1012-00004 · Stonefield Logistics Group · Factual Investigation & Analysis

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

MEMORANDUM

FROM: Devon Archer, Working Associate, Labor & Employment, Calderwood & Harkness LLP James Underwood, Lead Associate, Labor & Employment, Calderwood & Harkness LLP

TO: Bernard Crawford, Responsible Partner, Labor & Employment, Calderwood & Harkness LLP Renata Vasquez, Billing Partner, Labor & Employment, Calderwood & Harkness LLP

DATE: June 30, 2025

RE: Subcontracting and Multi-Platform Engagement Analysis — Delano v. Stonefield Logistics Group Inc., Case No. 3:25-cv-01847-RBC (N.D. Tex.)

CLIENT: Stonefield Logistics Group Inc.

MATTER NO.: 1012-00004

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I. Executive Summary

The purpose of this memorandum is to present a comprehensive analysis of Stonefield Logistics Group Inc.'s ("SLG" or the "Company") internal records concerning the extent to which delivery drivers classified as independent contractors under SLG's Independent Contractor Operating Agreements ("ICOAs") engaged in (a) subcontracting of deliveries to third parties, and (b) performing delivery or driving services for competing platforms or companies during the relevant period of April 30, 2022 through the present. This analysis is undertaken in support of SLG's defense in the above-captioned matter, in which named plaintiff Marcus Delano seeks conditional certification of a collective action under Section 216(b) of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), alleging that SLG misclassified approximately 1,187 delivery drivers as independent contractors and failed to pay overtime compensation for hours worked in excess of forty per workweek.

The findings in this memorandum bear on two critical aspects of SLG's defense. First, subcontracting and multi-platform engagement are directly relevant to the "opportunity for profit or loss through the exercise of managerial skill or entrepreneurial initiative" factor of the FLSA economic reality test as applied in the Fifth Circuit. A worker's ability to hire assistants or substitutes, and a worker's freedom to provide services to competing enterprises simultaneously, are hallmarks of independent contractor status that courts routinely examine when evaluating the totality of the working relationship. Second, and of more immediate procedural significance in light of the August 13, 2025 deadline for SLG's opposition to conditional certification, the variation in subcontracting activity and multi-platform engagement across the approximately 1,187 drivers in the proposed collective — and particularly across the 14 distribution hubs — is relevant to demonstrating the lack of commonality required for conditional certification under the lenient standard applied at the first stage of the Lusardi-type two-stage certification process.

At a high level, our analysis reveals the following preliminary findings. Subcontracting was contractually permitted under all three ICOA versions but was rarely exercised in practice. Across all 14 hubs during the relevant period, only 73 subcontracting approval requests were submitted, of which only 19 were approved, yielding an overall approval rate of approximately 26%. Actual delivery volume performed by approved subcontractors was negligible, representing less than 0.3% of total deliveries during the relevant period. The low approval and utilization rates present a mixed picture for SLG's defense: while the contractual right to subcontract supports independent contractor status, the practical barriers to exercising that right — particularly as compounded in the ICOA v3.0 revisions — undercut the argument that the entrepreneurial opportunity was genuine and meaningful.

Multi-platform engagement, by contrast, was more prevalent than plaintiff's allegations suggest, though unevenly distributed across the 14 hubs. Based on our analysis of the 50-driver sample across five hubs, we estimate that approximately 31% of sampled drivers engaged in delivery or driving services for at least one competing platform or company during some portion of the relevant period. This figure, if representative of the broader population (a determination we reserve for Dr. Priya Ramanathan's expert statistical analysis through Corbin Risk Advisors LLC), provides meaningful support for SLG's position that drivers exercised entrepreneurial initiative and were not economically dependent solely on SLG. However, the 85% minimum acceptance rate, the mandatory delivery windows of 7:00 AM to 8:00 PM Monday through Saturday, and the 12-month, 50-mile non-compete clause collectively constrained the practical ability of drivers to pursue multi-platform work, and plaintiff's counsel will undoubtedly argue that these contractual provisions rendered the freedom to work elsewhere largely theoretical.

In sum, the subcontracting and multi-platform engagement data present both favorable and unfavorable elements for SLG's defense. The multi-platform engagement evidence is the stronger of the two data sets from a defensive standpoint, while the subcontracting data carries strategic risks if not carefully presented. We recommend emphasizing multi-platform engagement variance in the conditional certification opposition and exercising caution in how the subcontracting approval rate data is deployed, as discussed in greater detail in Section VII below.

This memorandum should be read in conjunction with the following related work product:

• Driver Classification Analysis Memorandum (FLSA Economic Reality Test), dated May 20, 2025;

• RouteSync Data & GPS Log Analysis Memorandum, dated June 25, 2025;

• ICOA Version Comparison Chart, dated May 12, 2025; and

• Memorandum re: Strategic Considerations — Motion to Compel Arbitration Timing, dated June 10, 2025.

II. Scope of Review and Data Sources

A. Records Reviewed

In preparing this memorandum, we reviewed the following categories of records and data sources:

1. SLG Human Resources and Driver Relations Records. We reviewed records maintained by Karen Lund, Director of Driver Relations, including driver roster files, ICOA execution records, correspondence files relating to driver classification and engagement terms, and internal policy memoranda governing the Company's relationship with contracted drivers across all 14 distribution hubs.

2. Independent Contractor Operating Agreements (All Versions). We reviewed and analyzed all three versions of the ICOA:

(a) ICOA v1.0 (2018), originally drafted by Pennfield & Daye LLP in connection with SLG's transition to an independent contractor delivery model;

(b) ICOA v2.0 (August 2020), incorporating revisions to the subcontracting approval process and the addition of the Subcontractor Approval Request Form as a standard exhibit; and

(c) ICOA v3.0 (January 2023), incorporating further revisions to subcontracting requirements, including mandatory training and the Subcontractor Acknowledgment Agreement, as well as the addition of a binding arbitration clause and collective action waiver.

3. Subcontracting Approval Request Files. We reviewed subcontracting approval request files maintained at the hub level by individual hub managers and centrally by the Driver Relations department. These files include the Subcontractor Approval Request Forms (for drivers operating under ICOA v2.0 and v3.0), informal written requests (for drivers operating under ICOA v1.0), approval and denial correspondence, background check results for proposed substitute drivers, and vehicle inspection records.

4. RouteSync Dispatch Platform Data. We reviewed RouteSync dispatch data for the relevant period of April 30, 2022 through June 2025 across all 14 distribution hubs. This data includes delivery assignment records, driver acceptance and declination records, delivery completion timestamps, and scheduling data. This data set is the same data set analyzed in the RouteSync Data & GPS Log Analysis Memorandum dated June 25, 2025, and cross-references to that memorandum are made throughout this analysis where applicable.

5. GPS Telematics Data. We reviewed GPS telematics data from SLG-provided telematics devices installed on all contracted driver vehicles. This data includes vehicle location, ignition status, mileage, and route tracking information. As discussed in Section V below, GPS data was utilized as indirect evidence of multi-platform engagement during non-delivery hours, subject to the limitations identified in the RouteSync/GPS analysis memorandum.

6. Accounts Payable Records. We reviewed SLG's accounts payable records reflecting payments to drivers and, where applicable, to driver-designated subcontractors during the relevant period. These records include payment amounts, payment dates, delivery volume associated with each payment, and deductions or adjustments. Where payments were directed to a subcontractor rather than the contracting driver, those transactions were flagged and cross-referenced against the subcontracting approval files.

7. Driver Onboarding and Orientation Files. We reviewed onboarding and orientation files for drivers who commenced services during the relevant period, including executed ICOAs, acknowledgment forms, intake questionnaires (which include questions regarding concurrent engagement with other delivery or logistics companies), and training completion records.

8. Performance Review Records. We reviewed performance review records triggered by driver acceptance rates falling below the 85% minimum acceptance rate per rolling 30-day period. These records include written notifications to drivers, driver responses, and any corrective action or contract termination proceedings that resulted from sustained sub-threshold acceptance rates.

9. 50-Driver Sample. Consistent with the sampling methodology employed in the RouteSync/GPS analysis memorandum of June 25, 2025, we analyzed a sample of 50 drivers across five hubs, selected to be representative of the geographic and operational diversity of SLG's hub network:

• HUB-01 Fort Worth: 10 drivers (of 142 total at hub)

• HUB-02 Dallas: 10 drivers (of 168 total at hub)

• HUB-03 Houston: 10 drivers (of 195 total at hub)

• HUB-06 Oklahoma City: 10 drivers (of 87 total at hub)

• HUB-09 New Orleans: 10 drivers (of 71 total at hub)

The selection methodology and representativeness assessment for this sample are detailed in the RouteSync/GPS analysis memorandum and will be subject to further validation in Dr. Ramanathan's expert analysis.

10. Interviews and Communications. We conducted interviews and reviewed communications with the following SLG personnel:

• Trevor Sandoval, Vice President of Operations, interviewed on May 8, 2025 and June 12, 2025;

• Karen Lund, Director of Driver Relations, interviewed on May 15, 2025 and June 19, 2025; and

• Dennis Faulkner, Hub Manager, Fort Worth HUB-01, interviewed on June 5, 2025.

B. Limitations. Several significant limitations affect the scope and reliability of this analysis, which should be taken into account in evaluating the findings presented herein and in determining how to deploy these findings in litigation.

Lack of Comprehensive Records of Outside Employment. SLG does not maintain comprehensive records of drivers' outside employment or engagement with competing delivery platforms. This is consistent with the Company's treatment of drivers as independent contractors — an employer would typically not track an independent contractor's outside business activities. However, this data gap means that our analysis of multi-platform engagement necessarily relies on indirect evidence, including RouteSync scheduling gaps, tax records where available, driver intake questionnaire responses (which capture only a point-in-time snapshot at onboarding), and anecdotal information provided by hub managers. The absence of direct, comprehensive data means that our estimates of multi-platform engagement rates are likely conservative, as some drivers who worked for other platforms may not have been identified through the indirect indicators available to us.

Outstanding discovery. Named plaintiff Marcus Delano's discovery responses to Defendant's First Set of Interrogatories (served June 23, 2025) are not yet due. Interrogatory Nos. 4, 7, and 12 specifically seek information regarding Delano's engagement with other delivery platforms and his total income from all sources during the relevant period. Similarly, Delano's tax returns (Schedule C), 1099-NEC forms, and bank records are the subject of Defendant's First Set of Requests for Production (also served June 23, 2025, Request Nos. 3, 5, 8, and 14) and have not yet been produced. Delano's responses to these discovery requests will be critical to evaluating his individual multi-platform engagement and should materially affect the analysis in Section V.D below.

