Feds forbid Cargomatic Inc. from retaliating against truck drivers

The U.S. Department of Labor (DOL) recently obtained a federal order that forbids a California-based logistics company from retaliating against truck drivers who are seeking remedy for alleged labor law violations.

On September 25, 2024, the U.S. District Court for the Central District of California issued an order against Long Beach-based logistics company Cargomatic Inc., requiring the company to “to cease its repeated intimidation and threats directed toward drivers.”

Cargomatic uses a mobile app to connect truckers to customers who need freight transportation services. The company has contracted with Ceva Freight LLC, a subsidiary of Ceva Logistics in Torrance, since at least 2019, officials say.

According to the DOL, when a group of truck drivers sued Ceva Freight seeking unpaid wages and remedy for other labor violations, Cargomatic threatened to countersue the drivers for $150,000 in attorney’s fees. The drivers claimed that Cargomatic intimidated them and threatened to terminate them for exercising their rights under the under the Fair Labor Standards Act (FLSA) and the California Labor Code.

“In fact, the company sent drivers involved in the Ceva lawsuit letters claiming they materially breached the terms of service agreements that Cargomatic required them to sign. The agreements included indemnity clauses that Cargomatic threatened to enforce against these workers to deter them from exercising their rights. To further deter workers from pursuing their rights, the agreements had an arbitration provision that arguably barred the workers from seeking collective relief against the company regarding the unlawful indemnity clauses,” federal officials said.

The DOL says Cargomatic’s actions illegally shifted liability for labor law violations onto workers.

“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. Such provisions are coercive, retaliatory, illegal, and unenforceable,” explained Regional Solicitor Marc Pilotin in San Francisco. “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.”

According to the DOL, the FLSA requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 in a workweek. FLSA also guarantees employees the right to raise wage and hour concerns, participate in U.S. Department of Labor wage investigations, and file private wage actions without retaliation from their employers.