The U.S. Department of Labor has obtained a permanent injunction and court order forbidding a California transportation company from retaliating against drivers and illegally shifting liability for labor law violations onto workers who exercised their federally protected rights.
A Sept. 25, 2024, consent judgment and order in the U.S. District Court for the Central District of California requires Cargomatic Inc., a Long Beach transportation and logistics company, to cease its repeated intimidation and threats directed toward drivers who deliver freight for Ceva Freight LLC, a subsidiary of Ceva Logistics in Torrance.
The department’s Office of the Solicitor learned that, after a group of drivers filed suit against Ceva for alleged labor violations, Cargomatic threatened to countersue the drivers for more than $150,000 in attorney’s fees. Drivers alleged the company intimidated drivers and threatened to terminate those who persisted in seeking unpaid wages and other remedies for the alleged violation of their rights under the Fair Labor Standards Act 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.
“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.”
The department’s legal action is part of larger efforts to combat employer’s attempts to enforce coercive provisions in contracts that seek to dissuade or punish workers from attempting to enforce their legal employment rights. The effort has included similar actions against Advanced Care Staffing in New York and Bimbo Bakeries in Vermont.
Cargomatic Inc. is a transportation logistics company that provides drivers who transport freight for shipping companies and has a mobile application for use by drivers. Since at least 2019, Cargomatic has contracted drivers to deliver cargo for Ceva Freight.
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. The law 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.