Truck drivers’ misclassification case against Diakon to resume

A class of truck drivers’ lawsuit that claimed Diakon Logistics violated Illinois labor laws will resume even though the company’s service agreements are governed under Virginia law.

The U.S. Court of Appeals for the Seventh Circuit ruled on Aug. 17 to reverse the district court’s decision in favor of Diakon. The class action lawsuit will now return to the district court.

According to the Seventh Circuit, the truck drivers’ wage claims arise from their work in Illinois, not from their contracts.

“The (Illinois Wage Payment and Collections Act) governs payment for work in Illinois regardless of what state’s law governs other aspects of the parties’ relationship,” the Seventh Circuit wrote.

Background

Diakon Logistics, which is incorporated in Delaware and is headquartered in Virginia, coordinates delivery for retailers across the nation.

Truck drivers Timothy Johnson and Darryl Moore, who were Illinois residents, made deliveries for Diakon to customers of Sears in Illinois, Indiana and Missouri.

Johnson and Moore both signed contracts that classified them as independent contractors although the company outlined detailed expectations for the drivers, including what uniforms to wear, what business cards to carry, what decals to put on their trucks, and how to perform deliveries and installations. The contracts also authorized Diakon to deduct from the drivers’ pay fees and penalties, including truck rental fees, the cost of insurance, workers’ compensation coverage and customers’ refused deliveries.

According to court records, the contracts selected Virginia law to govern the parties’ relations.

In 2016, Johnson and Moore filed a lawsuit against Diakon in federal court, alleging that they were misclassified as independent contractors under Illinois labor laws.

Illinois utilizes the restrictive ABC Test to determine a worker’s classification, while Virginia law is much more likely to consider the drivers as independent contractors.

The district court certified a class comprising of delivery drivers who signed a service agreement with Diakon, were classified as independent contractors and performed deliveries for Diakon and Sears in Illinois from June 28, 2006, to the present.

However, the district court ruled in Diakon’s favor, concluding that “the choice-of-law clauses mandate application of Virginia law.”

Seventh Circuit

The truck drivers appealed to the Seventh Circuit, saying Diakon waived the benefit of choice-of-law provisions.

“The contractual clauses on which Diakon relies do not apply to claims brought under the (Illinois Wage Payment and Collections Act) based on work done in Illinois,” the Seventh Circuit wrote. “The judgment of the district court is reserved, and the case is remanded for further proceedings.”

The Seventh Circuit also sided with the truck driver on another misclassification lawsuit earlier in August.

In that case, the Seventh Circuit determined that a district court erred by allowing the terms of Schneider National’s contract to be the deciding factor. LL