Sample Size Limitations. The 50-driver sample across five hubs represents approximately 4.2% of the total population of 1,187 drivers. While the sample was designed to capture geographic and operational diversity, it is not a statistically random sample and should not be treated as such for purposes of population-level inferences. A full population analysis of all 1,187 drivers is planned as part of Dr. Priya Ramanathan's expert analysis through Corbin Risk Advisors LLC. This memorandum provides a preliminary assessment based on available records and the 50-driver sample, and its findings should be understood as directional rather than definitive pending Dr. Ramanathan's work.

III. ICOA Subcontracting Provisions Across Versions

A. ICOA v1.0 (2018)

The original ICOA, drafted by Pennfield & Daye LLP in 2018 in connection with SLG's transition from an employee-driver model to an independent contractor model, addressed subcontracting in Section 4.3, titled "Substitute Drivers and Helpers." The operative language provided:

"Contractor may engage substitute drivers or helpers to perform assigned deliveries under this Agreement, subject to prior written approval from the Hub Manager at Contractor's assigned distribution hub. Contractor shall remain responsible for ensuring that all deliveries are completed in accordance with the service standards set forth in this Agreement."

Several features of the v1.0 subcontracting provision are noteworthy. First, the provision nominally grants a broad right to subcontract — drivers "may engage substitute drivers or helpers" — language that is favorable to SLG's independent contractor classification argument. Second, however, the right is conditioned on "prior written approval" from the hub manager, introducing a gatekeeper function that is more consistent with an employment relationship in which the employer retains the ultimate right to control the manner in which work is performed. Third, the v1.0 ICOA does not enumerate any criteria that hub managers are to apply in evaluating subcontracting requests, leaving the approval determination entirely to hub manager discretion. This absence of standardized criteria resulted in inconsistent application across hubs, as discussed in Section IV below. Fourth, no standardized form or process was established for requesting subcontracting approval under the 2018 version; requests could be made by email, text message, or informal written communication to the hub manager.

Approximately 547 drivers signed either ICOA v1.0 or its substantively identical successor, ICOA v2.0, during the pre-January 2023 period. Because v2.0 retained the same general subcontracting language while adding procedural requirements, the total pre-v3.0 driver population is approximately 547, computed as the difference between the total population of 1,187 and the approximately 640 drivers who signed ICOA v3.0 after its implementation in January 2023. Named plaintiff Marcus Delano signed ICOA v1.0 and was not required to execute v2.0 or v3.0 during his tenure.

B. ICOA v2.0 (August 2020)

ICOA v2.0, implemented in August 2020, retained the same general subcontracting provision in Section 4.3, with language substantively identical to v1.0. The v2.0 revision, however, added two significant procedural requirements. First, Section 4.3(b) was added to require that any proposed substitute driver "must pass a background check conducted by or on behalf of [SLG], including a criminal history check and driving record review, prior to receiving approval to perform deliveries." Second, Section 4.3(c) was added to require that any vehicle to be operated by a proposed substitute driver "must pass a vehicle safety inspection conducted by [SLG] or its designated inspection provider, confirming that the vehicle meets the specifications set forth in Exhibit B [Vehicle Requirements]."

In addition to these substantive conditions, v2.0 introduced the "Subcontractor Approval Request Form" as Exhibit D to the ICOA, standardizing the process for requesting subcontracting approval. The form requires the contracting driver to provide the proposed substitute's full legal name, date of birth, driver's license number, vehicle information, insurance documentation, and a statement regarding the specific deliveries or time periods for which the substitute will be engaged. Upon receipt of a completed form, the hub manager is to initiate the background check and vehicle inspection processes before rendering an approval decision.

The practical effect of these v2.0 additions was to create meaningful administrative hurdles to subcontracting that did not exist under v1.0. The background check process, as described by Karen Lund, typically required five to seven business days to complete. The vehicle inspection required the substitute driver to bring the proposed vehicle to the hub for in-person inspection, which was available only during business hours on weekdays. These requirements, while facially reasonable as safety and quality measures, had the practical consequence of making ad hoc or short-notice subcontracting extremely difficult. A driver who needed a substitute for a particular day or week due to illness, personal obligations, or the desire to pursue other business opportunities could not obtain approval on a timeline that would be useful, effectively negating the subcontracting right in many real-world scenarios.

C. ICOA v3.0 (January 2023)

ICOA v3.0, implemented in January 2023, retained the subcontracting provision but further conditioned it with additional requirements. Section 4.3 of v3.0 provides that a contracting driver may engage a substitute driver to perform deliveries, provided that the following conditions are satisfied:

(1) The contracting driver obtains prior written approval from the Hub Manager using the Subcontractor Approval Request Form (Exhibit D);

(2) The proposed substitute driver passes an SLG background check, including criminal history, driving record, and drug screening;

(3) The proposed substitute driver's vehicle passes an SLG vehicle safety inspection confirming compliance with the vehicle specifications set forth in Exhibit B, including the requirement that the vehicle be a cargo van or box truck with a model year of 2015 or newer;

(4) The proposed substitute driver completes SLG's 16-hour initial safety and customer-service training program, conducted at the assigned hub over two consecutive business days; and

(5) The proposed substitute driver signs a Subcontractor Acknowledgment Agreement (Exhibit E), acknowledging compliance with SLG's service standards, safety protocols, customer interaction guidelines, and data privacy requirements.

Section 4.3(f) of v3.0 further added language providing that the contracting driver "remains solely responsible for the performance and quality of all deliveries performed by any approved substitute driver," and that any service failures, customer complaints, or safety incidents attributable to a substitute driver will be assessed against the contracting driver's performance record for purposes of the performance evaluation provisions of Section 7.

Separately, ICOA v3.0 introduced a binding arbitration clause in Section 12 and a collective action waiver in Section 12.4. While these provisions are analytically distinct from the subcontracting provisions, they are relevant to the overall litigation strategy insofar as approximately 640 drivers signed v3.0 and are potentially subject to arbitration. The interplay between the arbitration and subcontracting issues is addressed in Section VII.B below.

The practical observation regarding v3.0 is that the cumulative effect of the five subcontracting conditions made the approval process significantly more burdensome than under either v1.0 or v2.0. The 16-hour training requirement alone represented a substantial barrier, as it required a proposed substitute to devote two full business days to unpaid training at an SLG hub before performing a single delivery. When combined with the background check timeline (now expanded to include drug screening), the vehicle inspection requirement, and the Subcontractor Acknowledgment Agreement, the v3.0 subcontracting process was so demanding that it effectively discouraged all but the most determined and well-resourced drivers from attempting to subcontract. As discussed in Section IV below, the empirical data confirms that subcontracting requests declined further after v3.0's implementation.

D. Cross-Version Comparison Summary

The trajectory across the three ICOA versions reveals a consistent pattern of escalating requirements that progressively narrowed the practical availability of the subcontracting right. The following table summarizes the key differences:

All three versions nominally permit subcontracting, which is a threshold positive for SLG's classification defense. However, the escalating requirements across versions made actual subcontracting progressively more difficult, creating a tension between the contractual right and its practical exercise that courts scrutinize carefully in the independent contractor analysis. This tension is a risk factor for SLG's position, as discussed further in Section IV.D below.

For the complete side-by-side textual comparison of the subcontracting provisions across all three ICOA versions, we refer to the ICOA Version Comparison Chart (work product dated May 12, 2025), which is also reproduced in relevant part in Appendix D to this memorandum.

IV. Subcontracting in Practice: Empirical Analysis

A. Subcontracting Approval Request Data (All Hubs, April 2022 – June 2025)

1. Aggregate Findings. Based on our review of subcontracting approval request files maintained at the hub level and centrally by the Driver Relations department, the following aggregate data reflects subcontracting activity across all 14 SLG distribution hubs during the relevant period of April 30, 2022 through June 30, 2025:

• Total subcontracting approval requests submitted: 73

• Total approvals granted: 19

• Total denials: 47

• Total requests pending or withdrawn: 7

• Overall approval rate (approvals / requests decided): 28.8% (19 of 66 decided requests)

• Overall approval rate (approvals / total requests submitted): 26.0% (19 of 73 total requests)

These figures represent the total requests submitted by drivers across the entire 1,187-driver population over a period of approximately 38 months. On a per-driver basis, the 73 total requests represent a submission rate of approximately 6.2% of the driver population — meaning that approximately 93.8% of drivers never submitted a single subcontracting approval request during the relevant period. Among the 73 requests, some drivers submitted multiple requests; the 73 requests were submitted by approximately 58 unique drivers.

The low submission rate is itself a significant data point. It could reflect drivers' awareness that the approval process was burdensome and unlikely to succeed (supporting plaintiff's characterization of the right as illusory), or it could reflect that drivers simply did not desire to subcontract and preferred to perform deliveries themselves (supporting SLG's position that the low utilization rate reflects driver choice rather than Company control). Both characterizations have some evidentiary support, and we anticipate plaintiff's counsel at Hartwell & Brashear will vigorously advance the former interpretation.

2. Hub-by-Hub Breakdown. The following table presents subcontracting approval request data by hub. The data reveals significant variation across hubs, which is relevant to SLG's conditional certification opposition.

Several observations emerge from the hub-level data:

Hubs with Zero Approvals. Four hubs — HUB-01 Fort Worth, HUB-11 Shreveport, HUB-13 Lubbock, and HUB-14 Corpus Christi — granted zero subcontracting approvals during the relevant period. Notably, HUB-01 Fort Worth is the hub where named plaintiff Marcus Delano was assigned, and the zero-approval record at that hub is consistent with his allegation that subcontracting approvals were "rarely, if ever, granted." This data point is problematic for SLG because the named plaintiff's own experience will be the most visible data point before the Court, and a zero-approval record at his hub tends to corroborate his characterization of the subcontracting right as illusory.

Hubs with Higher Approval Rates. By contrast, HUB-06 Oklahoma City had an approval rate of 50.0% (3 approvals out of 6 decided requests), and HUB-09 New Orleans had an approval rate of 40.0% (2 approvals out of 5 decided requests). HUB-03 Houston, the largest hub by driver count, had an approval rate of 38.5% (5 approvals out of 13 decided requests). These hubs demonstrate that subcontracting approval was not uniformly unavailable — some hub managers were materially more receptive to subcontracting requests than others. This variation is favorable for SLG's conditional certification opposition because it demonstrates that the subcontracting experience was not uniform across the proposed collective but rather depended on hub-specific managerial practices and individual circumstances.

Hub Size and Request Volume. There is a rough positive correlation between hub size and the number of subcontracting requests, as expected. HUB-03 Houston (195 drivers) generated 14 requests, while HUB-13 Lubbock (29 drivers) generated only 3. However, the per-capita request rate is relatively consistent across hubs, ranging from approximately 2.1% (HUB-01 Fort Worth: 3 requests among 142 drivers) to approximately 10.3% (HUB-13 Lubbock: 3 requests among 29 drivers), suggesting that the low submission rate is a system-wide phenomenon not concentrated in particular hubs.

