Nov. 29, 2022 – A truck driver claiming that a company violated federal law by paying him less than the minimum wage of $7.25 an hour stated sufficient facts to survive a motion to dismiss for failure to state a claim, the U.S. Court of Appeals for the Seventh Circuit has ruled.
In Brant v. Schneider National, Inc., No. 21-2122 (Aug. 3, 2022), the Seventh Circuit Court of Appeals employed a six-factor test to hold (2-1) that the truck driver had made a plausible claim that he was an employee, rather than an independent contractor.
In August 2018, Eric Brant became an owner-operator with Schneider National, Inc. (Schneider), a national motor carrier. Brant signed two contracts: a two-year lease for a semi tractor-trailer and an operating agreement.
Jeff M. Brown is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by
email or by phone at (608) 250-6126.
Under the terms the operating agreement, Brant leased the truck back to Schneider and received 65% of the gross revenue from shipments he hauled for Schneider.
Additionally, the operating agreement allowed Brant to haul loads for other carriers and hire assistant drivers while specifying that he was responsible for all operating expenses. However, the operating agreement also granted to Schneider the sole discretion to deny Brant permission to haul loads for other carriers.
Federal Lawsuit Over Pay
In July 2020, Brant sued Schneider in the U.S. District Court for the Eastern District of Wisconsin. In his complaint, Brant claimed that:
Schneider violated the Fair Labor Standards Act (FSLA) by failing to pay him the federal minimum wage;
Schneider violated state law by failing to pay him the Wisconsin minimum wage;
the contract with Schneider was void because it was unconscionable; and
Schneider unjustly enriched itself by deducting money from his pay in violation of state law.
The district court granted Schneider’s motion to dismiss for failure to state a claim. Brant appealed.
Writing for a two-judge panel, Judge David Hamilton explained that to survive the motion to dismiss on his FSLA claim, Brant must allege facts sufficient to allow a plausible inference that he was an employee and that he was paid less than the minimum wage for at least one work week.
Brant met the second element, Hamilton pointed out, because in his complaint he alleged that in one week he drove 3,000 miles to deliver five loads but received no net pay.
To determine whether Brant met the first element, Judge Hamilton explained, the court would use a six-factor test required by Seventh Circuit precedent. That test employs the following factors:
the nature and degree of the alleged employer’s control over the manner in which the work is performed;
the alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
the alleged employee’s investment in equipment or materials, or his or her hiring of workers;
whether the service required a special skill;
the permanency and duration of the working relationship; and
the extent to which the service rendered was integral to the alleged employer’s business.
No single factor is controlling, Hamilton noted. Rather, he explained, a court must examine the totality of the circumstances.
‘High Degree of Scrutiny’
Applying the test to the facts alleged in Brant’s complaint, Hamilton concluded that Brant had alleged facts sufficient to allow a plausible inference that he was Schneider’s employee.
Under the operating agreement, Judge Hamilton pointed out, Brant was to determine the “manner, means and methods of performing all Freight Transportation Services.”
But Brant claimed that Schneider controlled not only advertising, billing, and negotiations with customers, it also imposed requirements related to his personal appearance, how he was to pick up and deliver loads, and how to hire help for loading and unloading.
Brant also claimed that Schneider monitored large amounts of data related to his work, including how fast he drove and how long he worked.
“This allegedly high degree of scrutiny into the fine details of the driver’s operations, along with the constant threat of termination for non-compliance, weighs in favor of status as an employee rather than independent contractor,” Hamilton wrote.
Hamilton reasoned that consideration of four of the remaining factors weighed in favor of a conclusion that Brant was Schneider’s employee:
Profit or loss. Brant alleged that he had no realistic choice other than taking the shipments Schneider offered, even when doing so was unprofitable;
Investment in equipment. Brent alleged that his investments in the lease payment, fuel, and equipment depended on Schneider providing him a truck;
Permanency and duration. Schneider renewed the original two-year operating agreement;
Integral part of employer’s business. Brant hauled shipments for Schneider in the same manner as the company’s employee drivers did.
State Minimum Wage Claim
Hamilton then turned to Brant’s state law claim.
Applying Wisconsin law, he concluded that the Wisconsin Supreme Court would hold that Brant had pled facts sufficient to allow a plausible inference that Schneider controlled his work as an employee.
“The state’s courts have interpreted the boundaries of employee status repeatedly … during the last century and place a heavy emphasis on the alleged employer’s right to control the manner and conduct of the work,” Judge Hamilton wrote.
Unconscionability, Unjust Enrichment Claims
Judge Hamilton also concluded that Brant alleged facts sufficient to infer that the contracts he entered into with Schneider were unconscionable and therefore void, and that the money Schneider held back from Brant’s net pay was unjust enrichment.
Hamilton noted that Brant alleged procedural unconscionability by alleging a disparity in bargaining power and the inability to have someone explain the contract terms to him.
Brant also alleged substantive unconscionability, Judge Hamilton noted, by alleging that the operating agreement’s indemnity provision was too broad because it shifted all liability to him.
“If these provisions drafted in Schneider’s contracts are valid, then Schneider and other companies can turn back the clock to a time when low wages, long hours, workplace discrimination, and other forms of abuse were subject to relatively little regulation,” Hamilton wrote.
The Seventh Circuit Court of Appeals remanded the case to the district court for further proceedings.