J.B. Hunt Settles California Labor Lawsuit with Truckers for $15million

November 8, 2018, 2:15PM. By Jane Mundy

A California wage and hour lawsuit filed 11 years ago regarding unpaid meal and rest breaks has finally settled—potentially involving 11,000 J.B. Hunt employees.

Los Angeles, CAMore than a decade ago truck drivers filed a California wage lawsuit against J.B. Hunt Transport, an Arkansas trucking company, claiming the company violated California's wages, rest break and meal rules. Since that time, the class action lawsuit has been the subject of recent debates over when – and whether-- federal rules regarding driver work should pre-empt state regulations.

Gerardo Ortega et al v. J.B. Hunt Transport lawsuit

Truck drivers and lead plaintiffs Gerardo Ortega and Michael D. Patton filed the lawsuit back in 2007, claiming that J.B. Hunt violated the California labor code by failing to pay its drivers a 30-minute break for every five hours worked. The transport company argued that the California law was preempted by a 1994 federal law, which says state law could not circumvent interstate trucking laws. (The Case is Gerardo Ortega et al v. J.B. Hunt Transport Inc.,2:07-cv-08336).

Further, plaintiffs claimed that J.B. Hunt based employee wages on an “activity-based pay” (ABP) model that failed to pay its drivers minimum hourly wages as well as meal and rest break violations under California law. The class action lawsuit said that tasks such as pre- and post-trip inspections, time waiting at customer locations and other activities were compensated at a lower rate. Drivers were paid a piece-rate formula, under which they received mileage pay and separate pay rates for non-driving tasks and detention, according to freightwaves.com, a news source for freight markets.

Activity Based Compensation, (ABC) AKA activity-based pay or incentive-based pay is way to pay drivers rather than hourly. Hours, percentages of standard, delay time, units per hour, cost per mile, and cost per stop all should be accounted for, but are not easily converted to a dollar equivalent. All measurements with ABC are in dollars. Work elements, delays, breaks, and productivity are all represented by actual dollar values. (for more information, visit transervice.com).

According to truckinginfo.com, productivity-based pay is hardly new to trucking. On the for-hire side, most drivers are paid by the mile. According to a recent web survey done by the National Private Truck Council, about 47 percent of private fleets still use an hourly rate to determine base pay (excluding bonuses and incentives), but more than a third use a mileage rate and another 9 percent pay drivers per delivery.

Denham Amendment

For years, trucking companies such as J.B. Hunt have tried unsuccessfully to get the Denham Amendment passed, a bill that would disallow California and other state’s attempts to set their own laws.

But the Central District of California’s federal judge said the company’s piece-rate compensation system was not uniform across the class and some drivers in the class received straight hourly pay, weekly pay, or other compensation methods.

“The Court emphasized that the only way to glean which pay plan applied to each class member was to examine each individual driver’s payroll records and activity logs, and such individual issues predominated and were not appropriate for class adjudication,” according to Lexology, which also explained that J.B. Hunt
“reasonably believed the Federal Aviation Administration Authorization Act of 1994.” This federal law would preempt state laws on worker rules, and was the law under which it “should” operate. Plaintiffs Ortega and Patton told the court they could take a meal break whenever they wanted, and the court found the company did not have to “police” such breaks. As for the rest breaks, they survived because the ABP model did not separately list out the amount paid, if any, for rest breaks.

Legalreader reported the following statement from the plaintiffs:

“The case has been extensively litigated for 11 years. It involved novel and cutting-edge legal theories relating to class certification, liability under California’s wage and hour laws, and federal preemption. In fact, the case was previously dismissed based on federal preemption grounds, reinstated by the Ninth Circuit, and finally decertified six weeks before the scheduled class trial. At the time of decertification, this court had also rendered two critical rulings on the parties’ motions for partial summary judgment…Against this very complex backdrop, the parties were finally able to reach a proposed class-wide settlement in the amount of $15 million.”