Controversial Transportation Settlement: $100M Knight-Swift Misclassification

Swift Transportation, now part of Knight-Swift Transportation Holdings, agreed in March 2019 to pay $100 million to resolve Van Dusen v. Swift Transportation, a decade-old class action alleging the carrier misclassified roughly 20,000 truck drivers as independent contractors. A federal judge in Arizona granted final approval on February 5, 2020, and settlement checks went out to class members beginning April 6, 2020. It is one of the largest employment-related payouts in the history of the trucking industry.¹²

What the Drivers Alleged

The lawsuit was filed in December 2009 in the U.S. District Court for the District of Arizona, led by named plaintiffs Virginia Van Dusen and Joseph Sheer. The complaint said Swift ran its owner-operator division in a way that made drivers employees in everything but name: the company controlled their routes, schedules, and load assignments while requiring them to lease trucks from an affiliated company, Interstate Equipment Leasing.³

The money worked like this. Many drivers didn’t own their trucks. Swift selected them to lease vehicles from Interstate Equipment Leasing on leases that renewed automatically year to year. Drivers were paid per mile and received weekly settlement statements like company employees, but they bore the costs of fuel, maintenance, insurance, tolls, and lease payments, all deducted directly from their pay. The combination of those deductions and the minimum driving volume needed to cover weekly rental payments left some drivers earning less than the federal minimum wage, according to the complaint.¹³

Drivers who tried to leave faced two consequences, the plaintiffs said. They would owe all remaining lease payments on the truck, and Swift could file a negative report with DAC, a trucking employment verification service, effectively blacklisting them from other carriers. The complaint raised claims under the Fair Labor Standards Act, state wage and contract laws, and federal forced labor statutes.³¹

Who Was in the Class and What They Received

Judge John W. Sedwick conditionally certified the class in April 2019 under Federal Rule of Civil Procedure 23(b)(3). The class was defined as individuals who had entered into an independent contractor agreement with Swift and a lease agreement with Interstate Equipment Leasing at any time before January 1, 2019. The settlement covered claims from December 23, 1999, through September 8, 2017, spanning nearly two decades of the owner-operator program.⁴⁵

Each class member was entitled to a minimum of $250 for nonwage claims tied to the forced labor and state law counts, with individual payouts reaching up to $5,000 depending on how long the driver worked under the arrangement. Original named plaintiffs could apply for service awards of up to $50,000. Attorneys sought 29% of the settlement fund, plus costs capped at $750,000.¹⁶

Class members did not have to file a claim. Payments were automatic for anyone who did not opt out. After the court’s February 5, 2020, final approval and a 30-day appeal window that expired on March 6, the settlement became effective. Knight-Swift funded the qualified settlement fund by March 26, and checks began mailing on April 6, 2020, to approximately 20,000 drivers.⁷²

Why the Case Took a Decade

For most of the lawsuit’s life, the fight wasn’t about whether drivers were misclassified. It was about whether the case could be heard in court at all. Swift pushed aggressively to force drivers into individual arbitration, pointing to class action waivers in the contracts. If Swift had won that fight, each driver would have had to pursue a claim alone, which would have ended the litigation for most of them.⁵

The plaintiffs countered that the Federal Arbitration Act doesn’t apply to transportation workers. Section 1 of the FAA excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The open question was whether that exemption covered drivers whom Swift had classified as independent contractors. The Ninth Circuit sided with the plaintiffs, holding that a court, not an arbitrator, had to first decide whether the drivers were employees or contractors before anyone could compel arbitration. Swift petitioned the U.S. Supreme Court to reverse that ruling, and the Court denied the petition.⁸

The underlying question was settled nationally in January 2019 in New Prime Inc. v. Oliveira, a separate trucking misclassification case. In an 8-0 opinion by Justice Neil Gorsuch, the Supreme Court held that the FAA’s Section 1 exemption for transportation workers applies to independent contractor agreements, not just traditional employment contracts. The word “employment” in the statute, the Court explained, was understood in 1925, when the FAA was enacted, to mean any agreement to perform work. That ruling removed the arbitration barrier that had stalled the Van Dusen case for years and opened the door to a class settlement weeks later.⁹¹⁰