3. Reasons for Denials. Our review of the 47 denial records reveals the following categories of stated reasons for denial:

• Substitute driver failed background check: 14 denials (29.8%). In these cases, the proposed substitute driver had disqualifying criminal history, an unsatisfactory driving record (including excessive moving violations or a DUI within the preceding five years), or failed a drug screening (under v3.0).

• Substitute vehicle did not meet SLG specifications: 9 denials (19.1%). The most common vehicle-related deficiency was failure to meet the model year 2015 or newer requirement for cargo vans and box trucks. In several instances, the proposed substitute intended to use a personal vehicle that did not meet the cargo capacity requirements specified in Exhibit B of the ICOA.

• Substitute did not complete required 16-hour training: 8 denials (17.0%). All eight of these denials occurred after January 2023 and involved drivers operating under ICOA v3.0. In several cases, the proposed substitute scheduled the training but did not complete both days, and the hub manager denied the request for failure to satisfy the training condition.

• Timing or urgency of request: 6 denials (12.8%). In these cases, the contracting driver submitted the request too close to the requested substitution date for the background check and inspection processes to be completed in time. This category is particularly significant because it illustrates the practical barrier created by the multi-step approval process: even where the request might have been approved on the merits, the administrative timeline rendered it moot.

• Insufficient documentation or incomplete form: 4 denials (8.5%). These involved requests where the contracting driver did not submit a completed Subcontractor Approval Request Form or omitted required supporting documentation.

• No substantive reason documented: 6 denials (12.8%). In six instances, the denial record does not contain a documented substantive basis for the denial. The hub manager's file simply reflects that the request was "denied" or "not approved" without further explanation. These undocumented denials are concentrated at HUB-01 Fort Worth (2 of 3 denials) and HUB-13 Lubbock (2 of 3 denials).

The existence of six denials without documented substantive reasons is a risk factor for SLG. If plaintiff's counsel obtains these records in discovery, they may argue that the denials reflect hub managers' practice of rejecting subcontracting requests as a matter of course without genuine consideration, further supporting the argument that the subcontracting right was illusory. The concentration of undocumented denials at HUB-01 Fort Worth, the named plaintiff's hub, amplifies this risk.

B. Actual Subcontracting Activity

Of the 19 approved subcontracting requests, our review of RouteSync dispatch data and accounts payable records indicates that 16 resulted in actual deliveries being performed by an approved substitute driver. The remaining 3 approvals were granted but ultimately not utilized by the contracting driver — in two cases because the need for a substitute had passed by the time the approval was obtained, and in one case for reasons not documented.

The 16 instances of actual subcontracting yielded the following delivery volume:

• Total deliveries performed by approved subcontractors during the relevant period: 1,247

• Total deliveries performed by all drivers across all 14 hubs during the relevant period: Approximately 4,832,000

• Subcontractor-performed deliveries as a percentage of total deliveries: Approximately 0.026%

The 1,247 subcontractor-performed deliveries were distributed across 9 hubs (the 5 hubs with zero approvals naturally had zero subcontractor deliveries) and across the full relevant period. The geographic and temporal distribution was as follows:

One driver at HUB-06 Oklahoma City is noteworthy: Driver OKC-037 (name withheld for privilege purposes) submitted three separate subcontracting requests between July 2022 and January 2025, all of which were approved, resulting in 178 deliveries performed by his designated substitute over intermittent periods. Driver OKC-037 appears to have established something approaching a business model involving regular use of a subcontractor, engaging his substitute during periods when he was performing delivery services for a competing logistics company. This driver's experience is potentially favorable for SLG's argument that the subcontracting right had real economic value and was exercised as part of entrepreneurial activity, though the singularity of this example limits its persuasive weight.

C. Named Plaintiff Marcus Delano's Subcontracting History

Marcus Delano performed delivery services under contract with SLG from March 2021 through September 2024, operating out of HUB-01 Fort Worth under the supervision of Hub Manager Dennis Faulkner. Delano signed ICOA v1.0 in March 2021 and was not required to execute the v2.0 or v3.0 revisions. Notably, because Delano signed v1.0, which does not contain the arbitration clause or collective action waiver introduced in v3.0, he is not subject to SLG's Motion to Compel Arbitration, which is directed at the approximately 640 drivers who executed v3.0.

Our review of the subcontracting approval request files for HUB-01 Fort Worth reveals that Marcus Delano did not submit any subcontracting approval requests during his tenure. This finding is consistent with the allegations in the Complaint, where Delano alleges that subcontracting approvals were "rarely, if ever, granted" and that the right to subcontract was "effectively meaningless." However, we note the distinction between alleging that approvals were rarely granted (which the data confirms at HUB-01) and the fact that Delano himself never submitted a request. Plaintiff's counsel may argue that Delano's failure to submit a request reflects the chilling effect of a process he perceived as futile. SLG may argue that Delano's failure to even attempt to exercise his contractual right to subcontract reflects his own voluntary choice and cannot be attributed to SLG's control.

The significance of this data point for the economic reality test is nuanced. If Delano never attempted to subcontract, plaintiff's counsel will argue that the subcontracting provision was illusory in practice and that no reasonable driver would have attempted to navigate the approval process given the known low success rate. Conversely, SLG can argue that Delano's failure to exercise the right — indeed, his failure even to attempt to exercise the right — reflects that he was not prevented from subcontracting but simply chose not to pursue it, and that the ICOA's subcontracting provision nonetheless demonstrates the independent contractor nature of the relationship.

D. Implications for Classification Defense

The subcontracting data presents a mixed picture for SLG's economic reality test defense.

Favorable Elements:

• All three ICOA versions contractually permit subcontracting, which is a structural feature of the relationship more consistent with independent contractor status than employee status. Employees are not typically given the contractual right to hire their own substitutes to perform their work.

• Some drivers at some hubs did exercise the right to subcontract, and 19 approvals were granted during the relevant period. The fact that the right was not entirely theoretical is helpful, though the small numbers limit the force of this argument.

• At least one driver (OKC-037) appeared to use subcontracting as part of a broader entrepreneurial strategy involving multi-platform engagement, demonstrating that the subcontracting right had real economic value for drivers who chose to exercise it.

Unfavorable Elements:

• The overall approval rate of 28.8% (or 26.0% of all requests including pending and withdrawn) and the vanishingly small volume of subcontractor-performed deliveries (0.026% of total deliveries) strongly suggest that the right to subcontract was largely theoretical for the vast majority of drivers. Courts in this Circuit and elsewhere have recognized that a theoretical right to subcontract that is rarely exercised carries diminished weight in the economic reality analysis.

• The escalating requirements across ICOA versions, particularly the v3.0 requirement of a 16-hour training program for substitutes, created progressively more onerous barriers that had the practical effect of discouraging subcontracting.

• The existence of undocumented denials at certain hubs suggests that some hub managers may have treated the subcontracting provision as a formality rather than a genuine right, raising concerns about the good faith of SLG's administration of the subcontracting process.

• The zero-approval record at HUB-01 Fort Worth is particularly damaging because it is the named plaintiff's hub and will be the most visible data point before the Court.

Relevant Case Law. In Hopkins v. CornerStone Staffing Solutions, Inc., 545 F.3d 338 (5th Cir. 2008), the Fifth Circuit considered the subcontracting factor as part of the economic reality test and noted that while the contractual right to subcontract favors independent contractor status, its weight is diminished when the right is "more theoretical than real." More recently, in Parada v. Bramwell Group, No. 3:19-cv-01420-S, 2021 WL 4134508 (N.D. Tex. Sept. 10, 2021), the Northern District of Texas found that a subcontracting provision that was "subject to numerous conditions and rarely exercised" weighed only slightly in favor of independent contractor status. The court observed that "a right that exists on paper but is rarely available in practice carries limited weight in the economic reality analysis."

SLG's subcontracting data falls squarely within the zone of vulnerability identified in these decisions. The contractual right exists, but the practical exercise of that right was exceptionally rare, and the conditions imposed on its exercise were substantial. We recommend that the subcontracting data be presented carefully and in the context of the broader entrepreneurial opportunity analysis, with emphasis on the contractual right itself rather than the utilization rate, while acknowledging the limitations forthrightly to maintain credibility with the Court.

E. Implications for Conditional Certification

Notwithstanding the challenges the subcontracting data presents for the merits defense, the hub-level variation in subcontracting experience is valuable for the conditional certification opposition.

The variation in subcontracting approval rates across hubs — from 0.0% at HUB-01, HUB-11, HUB-13, and HUB-14 to 50.0% at HUB-06 — demonstrates that the subcontracting experience was not uniform across the proposed collective. A driver at HUB-06 Oklahoma City had a materially different experience with subcontracting than a driver at HUB-01 Fort Worth or HUB-13 Lubbock. This variation supports the argument that drivers are not "similarly situated" for purposes of Section 216(b) because resolving the subcontracting factor of the economic reality test requires hub-specific, individualized factual inquiry.

Hub-level differences in managerial approach to subcontracting requests further demonstrate the need for individualized analysis. Dennis Faulkner's approach at HUB-01 Fort Worth (zero approvals, two undocumented denials) differed markedly from the approach at HUB-06 Oklahoma City (50.0% approval rate, documented substantive review of requests). This variation in hub manager practice means that the subcontracting factor cannot be resolved on a collective-wide basis through common proof.

We recommend incorporating this hub-level variation into the conditional certification opposition, but with the important strategic caveat discussed in Section VII.A: presenting the subcontracting approval rate data carries the risk that plaintiff will seize upon the low aggregate approval rate (26.0%) as evidence of a common policy of effectively denying subcontracting rights across the board. This risk must be balanced against the value of the hub-level variation in undermining commonality.

V. Multi-Platform Engagement Analysis

A. Framework and Relevance

Under the FLSA economic reality test, a key factor in determining whether a worker is an employee or an independent contractor is whether the worker has the opportunity to profit or lose based on the exercise of managerial skill or entrepreneurial initiative. The Fifth Circuit has consistently recognized that a worker's freedom to provide services to competing enterprises simultaneously is a significant indicator of independent contractor status. See, e.g., Hopkins, 545 F.3d at 343 ("An employee, as a rule, works for one company; an independent contractor may work for several."); Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1314 (5th Cir. 1976) (considering whether workers "were free to offer their services to others").

All three versions of the ICOA contain no explicit exclusivity requirement. Section 2.1 of each version states that the driver is "an independent contractor and not an employee of [SLG]" and that "nothing in this Agreement shall be construed to create an exclusive relationship between [SLG] and Contractor." This non-exclusivity language is a favorable structural feature of the ICOA for SLG's classification defense.

However, several contractual provisions in the ICOA operate in tension with the non-exclusivity language and effectively constrain drivers' ability to engage with competing platforms or companies:

Minimum Acceptance Rate. Section 5.2 of all three ICOA versions requires drivers to maintain a minimum delivery acceptance rate of 85% per rolling 30-day period as measured through the RouteSync dispatch platform. Drivers who fall below this threshold are subject to a "performance review" process that can lead to increased monitoring, temporary suspension, or termination of the ICOA. The practical effect of this requirement is that drivers must accept at least 85% of the deliveries offered to them through RouteSync, limiting their ability to decline SLG work in favor of competing opportunities.

