OnTrac Accused of Exploiting Delivery Drivers Through Misclassification Scheme

FOR IMMEDIATE RELEASE
October 21, 2024
Media Contact: Alex Bradley
Bradley@katzbanks.com

San Francisco, CA – Today, attorneys from Katz Banks Kumin LLP, The Villegas Law Firm, APC, and Community Legal Services in East Palo Alto announced that they have filed a class action lawsuit against OnTrac Logistics, Inc. (OnTrac) and two subcontractors alleging they engaged in a complex misclassification scheme to deprive delivery drivers of pay.

OnTrac is a “last mile” delivery company that operates across 35 states and the District of Columbia. In the lawsuit, plaintiff Eleazar Herrera, who worked as a delivery driver, alleges that the company deliberately misclassified him, as well as scores of other workers who operate out of the company’s San Francisco warehouse and other California warehouses, as independent contractors instead of employees. As a delivery driver, Mr. Herrera worked twelve-hour days and delivered over 200 packages daily for OnTrac.  He was paid $1.75 per package delivered, but hundreds of dollars a week were deducted from his paychecks for rent for a cargo van, rent for an OnTrac scanner, and package insurance to protect OnTrac against theft, and he was required to pay for gas out of pocket.

“Companies have gotten more sophisticated with how they rip off workers, all in an attempt to get around California and federal labor laws,” said Katz Banks Kumin partner Rebecca Peterson-Fisher. “This is a complex misclassification scheme that is directly taking money out of the pockets of workers. We’re filing this lawsuit to get our clients the income that they earned, and to send a message that these kinds of schemes are unacceptable.”

“In this lawsuit, our client merely asks for the same rights as all other California workers – to be paid a lawful wage for his time worked and to be provided meal and rest periods to which he was entitled, said Virginia Villegas, of the Villegas Law Firm, APC. “Instead, OnTrac used various schemes to avoid its obligations an employer.”

In California, a worker may be classified as an independent contractor only if the worker is free of control and direction of the hiring entity in their performance of the work contracted, the worker’s business is outside of the usual course of the hiring entity’s business, and the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed (such as an electrician with their own business who performs electrical work for various clients).  The lawsuit alleges OnTrac contracted with individual operators who then hired delivery drivers, but the company maintained a high degree of control over delivery drivers’ wages, hours, and working conditions, making OnTrac legally their employer. Notably, Mr. Herrera alleges that OnTrac directly approved delivery driver hiring, required delivery drivers to wear company uniforms, required them to use proprietary package tracking software, and assigned them packages to deliver and delivery areas.  Delivery drivers, however, were required to absorb the costs of renting a cargo van or using their personal vehicle, insuring OnTrac packages, and renting OnTrac scanners.

As a result of their misclassification as contractors, workers were deprived of substantial pay and other critical benefits and protections under California laws, including overtime, meal and rest breaks, reimbursement for business expenses, minimum wage, timely, and accurately tracked wages, and itemized wage statements. Additionally, many federal and state labor and civil rights protections, including FLSA, Title VII, FMLA, ADEA, and workers compensation, Title I of the ADA, do not apply to independent contractors.

In this case, the plaintiff is seeking damages, penalties, and injunctive relief on behalf of all OnTrac delivery drivers in the state of California.

In this matter, the plaintiff is represented by Rebecca Peterson-Fisher and Jessica Westerman of Katz Banks Kumin, Virginia Villegas of the Villegas Law Firm, APC, and Jennifer Smith of Community Legal Services of Palo Alto.

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