Matco Tools Corporation is the defendant in a proposed class action filed by distributors who claim they were misclassified as independent contractors and cheated out of proper wages.
Behind the suit are current and former distributors who operated Matco shops out of mobile trucks. As a result of their supposed misclassification, the plaintiffs were deprived of lawful minimum and overtime wages, the lawsuit alleges, as well as proper break periods. Additionally, the distributors allege they were not reimbursed for business expenses, such as an initial fee that covered training, software and licensing costs. Other out-of-pocket expenses included fuel, vehicle payments, car and health insurance, according to the complaint. The plaintiffs argue that they should have been designated as true employees, in part because Matco sets distributors’ sales goals and “strictly controls and regulates” their client lists, merchandise and work equipment.
The suit goes on to charge that the defendant effectively acquires free labor from distributors’ spouses, such as one plaintiff who claims Matco made her “personally liable” for operational responsibilities, including inventory and accounting duties, despite not being on payroll. The spousal plaintiff alleges distributors’ spouses are bound by Matco’s distributor agreements.
Lastly, the case claims Matco issues distributors loans with excessive interest rates—10 percent—for the purposes of obtaining inventory and other business expenses. From the complaint:
“In short, not only does Matco illegally require that Distributors and their Spouses pay for Matco’s business expenses, but it also charges illegal interest rates on money it loans to these individuals for such expenses.”
The case, which was filed in December 2018, has been recently removed to federal court in California.