Delivery Windows. Section 3.4 of the ICOA establishes the "Service Availability Period" as 7:00 AM to 8:00 PM, Monday through Saturday. During this period, drivers are required to be available to accept delivery assignments through the RouteSync platform. While the ICOA does not technically prohibit drivers from performing other work during this window (so long as they maintain the 85% acceptance rate), the practical effect is that the 78-hour weekly service availability period occupies most of the hours during which competing delivery work is typically available.

Non-Compete Clause. Section 11.3 of all three ICOA versions contains a post-termination non-compete clause providing that, upon termination of the ICOA for any reason, the driver shall not "directly or indirectly engage in, or provide services for, any business that competes with [SLG] in the provision of last-mile delivery services" within a 50-mile radius of the driver's assigned hub for a period of 12 months following termination. While this provision is a post-termination restriction rather than a restriction on concurrent engagement during the term of the ICOA, its presence in the agreement may have had a chilling effect on drivers' willingness to establish relationships with competing platforms.

Taken together, these provisions create a complex factual landscape regarding multi-platform engagement. The ICOA permits it in theory, but the minimum acceptance rate, delivery windows, and non-compete clause collectively narrow the practical scope of that permission.

B. Indirect Evidence of Multi-Platform Engagement

Because SLG does not maintain direct records of drivers' outside employment, our analysis of multi-platform engagement relies on several categories of indirect evidence, which we describe in turn.

1. RouteSync Scheduling Gap Analysis. We analyzed RouteSync dispatch data for the 50-driver sample across the five selected hubs to identify periods during which drivers had delivery-free days or blocks of time that could have been used for competing platform work. The RouteSync platform records the time at which delivery assignments are offered to each driver, the driver's acceptance or declination of each offer, and the completion time of accepted deliveries. By analyzing gaps in this data, we can identify periods when a driver was not performing SLG deliveries and could theoretically have been engaged in other work.

Our analysis of the 50-driver sample yielded the following findings:

Average Delivery-Free Days Per Month. Across the sample, drivers averaged 6.3 days per month with no RouteSync delivery activity. This figure includes Sundays (when the service availability period does not apply), but also includes a meaningful number of weekday and Saturday gaps. When Sundays are excluded, the average drops to 2.1 weekday/Saturday gaps per driver per month.

Hub-Level Variation in Scheduling Gaps. The average number of delivery-free days (excluding Sundays) varied by hub as follows:

HUB-06 Oklahoma City had the highest average number of delivery-free days, consistent with the observation that Oklahoma City drivers appeared to have the most active multi-platform engagement. HUB-09 New Orleans had the lowest average, suggesting that New Orleans drivers were more fully committed to SLG delivery work during the service availability period.

Drivers with Consistent Versus Irregular Patterns. We categorized the 50 sampled drivers into three groups based on their RouteSync scheduling patterns:

• Full-time SLG engagement (0-1 delivery-free weekdays/Saturdays per month): 22 drivers (44% of sample)

• Moderate gaps (2-4 delivery-free weekdays/Saturdays per month): 19 drivers (38% of sample)

• Significant gaps (5+ delivery-free weekdays/Saturdays per month): 9 drivers (18% of sample)

Drivers in the "significant gaps" category had scheduling patterns most suggestive of outside work. These 9 drivers averaged 6.7 delivery-free weekdays/Saturdays per month, creating ample time for engagement with competing platforms. Notably, 6 of these 9 drivers were later confirmed through other evidence (intake questionnaires or hub manager reports) to have been engaged with at least one other delivery or logistics company during the relevant period.

2. Driver Intake Questionnaire Data. SLG's onboarding process requires drivers to complete an intake questionnaire that includes the following question: "Are you currently performing delivery, driving, or logistics services for any other company? If yes, please identify the company or companies." Our review of intake questionnaire responses for drivers who commenced services during the relevant period yielded the following data:

• Total intake questionnaires reviewed (drivers onboarding April 2022 – June 2025): 394

• Drivers indicating concurrent engagement with another company at time of onboarding: 87 (22.1%)

• Drivers indicating no concurrent engagement: 291 (73.9%)

• Drivers leaving the question blank or providing ambiguous responses: 16 (4.1%)

Of the 87 drivers who indicated concurrent engagement, the most frequently identified companies were FleetDash (31 drivers), Brightwater Industries (22 drivers), SwiftRoute Delivery Services (14 drivers), and various ride-share or ride-hail platforms (12 drivers). The remaining 8 drivers identified other logistics or courier companies.

Several important limitations apply to this data. First, the intake questionnaire captures a point-in-time snapshot at onboarding and is not updated periodically. A driver who was not performing services for another company at the time of onboarding may have begun doing so weeks or months later. Conversely, a driver who indicated concurrent engagement at onboarding may have subsequently ceased that engagement. Second, the intake questionnaire is self-reported and unverified; drivers may have had incentives to underreport outside work if they perceived that SLG would view it unfavorably. Third, the 394 questionnaires represent only the drivers who onboarded during the relevant period, not the full population of 1,187 drivers (which includes drivers who onboarded before April 2022 and whose questionnaires are not consistently available in the file).

Despite these limitations, the 22.1% figure is directionally significant and suggests that multi-platform engagement was not a marginal phenomenon. If even one in five drivers reported concurrent work at onboarding, the actual rate of multi-platform engagement at any given time during the relevant period is likely higher, given that drivers may have commenced outside work after onboarding and that underreporting is likely.

3. Hub Manager Reports and Anecdotal Evidence. Interviews with Trevor Sandoval (VP of Operations) and Karen Lund (Director of Driver Relations) provided additional context regarding multi-platform engagement. Sandoval stated that it was "common knowledge" within SLG that many drivers performed delivery or driving services for other companies, and that this was viewed by SLG as consistent with the independent contractor relationship. Sandoval identified FleetDash, Brightwater Industries, and SwiftRoute Delivery Services as the most common competing platforms used by SLG drivers, and stated that SLG did not take any steps to prevent drivers from working for these competitors beyond the non-compete clause in the ICOA.

Karen Lund provided a more nuanced perspective. She noted that while SLG's official policy did not prohibit concurrent engagement with other platforms, the 85% minimum acceptance rate effectively limited drivers' ability to decline SLG deliveries in favor of competing work. Lund stated that she was aware of "at least several dozen" drivers across the hub network who performed services for FleetDash or Brightwater Industries, and that this information was generally communicated informally through hub managers rather than tracked systematically.

Dennis Faulkner, Hub Manager at HUB-01 Fort Worth, stated that he was aware of approximately 8 to 10 drivers at his hub (out of 142 total) who he believed were concurrently engaged with one or more competing platforms during the relevant period. Faulkner identified FleetDash and Brightwater Industries by name as the platforms most commonly used by Fort Worth drivers. When asked about Marcus Delano specifically, Faulkner stated that he was not aware of Delano working for any other company during his tenure, but acknowledged that he did not systematically track drivers' outside activities.

4. Acceptance Rate Data as a Proxy. We analyzed delivery acceptance rate data from the RouteSync platform for the 50-driver sample as an additional proxy for multi-platform engagement. The logic underlying this analysis is that drivers who consistently maintained acceptance rates at or near the 85% minimum threshold — i.e., who declined the maximum number of deliveries permitted without triggering performance review — may have been strategically managing their SLG workload to preserve time for competing platform work. Conversely, drivers with acceptance rates near 100% were accepting virtually all offered deliveries and were less likely to have been engaged in significant outside work.

The distribution of average acceptance rates across the 50-driver sample was as follows:

The 11 drivers (22%) with acceptance rates between 85.0% and 89.9% were operating at the margin of the minimum threshold, declining approximately 10-15% of offered deliveries. This pattern is consistent with strategic workload management to preserve time for other activities, though it is not definitive evidence of multi-platform engagement — drivers may have declined deliveries for personal reasons, vehicle maintenance, or other non-work-related factors.

Performance Review Records. Our review of performance review records triggered by sub-85% acceptance rates revealed that 23 drivers across the full 1,187-driver population received performance review notifications during the relevant period. Of these, 7 resulted in termination of the ICOA, 11 resulted in the driver's acceptance rate returning to compliance within the subsequent 30-day period, and 5 were pending or otherwise unresolved at the time of this analysis. The relatively low number of performance reviews (23 out of 1,187 drivers, or 1.9%) suggests that the 85% threshold was generally effective in maintaining delivery volume, but also that the overwhelming majority of drivers complied with the requirement, potentially limiting their ability to engage in outside work.

Hub-by-Hub Acceptance Rate Variance. Average acceptance rates varied meaningfully across the five sampled hubs:

HUB-06 Oklahoma City had the lowest average acceptance rate (88.9%), consistent with the observation from the scheduling gap analysis that Oklahoma City drivers had the highest average number of delivery-free days and the highest apparent rate of multi-platform engagement. HUB-09 New Orleans had the highest average acceptance rate (94.2%), consistent with its lower scheduling gap average and lower apparent multi-platform engagement.

C. Known Multi-Platform Drivers

1. Quantitative Findings. Triangulating across the four categories of indirect evidence described above — RouteSync scheduling gaps, intake questionnaire responses, hub manager reports, and acceptance rate patterns — we identified 16 of the 50 sampled drivers (32.0%) as having performed services for at least one other delivery or logistics company during some portion of the relevant period. We further classified the outside work into the following categories:

• Competing last-mile delivery platforms (FleetDash, Brightwater Industries, SwiftRoute): 11 drivers (22.0% of sample)

• Ride-share or ride-hail platforms: 3 drivers (6.0% of sample)

• Independent freight hauling: 1 driver (2.0% of sample)

• Non-delivery employment (unrelated to logistics): 1 driver (2.0% of sample)

If the 32.0% rate in our sample is representative of the full 1,187-driver population, this would suggest that approximately 380 drivers engaged in multi-platform work during some portion of the relevant period. However, we emphasize the caveats identified in Section II.B regarding the limitations of the 50-driver sample and the reliance on indirect evidence. A formal statistical analysis with appropriate confidence intervals and methodology validation is reserved for Dr. Priya Ramanathan's expert report through Corbin Risk Advisors LLC, and the 32.0% figure should be treated as a preliminary directional estimate.

An additional refinement is warranted: the 32.0% figure reflects drivers who engaged in multi-platform work during some portion of the relevant period. It does not necessarily mean that 32% of drivers were working for competitors at any given point in time. Some drivers may have engaged with a competing platform for only a few weeks or months before ceasing that engagement. A more conservative estimate of the percentage of drivers concurrently engaged with a competing platform at any given point in time during the relevant period is approximately 15-20%, based on the temporal distribution of the evidence.

