A recent federal court ruling in Ohio has found Total Quality Logistics (TQL), the second-largest freight brokerage in the United States, in violation of federal labor laws. The ruling mandates that TQL must pay overtime wages to thousands of former employees who worked over 40 hours a week. The decision, delivered by Judge Michael Barrett of the U.S. District Court for the Southern District of Ohio, came after an 18-month legal battle and an additional order for TQL to pay an amount equal to the actual damages incurred.
This legal victory is seen as a significant win for over 4,500 members of the class-action suit against TQL. The plaintiffs, including logistics account executive trainees (LAETs) and logistics account executives (LAEs), worked for TQL in Ohio from September 2008 to mid-April 2016. They were initially expected to complete at least six months of sales calls for the company, earning between $36,000 and $38,000 before transitioning to a commission-based pay system. However, only a small fraction of employees made this transition successfully, and they were often required to work over 60 hours per week to meet sales targets, remaining available 24/7 to boost TQL’s customer base and address customer concerns.
The case dates back to 2010 when the lawsuit was initially filed against TQL and its CEO and co-founder, Ken Oaks. TQL repeatedly attempted to decertify the class, but the legal battle continued. During the trial, Oaks acknowledged that the decision to classify LAETs and junior LAEs as salaried employees exempt from overtime was influenced by advice from the Transportation Intermediaries Association (TIA), a trade group representing freight brokers in the U.S.
The ruling against TQL is expected to have a significant impact on other freight brokerages that also exempt trainees from overtime pay. Matthew Leffler, an expert on the matter, believes that this could mark the beginning of a substantial shift in the industry. TQL argued that the trainees’ tasks were administrative in nature and thus exempt from the Fair Labor Standards Act (FLSA) overtime requirements. Still, the judge found that these duties were not directly related to the management or general business operations of TQL or its customers.
TQL, a privately held firm, reported revenues of approximately $8.8 billion in 2022, while CEO Ken Oaks was listed as one of Cincinnati’s wealthiest individuals in 2016 with a net worth estimated at $980 million. The legal action against TQL is considered a hybrid case, as it involves both federal and state law claims. The next steps include determining damages, pre- and post-judgment interest, and attorney’s fees, but the timeline for resolution remains uncertain after a lengthy 13-year legal battle. Attorney Bruce H. Meizlish, who represents the plaintiffs, expressed empathy for the affected individuals and noted that the case has taken a toll on them.