purport to require indemnification for FLSA and/or California wage and hour violations are unlawful and unenforceable,” the complaint stated.

“Employers should know better than to attempt to enforce indemnity clauses that purport to shift liability for wage and other labor law violations onto workers,” said Marc Pilotin, who represented DOL in its complaint against Cargomatic.

“Such provisions are coercive, retaliatory, illegal, and unenforceable. The U.S. Department of Labor will not tolerate retaliation against workers in any form, including when it involves — as here — employers invoking invalid terms buried in a contract’s fine print.”

Cargomatic agreed to settle the FLSA dispute with DOL without making any other admission as part of the settlement. (The underlying lawsuit over unpaid wages is ongoing.)

As part of the settlement, Cargomatic agreed not to retaliate against any driver who has filed a complaint under the FLSA, has testified or is about to testify in any FLSA proceeding, or has otherwise asserted rights under the FLSA, including by:

Threatening to terminate or causing the termination of the driver.
Threatening to sue or suing the driver for costs arising from such an FLSA proceeding.
Reducing the driver’s pay or work assignments.
Taking any other retaliatory action against the driver.

DOL said its action against Cargomatic is part of the Biden administration’s efforts to “combat employers’ attempts to enforce coercive provisions in contracts that seek to dissuade or punish workers from attempting to enforce their legal employment rights.”