The California Labor Commissioner’s Office cited Costco Wholesale Corp. and two trucking firms a combined $868,128 for allegedly misclassifying 58 delivery drivers as contractors.
The agency said drivers working for Mega Nice Trucking, based in Chula Vista, California, were systematically misclassified as contractors and deprived of protections, including minimum wage, mandatory breaks and workers compensation coverage. Although the drivers were reclassified as employees in 2023, the violations allegedly continued.
“Workers continued to receive a flat daily rate without proper compensation for overtime hours or missed meal breaks,” the LCO said in a statement. “Investigators also uncovered falsified payroll records, suggesting deliberate efforts to conceal these ongoing labor law violations.”
Mega Nice Trucking was a subcontractor for third-party logistics companies, including Ryder Last Mile Inc., and delivered large items around San Diego for big box retailers, including Costco.
The Labor Commissioner’s Office said Costco and Ryder had direct control over Mega Nice drivers. Actions such as scheduling deliveries, requiring uniforms and closely monitoring driver performance established a joint employer relationship, making them equally liable for the alleged misclassification.
All three companies have appealed the citations.
WorkCompCentral is a sister publication of Business Insurance. More stories here.