A federal court has decided that the nation’s second-largest freight brokerage, Total Quality Logistics, must pay back wages to thousands of former workers who were not paid overtime for working more than 40 hours per week.
After a 12-day bench trial concluded in early March 2022, Judge Michael Barrett of the U.S. The District Court for the Southern District of Ohio released his judgment on September 26. He determined that TQL must pay not just the workers’ extra salaries but also an amount commensurate with their real losses.
Barrett also imposed individual responsibility on TQL CEO and co-founder Ken Oaks.
More than 4,500 people filed a class action lawsuit against TQL, and lead attorney Bruce H. Meizlish from Cincinnati termed Barrett’s finding a “huge win” for his clients.
Challenging Work Conditions and High Turnover at TQL: An Inside Look
Meizlish told a source that, at this point, the actual damages number is unknown. We will argue that they are entitled to receive time and a half for every hour worked over 40.
Between September 2008 and April 2016, more than 4,500 trainees and full-fledged logistics account executives (LAETs and LAEs, respectively) worked with TQL in Ohio.
Before being evaluated for the transition from salary to commission, these trainees are supposed to spend at least six months making sales calls for freight brokers, earning between $36,000 and $38,000.
Former TQL workers have revealed to FreightWaves that just around 5% are successful after making the switch to a commission-only structure.
Sources have learned from former workers that in order to reach sales objectives, they were required to work in excess of 60 hours each week. They were also required to “increase TQL’s customer base” and be reachable at all times to address consumer concerns or inquiries.
In September of 2010, 13 years ago, Meizlish sued TQL and Oaks.
He said that TQL tried to decertify the class multiple times.
Oaks turned to TIA for guidance about exemption
During the course of the 12-day bench trial, Oaks testified that he was the one who came up with the idea to treat LAETs and junior LAEs as salaried employees exempt from overtime. He claimed he came to this conclusion after conducting “research” and seeking guidance from the Transportation Intermediaries Association (TIA), a trade group that represents thousands of freight brokers across the United States.
Oaks stated during his cross-examination that he had conducted research and received advice from the association’s experts and other top brokers in the industry, leading him to make that decision.
Anne Reinke, president and CEO of TIA, expressed disappointment with the judge’s decision in the class action lawsuit against TQL. She specifically mentioned that the ruling pertains to the Fair Labor Standards Act and the Ohio Minimum Wage Standards Act.
Potential Impact of Precedent on TIA Members and TQL’s Response
Reinke stated to a source that this unfortunate precedent has the potential to hinder hiring and innovation among TIA members. TIA will continue to track the progress of this case as it proceeds.
In his evidence, Oaks said he didn’t remember whether he spoke to TIA’s lawyers or employees before making his choice.
TIA can be compared to … Oaks said that he doesn’t know what you call them, the governing organization of brokers in the United States.
The attorney representing the plaintiffs responded by stating, “It is a trade organization, correct?” Oaks responded by saying, “That is correct.”
TQL did not provide a statement to the source before Wednesday’s publishing deadline.
What does the ruling mean for brokers?
As the Armchair Attorney, Matthew Leffler, put it, this is a huge judgment against TQL that “will have substantial fallout” for TQL and other freight brokerages who do not pay trainees overtime.
Leffler stated to a source that this could potentially mark the start of the decline of their business model.
TQL claimed that its LAETs and junior LAEs were exempt from the overtime requirements of the FLSA since the work they did was mostly administrative in nature.
Leffler, however, said that TQL had not shown that the employees’ duties were integral to the management or daily operations of TQL and its clients.
He said that these people had little independence over their ability to make a living.
Leffler stated that the question is what these people are actually doing. He said that they are making cold calls, actively prospecting to acquire business, and handling transportation to some extent based on their mentor’s book of business. The judge determined that their job duties are not directly linked to the management or general business operations of TQL or TQL’s customers.
What’s next?
TQL, a privately owned company, generated over $8.8 billion in sales in 2022. According to Forbes, Oaks has a net worth of $980 million, making him the richest person in Cincinnati as of 2016.
Meizlish said that he filed his lawsuit under both federal and state law, making it a “hybrid action.” The Ohio Minimum Wage Standards Act does not provide for the collection of further damages, but the Fair Labor Standards Act allows for liquidated damages in an amount equal to the amount of actual damages received.
Barrett ordered the parties to confer and provide a joint submission setting out the timeline for briefing on issues of damages, pre-and post-judgment interest and costs, and reasonable attorney’s fees.
Meizlish quipped that retirement was something he’d wanted to be doing by now but isn’t planning on doing anytime soon.
He stated that the case has been dragging on for 13 years, so he doesn’t have a clear timeframe for what happens next. I sympathize with these individuals. Their first employment experience was often the cause of their scars.
Contact Lading Logistics for comprehensive logistics solutions
Overall, Total Quality Logistics (TQL) owes thousands of former workers extra compensation, which might benefit the logistics sector. Lading Logistics is dedicated to staying up-to-date with the latest developments in the trucking industry. They offer a wide range of services, including:
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