Schneider Logistics Inc. (Schneider) agreed to pay $21 million to settle a class-action civil lawsuit brought by 1800 dockworkers at a California warehouse. The suit, Carrillo v. Schneider Logistics et al, is significant because it demonstrates the courts’ willingness to untangle multi-level business operations and hold all involved entities liable for wage and hour violations.

The workers involved in the suit work at a warehouse that provides services for Walmart. Although Walmart often manages its own warehouse and distribution centers, it turns management of some over to logistic companies like Schneider.  Schneider Logistics, a division of trucking and logistics company Schneider of Green Bay, Wisconsin, has run Wal-Mart’s Mira Loma distribution center in Riverside County since 2006. Schneider also hired two smaller logistics companies, who in turn hired the dockworkers, or lumpers, who eventually started the legal action.

The lawsuit alleged that workers who loaded and unloaded boxes by hand from shipping containers and into trailers for Walmart often worked below minimum wage for double shifts, seven days a week with no required breaks or overtime premiums.  The workers, who were directly employed by loading and unloading companies, claim they were paid by a piece rate that was later found to be illegal.  Although the two smaller firms hired them, the workers argued that Schneider and Walmart were also responsible for compliance with workplace regulations. For their part, Walmart argued that Schneider was responsible for operations and Schneider argued that they and Walmart were not joint employers because the workers in question were directly employed and paid by the labor services subcontractors. 

Walmart was added as a defendant in 2013.  In a January 2014 ruling, a U.S. District Judge in California rejected these claims by Walmart and Schneider, and ruled they remained potentially liable in the case.  Plaintiffs’ counsel argued that up to a dozen Walmart managers were on site at the warehouse facilities and the daily control over the work made the managers both aware of and liable for wage and hour violations at the warehouse.  Significantly, this marked the first time that retail giant Walmart or any retailer was determined to have joint employer status in a suit involving contracted laborers.

Walmart and Schneider agreed to a settlement of $21 million to resolve the massive wage and hour claims. Under the terms of the settlement agreement, Schneider will pay the entire $21 million in unpaid wages, interest, and penalties.  Both companies have reserved the right to go after the subcontractors paid as a result of the settlement.