Hub Group Switches Drivers to Employee Status

Hub Group Inc.

Hub Group Inc. has decided to voluntarily make drayage drivers in California into employees, taking a different stance from other fleets that continue to insist that intermodal truckers are independent contractors.

The statement said Hub Group’s trucking unit will convert the driver status following lawsuits filed in California that challenged drivers’ contractor status. Hub Group, which ranks No. 8 on the Transport Topics Top 100 list of for-hire carriers in the United States and Canada, disclosed its move in a Securities and Exchange Commission filing.

The move by Hub runs counter to efforts by the Harbor Trucking Association in Southern California and nationwide efforts by American Trucking Associations to classify port truckers as independent contractors. ATA successfully challenged efforts to re-classify drivers serving the Port of Los Angeles as employees.

ATA declined to comment on the Hub Group move.

“The company believes that the independent contractor truck drivers were properly classified as independent contractors at all times,” the Hub Group statement said. “Because lawsuits are expensive, time-consuming and could interrupt our business operations, we have decided to make settlement offers to individual drivers. We are also changing our business model in California from independent contractor truck drivers to employee drivers.”

Hub also said it would settle the suits at a cost of $9.5 million, if all drivers accept the company’s offer, adding that “a substantial number of the independent contractors” already have accepted settlements. A specific number wasn’t disclosed. Hub in July said its trucking unit had more than 2,900 drivers who haul 72% of its intermodal moves.

One lawsuit dates back to 2009, when driver Salvador Robles challenged his independent contractor status, leading a bid to create a class action. A second legal action was filed in San Bernadino County in California Superior Court, said Hub, which generates about half of its revenue from intermodal freight. The rest comes from brokerage and logistics management.

The moves come soon after a federal appeals court ruled that workers at FedEx Corp.’s Ground unit were employees. That decision ran counter to nearly all other rulings on the classification issue, FedEx said in an Aug. 27 statement.