Knight-Swift’s Position

Knight-Swift denied all allegations throughout the litigation and maintained its owner-operators were properly classified as independent contractors under state and federal law. In a March 2019 statement, the company framed the deal as a business decision: “After carefully evaluating the merits of trying the Sheer/Van Dusen lawsuit versus settling it, we chose the latter as continued litigation of this lawsuit would be protracted, burdensome and expensive for the Company.”¹

The company told investors the payout would not have a material impact on future operations and had already reserved the full estimated amount on its balance sheet as of December 31, 2018.¹¹

Where the Settlement Fits in Trucking Misclassification

The Swift payout wasn’t an outlier. It arrived in a wave of major litigation challenging how the trucking industry uses the independent contractor model. The economic incentive is straightforward: classifying drivers as contractors instead of employees lets carriers avoid payroll taxes, unemployment insurance, workers’ compensation premiums, and benefits. Research estimates misclassification can cut a company’s labor costs by 20% to 40%, with those costs shifting to drivers who then cover fuel, insurance, maintenance, and truck payments out of their own earnings.¹²

FedEx Ground paid roughly $228 million to resolve misclassification claims brought by more than 2,300 California drivers after a 2014 Ninth Circuit ruling that found FedEx drivers were “independent contractors in name only,” and agreed to a separate $240 million settlement covering drivers in 20 additional states.¹³¹⁴ J.B. Hunt settled driver wage lawsuits for $15 million.¹¹

California’s Assembly Bill 5, passed in 2019, codified the stricter “ABC test” for worker classification. Under that test, a worker is presumed to be an employee unless the hiring company can prove the worker is free from the company’s control, performs work outside the company’s usual business, and is independently established in that trade. The middle prong is the sticking point for trucking: it is hard to argue a driver hauling freight for a trucking company is working outside that company’s usual course of business. After the U.S. Supreme Court declined to hear a challenge from the California Trucking Association in June 2022, AB5 took full effect for the state’s trucking industry, affecting an estimated 70,000 owner-operators.¹⁵

A January 2025 report by the federal Truck Leasing Task Force found that drivers in lease-purchase arrangements frequently receive “negative compensation statements,” meaning deductions exceed their pay for a given period and leave them owing money to the carrier. That finding describes the same pattern Van Dusen and Sheer accused Swift of running fifteen years earlier.¹⁶

1
Transport Topics. Knight-Swift Transportation Holdings Settles Owner-Operator Lawsuit for $100 Million
2
Getman, Sweeney & Dunn, PLLC. Swift Transportation Co., Inc.
3
Getman, Sweeney & Dunn, PLLC. Trucking Industry: Swift Transportation and Interstate Equipment Leasing
4
Getman, Sweeney & Dunn, PLLC. Order Conditionally Certifying Class for Settlement Purposes
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Landline Media. Swift Agrees to $100 Million Settlement in Misclassification Lawsuit
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FS Law Firm. Swift to Pay $100M in Independent Contractor Misclassification Lawsuit
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Knight-Swift ERISA Settlement. Van Dusen v. Swift Transportation Settlement
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Public Citizen. Swift Transportation Co. v. Van Dusen
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Oyez. New Prime Inc. v. Oliveira
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Justia Supreme Court. New Prime Inc. v. Oliveira, 586 U.S. ___ (2019)
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Trucking Info. Knight-Swift Agrees to $100 Million Settlement in Misclassification Lawsuit
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Economic Policy Institute. Independent Contractor Misclassification
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Forbes. FedEx Settles Driver Mislabeling Case for $228 Million
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Jeffrey Goldberg Law. FedEx Independent Contractor Misclassification
15
RXO. AB5 Trucking
16
FMCSA. Truck Leasing Task Force Report