December 20, 2021 – Parties Ask for Approval of $15.8M Settlement
Matco has agreed to settle the claims detailed on this page in a deal that would benefit roughly 273 current and former distributors.
The proposed settlement looks to provide cash payments that will amount to an average of $35,000 each and forgive more than $2 million of debt owed by former distributors who ended their Matco Tools distributorships on or before September 8, 2021. The debt relief component brings the total net value of the deal to an average of $42,000 for each person covered by the settlement, according to a December 13 memo.
The settlement looks to cover anyone who signed a Matco Tools franchise distributorship agreement in California and personally operated a mobile store anytime between January 25, 2015 and the date the court grants preliminary approval of the deal.
Matco has also agreed to amend current distributors’ agreements to essentially give the company less control over the workers’ businesses. The amendments also include an arbitration provision. While distributors will be permitted to opt out of the arbitration provision, those who choose not to opt out will receive an additional $5,000 payment.
If the settlement receives the judge’s preliminary approval, notice will be sent via mail to those covered by the deal. There will be no need to file a claim for payment; checks will automatically be mailed to each class member who does not opt out of the settlement.
The plaintiff’s counsel have praised the deal as a “significant recovery” that “secures meaningful relief” for distributors.
A former Matco Tools distributor has filed a proposed class action in which he claims he was misclassified as an independent contractor exempt from California labor law protections.
In an effort to “avoid various duties and obligations owed to employees,” Matco Tools, the suit alleges, systematically misclassifies distributors who, in practice, operate as employees. According to the suit, the plaintiff worked at least 60 hours each week following a Salinas Valley, California sales route out of his mobile Matco Tools store. Upon being hired, the man was required to sign a distributor agreement that broke down “in exhaustive and minute detail” how he should perform his work, the case says. For example, distributors are supposedly provided with a pre-approved list of customers, hardware and software. Additionally, Matco Tools allegedly controls distributors’ inventory and product prices. The suit argues that given how highly controlled his work environment was, the plaintiff was not, in actuality, operating as an independent contractor.
As a result of his alleged misclassification, the plaintiff was deprived of proper overtime wages and paid meal and rest breaks, the case says. Moreover, the man claims he was not reimbursed for business expenses, including at least $50,000 spent on inventory, a $799 to $899 software license fee, and car insurance and uniform costs.