Delivery drivers to share $5.6M in misclassification case victory

Nearly 1,400 delivery drivers will split $5.6 million following a yearslong investigation by the U.S. Department of Labor, which found that a national auto parts distributor and an Arizona logistics company had misclassified their employee drivers as independent contractors.

The DOL’s consent judgment, obtained in the U.S. District Court for the District of Arizona, orders joint employers Parts Authority Arizona LLC and Arizona Logistics Inc., operating as Diligent Delivery Systems, to pay $2.8 million in back wages and the same amount in damages, plus interest, to drivers who worked for the companies from 2012 to 2020.

The consent judgment, announced Thursday, also orders Parts Authority, headquartered in Lake Success, New York, and Houston-based Diligent Delivery Systems, along with its owner and CEO, Larry Browne, to pay $150,000 in civil penalties.

As of publication, Diligent Delivery Systems and Parts Authority did not respond to FreightWaves’ request seeking comment. 

The investigation and ensuing litigation spans over eight years — from April 2012 to March 2020 — after the department’s Wage and Hour Division found that the companies violated drivers’ rights under the Fair Labor Standards Act (FLSA) by failing to meet minimum wage requirements, pay straight-time rates for all hours worked, pay time and a half for hours over 40 in a workweek and keep required timekeeping records, according to the DOL release. 

Court documents claim Diligent Delivery Systems required its drivers to sign owner-operator agreements and other documents “purporting to classify driver employees as independent contractors.” 

The company also required employees to use their personal vehicles for deliveries without compensation, a violation of the FLSA. 

The division’s Phoenix district office investigated the case and the department’s solicitor’s office in San Francisco litigated.

Several drivers are owed more than $50,000 in back pay, damages and interest, while others are owed significantly more. One driver, who worked for Diligent Delivery Systems from June 2012 to November 2018, is owed more than $120,000, while a second driver, who worked for the company for more than four years, is owed nearly $97,000, according to court filings. 

Diligent Delivery, which has 46 locations nationwide, services the health care, retail and e-commerce industries and also provides shipping and logistics services on behalf of Parts Authority to automotive dealerships, distributors and wholesalers, according to PitchBook. The company also provides hotshot delivery express services and operates a long-haul trucking division.

“Employers cannot avoid their obligations to pay the minimum wage and overtime through contracting with another entity to obtain employees,” Seema Nanda, solicitor of labor for the DOL, said in a statement. 

Parts Authority, which has Arizona offices in Tempe, Phoenix, Mesa and Surprise, is a leading national distributor of automotive replacement parts, tools, equipment and transmissions with more than 200 locations throughout the U.S. 

According to the consent judgment, payments to misclassified drivers will be completed in October 2025.

“We will continue to identify and address misclassification that not only hurts the workers who are deprived of their wages, but also puts responsible employers at a competitive disadvantage,” said Jessica Looman, DOL’s principal deputy wage and hour administrator.

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Editor: Clarissa Hawes