Dismissal of IC Misclassification Class Action by Truckers is Reversed on Appeal

The U.S. Court of Appeals for the Seventh Circuit has reinstated a class action brought by a trucker alleging that a freight hauling company misclassified him and other similarly situated drivers as independent contractors. Schneider National Inc. engaged plaintiff as an owner-operator driver who leased a truck from the company and provided services under an independent contractor (owner-operator) agreement. The plaintiff claimed, among other things, that the company violated the minimum wage provisions of the Fair Labor Standards Act and Wisconsin’s state wage and hour law. The district court granted the company’s motion to dismiss all claims, but on appeal the Seventh Circuit reversed. It concluded that the district court erred by only considering the written terms of the contract and not the economic reality of the working relationship when determining whether the plaintiff and other drivers were independent contractors or employees.

The appeals court further concluded that the plaintiff’s allegations about the economic reality of his working relationship with the company stated a viable claim under the FLSA and Wisconsin state law. In reaching its conclusion regarding the FLSA claim, the Seventh Circuit considered the plaintiff’s allegations that he could not hire additional drivers to assist with shipments; had no real ability to exercise choice over his schedule and routes; could not exercise his managerial skill to increase profits by selecting more profitable loads or by driving for other carriers when the company offered shipments with unfavorable terms; had a disproportionately small stake in the trucking operation compared to the company; and engaged in services that were an integral part of the Company’s business. The court stated, “[the plaintiff] alleges facts allowing  the plausible inference that he was so controlled by and dependent on the Company that he must be considered an employee as a matter of economic reality.”  Brant v. Schneider National Inc., No. 21-2122 (7th Cir. Aug. 3, 2022).