2. Hub-Level Variation. The percentage of sampled drivers identified as multi-platform engaged varied significantly across hubs:

HUB-09 New Orleans had a notably lower rate of identified multi-platform engagement (10%) compared to the other four hubs. This may reflect the smaller number of competing delivery platforms with a meaningful presence in the New Orleans market, or it may reflect the higher average acceptance rate at HUB-09 (94.2%), which left less time for outside work. By contrast, the three Texas hubs (Fort Worth, Dallas, Houston) and Oklahoma City all showed multi-platform engagement rates of 30-40%, suggesting that in larger markets with more competing platform opportunities, drivers were more likely to diversify their income sources.

Geographic and market factors likely play a significant role in this variation. The Dallas-Fort Worth and Houston metropolitan areas are home to the headquarters or regional operations of FleetDash and Brightwater Industries, respectively, creating more abundant competing platform opportunities in those markets. Oklahoma City has a growing logistics sector that provides additional opportunities for delivery drivers. By contrast, New Orleans has a smaller and less competitive last-mile delivery market, potentially limiting outside opportunities.

This hub-level variation in multi-platform engagement rates is a valuable data point for the conditional certification opposition, as it further demonstrates that the drivers in the proposed collective had materially different experiences regarding the opportunity for entrepreneurial initiative based on the geographic market in which they operated.

D. Named Plaintiff Marcus Delano's Multi-Platform Engagement

Available information regarding Marcus Delano's engagement with other companies during his tenure at HUB-01 Fort Worth (March 2021 – September 2024) is currently limited. Dennis Faulkner, Delano's hub manager, stated that he was not aware of Delano performing work for any other company. Delano's intake questionnaire from March 2021, which we reviewed in his onboarding file, indicated "No" in response to the question regarding concurrent engagement with other companies. However, as noted above, the questionnaire reflects only Delano's status at the time of onboarding and does not address whether he subsequently engaged in outside work.

Delano's tax returns (Schedule C) and bank records, which would provide the most definitive evidence regarding income from competing platforms, have been requested in Defendant's First Set of Requests for Production (served June 23, 2025) at Request Nos. 3, 5, 8, and 14. These documents have not yet been produced, and Delano's responses are not yet due. Interrogatory Nos. 4, 7, and 12 in Defendant's First Set of Interrogatories (also served June 23, 2025) specifically ask Delano to identify all companies for which he performed delivery, driving, or logistics services during the relevant period and to state the income he received from each. Delano's responses to these discovery requests will be critical to the analysis.

Based on the RouteSync data analyzed in the June 25, 2025 memorandum, Delano's average weekly hours of SLG delivery work was approximately 58 hours, and his average weekly gross pay was approximately $1,247, yielding an effective hourly rate of approximately $21.50. The 58-hour average weekly work schedule, when combined with the 7:00 AM – 8:00 PM delivery window, suggests that Delano was performing SLG deliveries for roughly 9-10 hours per day over a 6-day work week. While this schedule would have left evenings and Sundays theoretically available for other work, the most common competing last-mile delivery platforms (FleetDash, Brightwater Industries) operate primarily during the same daytime hours as SLG, meaning that Delano's schedule may not have left meaningful time for competing platform work during the hours when such work was most available.

The significance of Delano's multi-platform engagement (or lack thereof) for the economic reality test is substantial. If Delano did not work for other platforms during his SLG tenure, plaintiff's counsel will argue that the opportunity to do so was effectively illusory given the demands of the SLG relationship, and that the 58-hour average work week left insufficient time for entrepreneurial initiative. If, on the other hand, Delano did perform services for competing platforms — which his discovery responses should reveal — SLG can argue that his actual exercise of the freedom to work for others demonstrates the independent nature of the relationship and the existence of genuine entrepreneurial opportunity.

E. Impact of Contractual Constraints on Multi-Platform Engagement

1. Minimum Acceptance Rate (85%). The 85% minimum acceptance rate is the contractual provision with the most direct impact on drivers' ability to engage in multi-platform work. A driver who is required to accept 85% of offered deliveries during the 7:00 AM – 8:00 PM service availability period has limited flexibility to decline SLG deliveries in favor of a competing delivery for FleetDash or Brightwater Industries. In practical terms, the 85% threshold means that a driver who is offered an average of 12 deliveries per day can decline at most 1-2 deliveries per day. Over the course of a rolling 30-day period, the margin is somewhat wider, as the 85% threshold is computed on a cumulative basis, allowing a driver to have occasional days with lower acceptance rates so long as the 30-day rolling average remains at or above 85%.

Nonetheless, the minimum acceptance rate functions as a significant constraint on multi-platform engagement. A driver cannot routinely decline SLG deliveries to prioritize competing platform work without risking a performance review and potential ICOA termination. This constraint is especially pronounced when combined with the mandatory delivery windows: because competing platforms like FleetDash and Brightwater Industries offer thei

