Pharmaceutical Wholesalers End Misclassified Employee Class Action Lawsuit with $7.5M Deal

Two pharmaceutical wholesalers have reached a settlement with delivery drivers whose misclassified employee class action lawsuit argued that they were misclassified as independent contractors and were subsequently denied overtime.

Cardinal Health Inc. and Kinray Inc. will pay $7.5 million to resolve the misclassified employee claims. The pharmaceutical wholesalers settlement deal has not been approved yet, and awaits approval from a New York federal judge.

The class action settlement will end six years of litigation between the drivers and the wholesalers. Under the proposed settlement deal, 115 drivers will be eligible for at least $2,500. The drivers’ attorneys will receive $2.5 million. 

Reportedly, the deal was struck after mediation between the parties. The drivers expressed approval of the settlement, calling it an “excellent result.” No liability was determined in the pharma wholesalers class action lawsuit, but the parties agreed to come to a settlement to avoid the costs and risks of continuing litigation.

The misclassification class action lawsuit was filed by plaintiffs Freddy F. and Giovanny G. in 2013. The two drivers claim that they singed independent contractor agreements, but were treated like employees.

The drivers argue that because they were treated like employees, they should have received the benefits that come with being an employee, including overtime pay. The drivers also say that because they were treated as employees, they should not have had to pay for costs including truck maintenance and fuel.

The pharmaceutical wholesalers misclassified employee class action lawsuit says that Cardinal Health Inc. and Kinray Inc. violated the Fair Labor Standards Act and the New York Labor Law by misclassifying workers.

The FSLA, or the Fair Labor Standards Act, is a law guaranteeing certain rights to many workers. The rights included under the FSLA include that workers are entitled to fair wages and are entitled to overtime. The law also restricts child labor and establishes a 40-hour work week. 

Allegedly, the company classified the drivers as independent contractors to get out of paying them overtime, and to outsource costs like fuel and repair costs for truck maintenance. However, the drivers were allegedly treated like employees because they had to work on the companies’ schedules, drive assigned routes and meet certain specifications.

In their claims against the pharmaceutical companies, the drivers stress that contractors are not employees because they are not subject to the same oversight as employees.

According to Freddy and Giovanny, the companies misclassified other drivers and knew or should have known that classifying the drivers as contractors when they were subjected to significant oversight amounted to a violation of the law.

Though the drivers were called contractors, Fernandez and Gonzales argued that they qualified as “common law employees” and were entitled to employee benefits. The Balance says that a common law employee is “someone hired by an employer, with the employer having the right to control the employee’s work.”

According to The Balance, if a worker treated as an employee and a business directs their work in a way they would direct the work of an employee and direct what or how it will be done, the contractor is effectively a common law employee. 

The companies tried to win the lawsuit with a summary judgement in 2018, but the judge denied its motion, saying that too many facts in the employee classification class action lawsuit were disputed. In 2019, the drivers amended their complaint.

The Pharmaceutical Wholesalers Worker Classification Class Action Lawsuit is Case No. 1:13-cv-04938, in the U.S. District Court for the Eastern District of New York.

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This article is not legal advice. It is presented 
for informational purposes only.