In January 2023, a court ordered auto-parts distributor Parts Authority Arizona LLC and logistics firm Arizona Logistics Inc. to pay $2.8 million each to delivery drivers for misclassification in Thomas E Perez, et al. v. Arizona Logistics Incorporated, et al.
1398 delivery workers working for the two companies had been classified as independent contractors. The drivers were contracted by Arizona Logistics Inc. to deliver parts on behalf of Parts Authority Arizona LLC. The court relied on information such as the rules of conduct to which the drivers were required to adhere, the extent to which Parts Authority instructed drivers on how to perform their jobs, and requirements to check in with supervisors to conclude that the drivers were employees, and not independent contractors.
In addition to misclassifying the drivers, the court found that the two companies had violated minimum wage and overtime laws by paying the drivers the same rate for all hours worked and failing to keep accurate records of all hours worked. The two companies will pay out the settlement in installments until October 2025.
Lessons learned from the case:
- The case underscores the importance of classifying employees accurately based on their duties, work hours, and the requirement to follow company rules or adhere to a set code of conduct.
- The settlement is a reminder that non-compliance with state and federal overtime, minimum wage, and record-keeping laws could have negative financial implications on a company.
If you want to know more about overtime regulations, read our guide on Arizona Overtime Laws.