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: Devon Archer, Working Associate, Labor & Employment, Calderwood & Harkness LLP James Underwood, Lead Associate, Labor & Employment, Calderwood & Harkness LLP
TO: Bernard Crawford, Responsible Partner, Labor & Employment, Calderwood & Harkness LLP Renata Vasquez, Billing Partner, Labor & Employment, Calderwood & Harkness LLP
DATE: June 30, 2025
RE: Subcontracting and Multi-Platform Engagement Analysis — Delano v. Stonefield Logistics Group Inc., Case No. 3:25-cv-01847-RBC (N.D. Tex.)
CLIENT: Stonefield Logistics Group Inc.
MATTER NO.: 1012-00004
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I. Executive Summary
The purpose of this memorandum is to present a comprehensive analysis of Stonefield Logistics Group Inc.'s ("SLG" or the "Company") internal records concerning the extent to which delivery drivers classified as independent contractors under SLG's Independent Contractor Operating Agreements ("ICOAs") engaged in (a) subcontracting of deliveries to third parties, and (b) performing delivery or driving services for competing platforms or companies during the relevant period of April 30, 2022 through the present. This analysis is undertaken in support of SLG's defense in the above-captioned matter, in which named plaintiff Marcus Delano seeks conditional certification of a collective action under Section 216(b) of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), alleging that SLG misclassified approximately 1,187 delivery drivers as independent contractors and failed to pay overtime compensation for hours worked in excess of forty per workweek.
The findings in this memorandum bear on two critical aspects of SLG's defense. First, subcontracting and multi-platform engagement are directly relevant to the "opportunity for profit or loss through the exercise of managerial skill or entrepreneurial initiative" factor of the FLSA economic reality test as applied in the Fifth Circuit. A worker's ability to hire assistants or substitutes, and a worker's freedom to provide services to competing enterprises simultaneously, are hallmarks of independent contractor status that courts routinely examine when evaluating the totality of the working relationship. Second, and of more immediate procedural significance in light of the August 13, 2025 deadline for SLG's opposition to conditional certification, the variation in subcontracting activity and multi-platform engagement across the approximately 1,187 drivers in the proposed collective — and particularly across the 14 distribution hubs — is relevant to demonstrating the lack of commonality required for conditional certification under the lenient standard applied at the first stage of the Lusardi-type two-stage certification process.
At a high level, our analysis reveals the following preliminary findings. Subcontracting was contractually permitted under all three ICOA versions but was rarely exercised in practice. Across all 14 hubs during the relevant period, only 73 subcontracting approval requests were submitted, of which only 19 were approved, yielding an overall approval rate of approximately 26%. Actual delivery volume performed by approved subcontractors was negligible, representing less than 0.3% of total deliveries during the relevant period. The low approval and utilization rates present a mixed picture for SLG's defense: while the contractual right to subcontract supports independent contractor status, the practical barriers to exercising that right — particularly as compounded in the ICOA v3.0 revisions — undercut the argument that the entrepreneurial opportunity was genuine and meaningful.
Multi-platform engagement, by contrast, was more prevalent than plaintiff's allegations suggest, though unevenly distributed across the 14 hubs. Based on our analysis of the 50-driver sample across five hubs, we estimate that approximately 31% of sampled drivers engaged in delivery or driving services for at least one competing platform or company during some portion of the relevant period. This figure, if representative of the broader population (a determination we reserve for Dr. Priya Ramanathan's expert statistical analysis through Corbin Risk Advisors LLC), provides meaningful support for SLG's position that drivers exercised entrepreneurial initiative and were not economically dependent solely on SLG. However, the 85% minimum acceptance rate, the mandatory delivery windows of 7:00 AM to 8:00 PM Monday through Saturday, and the 12-month, 50-mile non-compete clause collectively constrained the practical ability of drivers to pursue multi-platform work, and plaintiff's counsel will undoubtedly argue that these contractual provisions rendered the freedom to work elsewhere largely theoretical.
In sum, the subcontracting and multi-platform engagement data present both favorable and unfavorable elements for SLG's defense. The multi-platform engagement evidence is the stronger of the two data sets from a defensive standpoint, while the subcontracting data carries strategic risks if not carefully presented. We recommend emphasizing multi-platform engagement variance in the conditional certification opposition and exercising caution in how the subcontracting approval rate data is deployed, as discussed in greater detail in Section VII below.
This memorandum should be read in conjunction with the following related work product:
• Driver Classification Analysis Memorandum (FLSA Economic Reality Test), dated May 20, 2025;
• RouteSync Data & GPS Log Analysis Memorandum, dated June 25, 2025;
• ICOA Version Comparison Chart, dated May 12, 2025; and
• Memorandum re: Strategic Considerations — Motion to Compel Arbitration Timing, dated June 10, 2025.
II. Scope of Review and Data Sources
A. Records Reviewed
In preparing this memorandum, we reviewed the following categories of records and data sources:
1. SLG Human Resources and Driver Relations Records. We reviewed records maintained by Karen Lund, Director of Driver Relations, including driver roster files, ICOA execution records, correspondence files relating to driver classification and engagement terms, and internal policy memoranda governing the Company's relationship with contracted drivers across all 14 distribution hubs.
2. Independent Contractor Operating Agreements (All Versions). We reviewed and analyzed all three versions of the ICOA:
(a) ICOA v1.0 (2018), originally drafted by Pennfield & Daye LLP in connection with SLG's transition to an independent contractor delivery model;
(b) ICOA v2.0 (August 2020), incorporating revisions to the subcontracting approval process and the addition of the Subcontractor Approval Request Form as a standard exhibit; and
(c) ICOA v3.0 (January 2023), incorporating further revisions to subcontracting requirements, including mandatory training and the Subcontractor Acknowledgment Agreement, as well as the addition of a binding arbitration clause and collective action waiver.
3. Subcontracting Approval Request Files. We reviewed subcontracting approval request files maintained at the hub level by individual hub managers and centrally by the Driver Relations department. These files include the Subcontractor Approval Request Forms (for drivers operating under ICOA v2.0 and v3.0), informal written requests (for drivers operating under ICOA v1.0), approval and denial correspondence, background check results for proposed substitute drivers, and vehicle inspection records.
4. RouteSync Dispatch Platform Data. We reviewed RouteSync dispatch data for the relevant period of April 30, 2022 through June 2025 across all 14 distribution hubs. This data includes delivery assignment records, driver acceptance and declination records, delivery completion timestamps, and scheduling data. This data set is the same data set analyzed in the RouteSync Data & GPS Log Analysis Memorandum dated June 25, 2025, and cross-references to that memorandum are made throughout this analysis where applicable.
5. GPS Telematics Data. We reviewed GPS telematics data from SLG-provided telematics devices installed on all contracted driver vehicles. This data includes vehicle location, ignition status, mileage, and route tracking information. As discussed in Section V below, GPS data was utilized as indirect evidence of multi-platform engagement during non-delivery hours, subject to the limitations identified in the RouteSync/GPS analysis memorandum.
6. Accounts Payable Records. We reviewed SLG's accounts payable records reflecting payments to drivers and, where applicable, to driver-designated subcontractors during the relevant period. These records include payment amounts, payment dates, delivery volume associated with each payment, and deductions or adjustments. Where payments were directed to a subcontractor rather than the contracting driver, those transactions were flagged and cross-referenced against the subcontracting approval files.
7. Driver Onboarding and Orientation Files. We reviewed onboarding and orientation files for drivers who commenced services during the relevant period, including executed ICOAs, acknowledgment forms, intake questionnaires (which include questions regarding concurrent engagement with other delivery or logistics companies), and training completion records.
8. Performance Review Records. We reviewed performance review records triggered by driver acceptance rates falling below the 85% minimum acceptance rate per rolling 30-day period. These records include written notifications to drivers, driver responses, and any corrective action or contract termination proceedings that resulted from sustained sub-threshold acceptance rates.
9. 50-Driver Sample. Consistent with the sampling methodology employed in the RouteSync/GPS analysis memorandum of June 25, 2025, we analyzed a sample of 50 drivers across five hubs, selected to be representative of the geographic and operational diversity of SLG's hub network:
• HUB-01 Fort Worth: 10 drivers (of 142 total at hub)
• HUB-02 Dallas: 10 drivers (of 168 total at hub)
• HUB-03 Houston: 10 drivers (of 195 total at hub)
• HUB-06 Oklahoma City: 10 drivers (of 87 total at hub)
• HUB-09 New Orleans: 10 drivers (of 71 total at hub)
The selection methodology and representativeness assessment for this sample are detailed in the RouteSync/GPS analysis memorandum and will be subject to further validation in Dr. Ramanathan's expert analysis.
10. Interviews and Communications. We conducted interviews and reviewed communications with the following SLG personnel:
• Trevor Sandoval, Vice President of Operations, interviewed on May 8, 2025 and June 12, 2025;
• Karen Lund, Director of Driver Relations, interviewed on May 15, 2025 and June 19, 2025; and
• Dennis Faulkner, Hub Manager, Fort Worth HUB-01, interviewed on June 5, 2025.
B. Limitations. Several significant limitations affect the scope and reliability of this analysis, which should be taken into account in evaluating the findings presented herein and in determining how to deploy these findings in litigation.
Lack of Comprehensive Records of Outside Employment. SLG does not maintain comprehensive records of drivers' outside employment or engagement with competing delivery platforms. This is consistent with the Company's treatment of drivers as independent contractors — an employer would typically not track an independent contractor's outside business activities. However, this data gap means that our analysis of multi-platform engagement necessarily relies on indirect evidence, including RouteSync scheduling gaps, tax records where available, driver intake questionnaire responses (which capture only a point-in-time snapshot at onboarding), and anecdotal information provided by hub managers. The absence of direct, comprehensive data means that our estimates of multi-platform engagement rates are likely conservative, as some drivers who worked for other platforms may not have been identified through the indirect indicators available to us.
Outstanding discovery. Named plaintiff Marcus Delano's discovery responses to Defendant's First Set of Interrogatories (served June 23, 2025) are not yet due. Interrogatory Nos. 4, 7, and 12 specifically seek information regarding Delano's engagement with other delivery platforms and his total income from all sources during the relevant period. Similarly, Delano's tax returns (Schedule C), 1099-NEC forms, and bank records are the subject of Defendant's First Set of Requests for Production (also served June 23, 2025, Request Nos. 3, 5, 8, and 14) and have not yet been produced. Delano's responses to these discovery requests will be critical to evaluating his individual multi-platform engagement and should materially affect the analysis in Section V.D below.
Sample Size Limitations. The 50-driver sample across five hubs represents approximately 4.2% of the total population of 1,187 drivers. While the sample was designed to capture geographic and operational diversity, it is not a statistically random sample and should not be treated as such for purposes of population-level inferences. A full population analysis of all 1,187 drivers is planned as part of Dr. Priya Ramanathan's expert analysis through Corbin Risk Advisors LLC. This memorandum provides a preliminary assessment based on available records and the 50-driver sample, and its findings should be understood as directional rather than definitive pending Dr. Ramanathan's work.
III. ICOA Subcontracting Provisions Across Versions
A. ICOA v1.0 (2018)
The original ICOA, drafted by Pennfield & Daye LLP in 2018 in connection with SLG's transition from an employee-driver model to an independent contractor model, addressed subcontracting in Section 4.3, titled "Substitute Drivers and Helpers." The operative language provided:
"Contractor may engage substitute drivers or helpers to perform assigned deliveries under this Agreement, subject to prior written approval from the Hub Manager at Contractor's assigned distribution hub. Contractor shall remain responsible for ensuring that all deliveries are completed in accordance with the service standards set forth in this Agreement."
Several features of the v1.0 subcontracting provision are noteworthy. First, the provision nominally grants a broad right to subcontract — drivers "may engage substitute drivers or helpers" — language that is favorable to SLG's independent contractor classification argument. Second, however, the right is conditioned on "prior written approval" from the hub manager, introducing a gatekeeper function that is more consistent with an employment relationship in which the employer retains the ultimate right to control the manner in which work is performed. Third, the v1.0 ICOA does not enumerate any criteria that hub managers are to apply in evaluating subcontracting requests, leaving the approval determination entirely to hub manager discretion. This absence of standardized criteria resulted in inconsistent application across hubs, as discussed in Section IV below. Fourth, no standardized form or process was established for requesting subcontracting approval under the 2018 version; requests could be made by email, text message, or informal written communication to the hub manager.
Approximately 547 drivers signed either ICOA v1.0 or its substantively identical successor, ICOA v2.0, during the pre-January 2023 period. Because v2.0 retained the same general subcontracting language while adding procedural requirements, the total pre-v3.0 driver population is approximately 547, computed as the difference between the total population of 1,187 and the approximately 640 drivers who signed ICOA v3.0 after its implementation in January 2023. Named plaintiff Marcus Delano signed ICOA v1.0 and was not required to execute v2.0 or v3.0 during his tenure.
B. ICOA v2.0 (August 2020)
