Julie Su Acting United States Secretary of Labor | Official Website
The U.S. Department of Labor has secured a permanent injunction and court order against Cargomatic Inc., a California transportation company, prohibiting it from retaliating against drivers and shifting liability for labor law violations onto workers who exercised their federally protected rights.
A consent judgment and order dated September 25, 2024, in the U.S. District Court for the Central District of California mandates that Cargomatic Inc., based in Long Beach, cease intimidation and threats toward drivers delivering freight for Ceva Freight LLC, a subsidiary of Ceva Logistics located in Torrance.
The Office of the Solicitor at the Department of Labor discovered that after a group of drivers filed suit against Ceva for alleged labor violations, Cargomatic threatened to countersue these drivers for over $150,000 in attorney’s fees. The drivers claimed that the company intimidated them and threatened termination if they continued to seek unpaid wages and other remedies under the Fair Labor Standards Act (FLSA) and the California Labor Code.
Cargomatic allegedly sent letters to drivers involved in the lawsuit with Ceva, accusing them of materially breaching service agreements that included indemnity clauses. These clauses were used by Cargomatic to deter workers from exercising their rights. Additionally, the agreements contained an arbitration provision potentially barring collective relief against 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,” stated 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.”
This legal action is part of broader efforts by the department to combat employers' attempts to enforce coercive contract provisions designed to dissuade or punish workers from enforcing their legal employment rights. Similar actions have been taken against Advanced Care Staffing in New York and Bimbo Bakeries in Vermont.
Cargomatic Inc., which provides transportation logistics services through contracted drivers using a mobile application since at least 2019, has been involved with delivering cargo for Ceva Freight.
Under FLSA regulations, most employees in the U.S. must be paid at least the federal minimum wage for all hours worked and overtime pay at no less than time-and-a-half for hours worked over 40 per week. The law also protects employees' rights to raise wage concerns, participate in Department of Labor investigations, and file private wage actions without employer retaliation.
For more information about FLSA and other laws enforced by the Wage and Hour Division, contact their toll-free helpline at 866-4US-WAGE (487-9243). More resources are available on their website including tools to check if back wages are owed.
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