ICOA v2.0, implemented in August 2020, retained the same general subcontracting provision in Section 4.3, with language substantively identical to v1.0. The v2.0 revision, however, added two significant procedural requirements. First, Section 4.3(b) was added to require that any proposed substitute driver "must pass a background check conducted by or on behalf of [SLG], including a criminal history check and driving record review, prior to receiving approval to perform deliveries." Second, Section 4.3(c) was added to require that any vehicle to be operated by a proposed substitute driver "must pass a vehicle safety inspection conducted by [SLG] or its designated inspection provider, confirming that the vehicle meets the specifications set forth in Exhibit B [Vehicle Requirements]."
In addition to these substantive conditions, v2.0 introduced the "Subcontractor Approval Request Form" as Exhibit D to the ICOA, standardizing the process for requesting subcontracting approval. The form requires the contracting driver to provide the proposed substitute's full legal name, date of birth, driver's license number, vehicle information, insurance documentation, and a statement regarding the specific deliveries or time periods for which the substitute will be engaged. Upon receipt of a completed form, the hub manager is to initiate the background check and vehicle inspection processes before rendering an approval decision.
The practical effect of these v2.0 additions was to create meaningful administrative hurdles to subcontracting that did not exist under v1.0. The background check process, as described by Karen Lund, typically required five to seven business days to complete. The vehicle inspection required the substitute driver to bring the proposed vehicle to the hub for in-person inspection, which was available only during business hours on weekdays. These requirements, while facially reasonable as safety and quality measures, had the practical consequence of making ad hoc or short-notice subcontracting extremely difficult. A driver who needed a substitute for a particular day or week due to illness, personal obligations, or the desire to pursue other business opportunities could not obtain approval on a timeline that would be useful, effectively negating the subcontracting right in many real-world scenarios.
C. ICOA v3.0 (January 2023)
ICOA v3.0, implemented in January 2023, retained the subcontracting provision but further conditioned it with additional requirements. Section 4.3 of v3.0 provides that a contracting driver may engage a substitute driver to perform deliveries, provided that the following conditions are satisfied:
(1) The contracting driver obtains prior written approval from the Hub Manager using the Subcontractor Approval Request Form (Exhibit D);
(2) The proposed substitute driver passes an SLG background check, including criminal history, driving record, and drug screening;
(3) The proposed substitute driver's vehicle passes an SLG vehicle safety inspection confirming compliance with the vehicle specifications set forth in Exhibit B, including the requirement that the vehicle be a cargo van or box truck with a model year of 2015 or newer;
(4) The proposed substitute driver completes SLG's 16-hour initial safety and customer-service training program, conducted at the assigned hub over two consecutive business days; and
(5) The proposed substitute driver signs a Subcontractor Acknowledgment Agreement (Exhibit E), acknowledging compliance with SLG's service standards, safety protocols, customer interaction guidelines, and data privacy requirements.
Section 4.3(f) of v3.0 further added language providing that the contracting driver "remains solely responsible for the performance and quality of all deliveries performed by any approved substitute driver," and that any service failures, customer complaints, or safety incidents attributable to a substitute driver will be assessed against the contracting driver's performance record for purposes of the performance evaluation provisions of Section 7.
Separately, ICOA v3.0 introduced a binding arbitration clause in Section 12 and a collective action waiver in Section 12.4. While these provisions are analytically distinct from the subcontracting provisions, they are relevant to the overall litigation strategy insofar as approximately 640 drivers signed v3.0 and are potentially subject to arbitration. The interplay between the arbitration and subcontracting issues is addressed in Section VII.B below.
The practical observation regarding v3.0 is that the cumulative effect of the five subcontracting conditions made the approval process significantly more burdensome than under either v1.0 or v2.0. The 16-hour training requirement alone represented a substantial barrier, as it required a proposed substitute to devote two full business days to unpaid training at an SLG hub before performing a single delivery. When combined with the background check timeline (now expanded to include drug screening), the vehicle inspection requirement, and the Subcontractor Acknowledgment Agreement, the v3.0 subcontracting process was so demanding that it effectively discouraged all but the most determined and well-resourced drivers from attempting to subcontract. As discussed in Section IV below, the empirical data confirms that subcontracting requests declined further after v3.0's implementation.
D. Cross-Version Comparison Summary
The trajectory across the three ICOA versions reveals a consistent pattern of escalating requirements that progressively narrowed the practical availability of the subcontracting right. The following table summarizes the key differences:
All three versions nominally permit subcontracting, which is a threshold positive for SLG's classification defense. However, the escalating requirements across versions made actual subcontracting progressively more difficult, creating a tension between the contractual right and its practical exercise that courts scrutinize carefully in the independent contractor analysis. This tension is a risk factor for SLG's position, as discussed further in Section IV.D below.
For the complete side-by-side textual comparison of the subcontracting provisions across all three ICOA versions, we refer to the ICOA Version Comparison Chart (work product dated May 12, 2025), which is also reproduced in relevant part in Appendix D to this memorandum.
IV. Subcontracting in Practice: Empirical Analysis
A. Subcontracting Approval Request Data (All Hubs, April 2022 – June 2025)
1. Aggregate Findings. Based on our review of subcontracting approval request files maintained at the hub level and centrally by the Driver Relations department, the following aggregate data reflects subcontracting activity across all 14 SLG distribution hubs during the relevant period of April 30, 2022 through June 30, 2025:
• Total subcontracting approval requests submitted: 73
• Total approvals granted: 19
• Total denials: 47
• Total requests pending or withdrawn: 7
• Overall approval rate (approvals / requests decided): 28.8% (19 of 66 decided requests)
• Overall approval rate (approvals / total requests submitted): 26.0% (19 of 73 total requests)
These figures represent the total requests submitted by drivers across the entire 1,187-driver population over a period of approximately 38 months. On a per-driver basis, the 73 total requests represent a submission rate of approximately 6.2% of the driver population — meaning that approximately 93.8% of drivers never submitted a single subcontracting approval request during the relevant period. Among the 73 requests, some drivers submitted multiple requests; the 73 requests were submitted by approximately 58 unique drivers.
The low submission rate is itself a significant data point. It could reflect drivers' awareness that the approval process was burdensome and unlikely to succeed (supporting plaintiff's characterization of the right as illusory), or it could reflect that drivers simply did not desire to subcontract and preferred to perform deliveries themselves (supporting SLG's position that the low utilization rate reflects driver choice rather than Company control). Both characterizations have some evidentiary support, and we anticipate plaintiff's counsel at Hartwell & Brashear will vigorously advance the former interpretation.
2. Hub-by-Hub Breakdown. The following table presents subcontracting approval request data by hub. The data reveals significant variation across hubs, which is relevant to SLG's conditional certification opposition.
Several observations emerge from the hub-level data:
Hubs with Zero Approvals. Four hubs — HUB-01 Fort Worth, HUB-11 Shreveport, HUB-13 Lubbock, and HUB-14 Corpus Christi — granted zero subcontracting approvals during the relevant period. Notably, HUB-01 Fort Worth is the hub where named plaintiff Marcus Delano was assigned, and the zero-approval record at that hub is consistent with his allegation that subcontracting approvals were "rarely, if ever, granted." This data point is problematic for SLG because the named plaintiff's own experience will be the most visible data point before the Court, and a zero-approval record at his hub tends to corroborate his characterization of the subcontracting right as illusory.
Hubs with Higher Approval Rates. By contrast, HUB-06 Oklahoma City had an approval rate of 50.0% (3 approvals out of 6 decided requests), and HUB-09 New Orleans had an approval rate of 40.0% (2 approvals out of 5 decided requests). HUB-03 Houston, the largest hub by driver count, had an approval rate of 38.5% (5 approvals out of 13 decided requests). These hubs demonstrate that subcontracting approval was not uniformly unavailable — some hub managers were materially more receptive to subcontracting requests than others. This variation is favorable for SLG's conditional certification opposition because it demonstrates that the subcontracting experience was not uniform across the proposed collective but rather depended on hub-specific managerial practices and individual circumstances.
Hub Size and Request Volume. There is a rough positive correlation between hub size and the number of subcontracting requests, as expected. HUB-03 Houston (195 drivers) generated 14 requests, while HUB-13 Lubbock (29 drivers) generated only 3. However, the per-capita request rate is relatively consistent across hubs, ranging from approximately 2.1% (HUB-01 Fort Worth: 3 requests among 142 drivers) to approximately 10.3% (HUB-13 Lubbock: 3 requests among 29 drivers), suggesting that the low submission rate is a system-wide phenomenon not concentrated in particular hubs.
3. Reasons for Denials. Our review of the 47 denial records reveals the following categories of stated reasons for denial:
• Substitute driver failed background check: 14 denials (29.8%). In these cases, the proposed substitute driver had disqualifying criminal history, an unsatisfactory driving record (including excessive moving violations or a DUI within the preceding five years), or failed a drug screening (under v3.0).
• Substitute vehicle did not meet SLG specifications: 9 denials (19.1%). The most common vehicle-related deficiency was failure to meet the model year 2015 or newer requirement for cargo vans and box trucks. In several instances, the proposed substitute intended to use a personal vehicle that did not meet the cargo capacity requirements specified in Exhibit B of the ICOA.
• Substitute did not complete required 16-hour training: 8 denials (17.0%). All eight of these denials occurred after January 2023 and involved drivers operating under ICOA v3.0. In several cases, the proposed substitute scheduled the training but did not complete both days, and the hub manager denied the request for failure to satisfy the training condition.
• Timing or urgency of request: 6 denials (12.8%). In these cases, the contracting driver submitted the request too close to the requested substitution date for the background check and inspection processes to be completed in time. This category is particularly significant because it illustrates the practical barrier created by the multi-step approval process: even where the request might have been approved on the merits, the administrative timeline rendered it moot.
• Insufficient documentation or incomplete form: 4 denials (8.5%). These involved requests where the contracting driver did not submit a completed Subcontractor Approval Request Form or omitted required supporting documentation.
• No substantive reason documented: 6 denials (12.8%). In six instances, the denial record does not contain a documented substantive basis for the denial. The hub manager's file simply reflects that the request was "denied" or "not approved" without further explanation. These undocumented denials are concentrated at HUB-01 Fort Worth (2 of 3 denials) and HUB-13 Lubbock (2 of 3 denials).
The existence of six denials without documented substantive reasons is a risk factor for SLG. If plaintiff's counsel obtains these records in discovery, they may argue that the denials reflect hub managers' practice of rejecting subcontracting requests as a matter of course without genuine consideration, further supporting the argument that the subcontracting right was illusory. The concentration of undocumented denials at HUB-01 Fort Worth, the named plaintiff's hub, amplifies this risk.
B. Actual Subcontracting Activity
Of the 19 approved subcontracting requests, our review of RouteSync dispatch data and accounts payable records indicates that 16 resulted in actual deliveries being performed by an approved substitute driver. The remaining 3 approvals were granted but ultimately not utilized by the contracting driver — in two cases because the need for a substitute had passed by the time the approval was obtained, and in one case for reasons not documented.
The 16 instances of actual subcontracting yielded the following delivery volume:
• Total deliveries performed by approved subcontractors during the relevant period: 1,247
• Total deliveries performed by all drivers across all 14 hubs during the relevant period: Approximately 4,832,000
• Subcontractor-performed deliveries as a percentage of total deliveries: Approximately 0.026%
The 1,247 subcontractor-performed deliveries were distributed across 9 hubs (the 5 hubs with zero approvals naturally had zero subcontractor deliveries) and across the full relevant period. The geographic and temporal distribution was as follows:
One driver at HUB-06 Oklahoma City is noteworthy: Driver OKC-037 (name withheld for privilege purposes) submitted three separate subcontracting requests between July 2022 and January 2025, all of which were approved, resulting in 178 deliveries performed by his designated substitute over intermittent periods. Driver OKC-037 appears to have established something approaching a business model involving regular use of a subcontractor, engaging his substitute during periods when he was performing delivery services for a competing logistics company. This driver's experience is potentially favorable for SLG's argument that the subcontracting right had real economic value and was exercised as part of entrepreneurial activity, though the singularity of this example limits its persuasive weight.
C. Named Plaintiff Marcus Delano's Subcontracting History
Marcus Delano performed delivery services under contract with SLG from March 2021 through September 2024, operating out of HUB-01 Fort Worth under the supervision of Hub Manager Dennis Faulkner. Delano signed ICOA v1.0 in March 2021 and was not required to execute the v2.0 or v3.0 revisions. Notably, because Delano signed v1.0, which does not contain the arbitration clause or collective action waiver introduced in v3.0, he is not subject to SLG's Motion to Compel Arbitration, which is directed at the approximately 640 drivers who executed v3.0.
Our review of the subcontracting approval request files for HUB-01 Fort Worth reveals that Marcus Delano did not submit any subcontracting approval requests during his tenure. This finding is consistent with the allegations in the Complaint, where Delano alleges that subcontracting approvals were "rarely, if ever, granted" and that the right to subcontract was "effectively meaningless." However, we note the distinction between alleging that approvals were rarely granted (which the data confirms at HUB-01) and the fact that Delano himself never submitted a request. Plaintiff's counsel may argue that Delano's failure to submit a request reflects the chilling effect of a process he perceived as futile. SLG may argue that Delano's failure to even attempt to exercise his contractual right to subcontract reflects his own voluntary choice and cannot be attributed to SLG's control.
The significance of this data point for the economic reality test is nuanced. If Delano never attempted to subcontract, plaintiff's counsel will argue that the subcontracting provision was illusory in practice and that no reasonable driver would have attempted to navigate the approval process given the known low success rate. Conversely, SLG can argue that Delano's failure to exercise the right — indeed, his failure even to attempt to exercise the right — reflects that he was not prevented from subcontracting but simply chose not to pursue it, and that the ICOA's subcontracting provision nonetheless demonstrates the independent contractor nature of the relationship.
D. Implications for Classification Defense
The subcontracting data presents a mixed picture for SLG's economic reality test defense.
Favorable Elements:
• All three ICOA versions contractually permit subcontracting, which is a structural feature of the relationship more consistent with independent contractor status than employee status. Employees are not typically given the contractual right to hire their own substitutes to perform their work.
• Some drivers at some hubs did exercise the right to subcontract, and 19 approvals were granted during the relevant period. The fact that the right was not entirely theoretical is helpful, though the small numbers limit the force of this argument.
• At least one driver (OKC-037) appeared to use subcontracting as part of a broader entrepreneurial strategy involving multi-platform engagement, demonstrating that the subcontracting right had real economic value for drivers who chose to exercise it.
Unfavorable Elements:
• The overall approval rate of 28.8% (or 26.0% of all requests including pending and withdrawn) and the vanishingly small volume of subcontractor-performed deliveries (0.026% of total deliveries) strongly suggest that the right to subcontract was largely theoretical for the vast majority of drivers. Courts in this Circuit and elsewhere have recognized that a theoretical right to subcontract that is rarely exercised carries diminished weight in the economic reality analysis.
• The escalating requirements across ICOA versions, particularly the v3.0 requirement of a 16-hour training program for substitutes, created progressively more onerous barriers that had the practical effect of discouraging subcontracting.
• The existence of undocumented denials at certain hubs suggests that some hub managers may have treated the subcontracting provision as a formality rather than a genuine right, raising concerns about the good faith of SLG's administration of the subcontracting process.
• The zero-approval record at HUB-01 Fort Worth is particularly damaging because it is the named plaintiff's hub and will be the most visible data point before the Court.
Relevant Case Law. In Hopkins v. CornerStone Staffing Solutions, Inc., 545 F.3d 338 (5th Cir. 2008), the Fifth Circuit considered the subcontracting factor as part of the economic reality test and noted that while the contractual right to subcontract favors independent contractor status, its weight is diminished when the right is "more theoretical than real." More recently, in Parada v. Bramwell Group, No. 3:19-cv-01420-S, 2021 WL 4134508 (N.D. Tex. Sept. 10, 2021), the Northern District of Texas found that a subcontracting provision that was "subject to numerous conditions and rarely exercised" weighed only slightly in favor of independent contractor status. The court observed that "a right that exists on paper but is rarely available in practice carries limited weight in the economic reality analysis."
SLG's subcontracting data falls squarely within the zone of vulnerability identified in these decisions. The contractual right exists, but the practical exercise of that right was exceptionally rare, and the conditions imposed on its exercise were substantial. We recommend that the subcontracting data be presented carefully and in the context of the broader entrepreneurial opportunity analysis, with emphasis on the contractual right itself rather than the utilization rate, while acknowledging the limitations forthrightly to maintain credibility with the Court.
E. Implications for Conditional Certification
Notwithstanding the challenges the subcontracting data presents for the merits defense, the hub-level variation in subcontracting experience is valuable for the conditional certification opposition.
The variation in subcontracting approval rates across hubs — from 0.0% at HUB-01, HUB-11, HUB-13, and HUB-14 to 50.0% at HUB-06 — demonstrates that the subcontracting experience was not uniform across the proposed collective. A driver at HUB-06 Oklahoma City had a materially different experience with subcontracting than a driver at HUB-01 Fort Worth or HUB-13 Lubbock. This variation supports the argument that drivers are not "similarly situated" for purposes of Section 216(b) because resolving the subcontracting factor of the economic reality test requires hub-specific, individualized factual inquiry.
Hub-level differences in managerial approach to subcontracting requests further demonstrate the need for individualized analysis. Dennis Faulkner's approach at HUB-01 Fort Worth (zero approvals, two undocumented denials) differed markedly from the approach at HUB-06 Oklahoma City (50.0% approval rate, documented substantive review of requests). This variation in hub manager practice means that the subcontracting factor cannot be resolved on a collective-wide basis through common proof.
We recommend incorporating this hub-level variation into the conditional certification opposition, but with the important strategic caveat discussed in Section VII.A: presenting the subcontracting approval rate data carries the risk that plaintiff will seize upon the low aggregate approval rate (26.0%) as evidence of a common policy of effectively denying subcontracting rights across the board. This risk must be balanced against the value of the hub-level variation in undermining commonality.
V. Multi-Platform Engagement Analysis
A. Framework and Relevance
Under the FLSA economic reality test, a key factor in determining whether a worker is an employee or an independent contractor is whether the worker has the opportunity to profit or lose based on the exercise of managerial skill or entrepreneurial initiative. The Fifth Circuit has consistently recognized that a worker's freedom to provide services to competing enterprises simultaneously is a significant indicator of independent contractor status. See, e.g., Hopkins, 545 F.3d at 343 ("An employee, as a rule, works for one company; an independent contractor may work for several."); Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1314 (5th Cir. 1976) (considering whether workers "were free to offer their services to others").
All three versions of the ICOA contain no explicit exclusivity requirement. Section 2.1 of each version states that the driver is "an independent contractor and not an employee of [SLG]" and that "nothing in this Agreement shall be construed to create an exclusive relationship between [SLG] and Contractor." This non-exclusivity language is a favorable structural feature of the ICOA for SLG's classification defense.
However, several contractual provisions in the ICOA operate in tension with the non-exclusivity language and effectively constrain drivers' ability to engage with competing platforms or companies:
Minimum Acceptance Rate. Section 5.2 of all three ICOA versions requires drivers to maintain a minimum delivery acceptance rate of 85% per rolling 30-day period as measured through the RouteSync dispatch platform. Drivers who fall below this threshold are subject to a "performance review" process that can lead to increased monitoring, temporary suspension, or termination of the ICOA. The practical effect of this requirement is that drivers must accept at least 85% of the deliveries offered to them through RouteSync, limiting their ability to decline SLG work in favor of competing opportunities.
Delivery Windows. Section 3.4 of the ICOA establishes the "Service Availability Period" as 7:00 AM to 8:00 PM, Monday through Saturday. During this period, drivers are required to be available to accept delivery assignments through the RouteSync platform. While the ICOA does not technically prohibit drivers from performing other work during this window (so long as they maintain the 85% acceptance rate), the practical effect is that the 78-hour weekly service availability period occupies most of the hours during which competing delivery work is typically available.
Non-Compete Clause. Section 11.3 of all three ICOA versions contains a post-termination non-compete clause providing that, upon termination of the ICOA for any reason, the driver shall not "directly or indirectly engage in, or provide services for, any business that competes with [SLG] in the provision of last-mile delivery services" within a 50-mile radius of the driver's assigned hub for a period of 12 months following termination. While this provision is a post-termination restriction rather than a restriction on concurrent engagement during the term of the ICOA, its presence in the agreement may have had a chilling effect on drivers' willingness to establish relationships with competing platforms.
Taken together, these provisions create a complex factual landscape regarding multi-platform engagement. The ICOA permits it in theory, but the minimum acceptance rate, delivery windows, and non-compete clause collectively narrow the practical scope of that permission.
B. Indirect Evidence of Multi-Platform Engagement
Because SLG does not maintain direct records of drivers' outside employment, our analysis of multi-platform engagement relies on several categories of indirect evidence, which we describe in turn.
1. RouteSync Scheduling Gap Analysis. We analyzed RouteSync dispatch data for the 50-driver sample across the five selected hubs to identify periods during which drivers had delivery-free days or blocks of time that could have been used for competing platform work. The RouteSync platform records the time at which delivery assignments are offered to each driver, the driver's acceptance or declination of each offer, and the completion time of accepted deliveries. By analyzing gaps in this data, we can identify periods when a driver was not performing SLG deliveries and could theoretically have been engaged in other work.
Our analysis of the 50-driver sample yielded the following findings:
Average Delivery-Free Days Per Month. Across the sample, drivers averaged 6.3 days per month with no RouteSync delivery activity. This figure includes Sundays (when the service availability period does not apply), but also includes a meaningful number of weekday and Saturday gaps. When Sundays are excluded, the average drops to 2.1 weekday/Saturday gaps per driver per month.
Hub-Level Variation in Scheduling Gaps. The average number of delivery-free days (excluding Sundays) varied by hub as follows:
HUB-06 Oklahoma City had the highest average number of delivery-free days, consistent with the observation that Oklahoma City drivers appeared to have the most active multi-platform engagement. HUB-09 New Orleans had the lowest average, suggesting that New Orleans drivers were more fully committed to SLG delivery work during the service availability period.
Drivers with Consistent Versus Irregular Patterns. We categorized the 50 sampled drivers into three groups based on their RouteSync scheduling patterns:
• Full-time SLG engagement (0-1 delivery-free weekdays/Saturdays per month): 22 drivers (44% of sample)
• Moderate gaps (2-4 delivery-free weekdays/Saturdays per month): 19 drivers (38% of sample)
• Significant gaps (5+ delivery-free weekdays/Saturdays per month): 9 drivers (18% of sample)
Drivers in the "significant gaps" category had scheduling patterns most suggestive of outside work. These 9 drivers averaged 6.7 delivery-free weekdays/Saturdays per month, creating ample time for engagement with competing platforms. Notably, 6 of these 9 drivers were later confirmed through other evidence (intake questionnaires or hub manager reports) to have been engaged with at least one other delivery or logistics company during the relevant period.
2. Driver Intake Questionnaire Data. SLG's onboarding process requires drivers to complete an intake questionnaire that includes the following question: "Are you currently performing delivery, driving, or logistics services for any other company? If yes, please identify the company or companies." Our review of intake questionnaire responses for drivers who commenced services during the relevant period yielded the following data:
• Total intake questionnaires reviewed (drivers onboarding April 2022 – June 2025): 394
• Drivers indicating concurrent engagement with another company at time of onboarding: 87 (22.1%)
• Drivers indicating no concurrent engagement: 291 (73.9%)
• Drivers leaving the question blank or providing ambiguous responses: 16 (4.1%)
Of the 87 drivers who indicated concurrent engagement, the most frequently identified companies were FleetDash (31 drivers), Brightwater Industries (22 drivers), SwiftRoute Delivery Services (14 drivers), and various ride-share or ride-hail platforms (12 drivers). The remaining 8 drivers identified other logistics or courier companies.
Several important limitations apply to this data. First, the intake questionnaire captures a point-in-time snapshot at onboarding and is not updated periodically. A driver who was not performing services for another company at the time of onboarding may have begun doing so weeks or months later. Conversely, a driver who indicated concurrent engagement at onboarding may have subsequently ceased that engagement. Second, the intake questionnaire is self-reported and unverified; drivers may have had incentives to underreport outside work if they perceived that SLG would view it unfavorably. Third, the 394 questionnaires represent only the drivers who onboarded during the relevant period, not the full population of 1,187 drivers (which includes drivers who onboarded before April 2022 and whose questionnaires are not consistently available in the file).
Despite these limitations, the 22.1% figure is directionally significant and suggests that multi-platform engagement was not a marginal phenomenon. If even one in five drivers reported concurrent work at onboarding, the actual rate of multi-platform engagement at any given time during the relevant period is likely higher, given that drivers may have commenced outside work after onboarding and that underreporting is likely.
3. Hub Manager Reports and Anecdotal Evidence. Interviews with Trevor Sandoval (VP of Operations) and Karen Lund (Director of Driver Relations) provided additional context regarding multi-platform engagement. Sandoval stated that it was "common knowledge" within SLG that many drivers performed delivery or driving services for other companies, and that this was viewed by SLG as consistent with the independent contractor relationship. Sandoval identified FleetDash, Brightwater Industries, and SwiftRoute Delivery Services as the most common competing platforms used by SLG drivers, and stated that SLG did not take any steps to prevent drivers from working for these competitors beyond the non-compete clause in the ICOA.
Karen Lund provided a more nuanced perspective. She noted that while SLG's official policy did not prohibit concurrent engagement with other platforms, the 85% minimum acceptance rate effectively limited drivers' ability to decline SLG deliveries in favor of competing work. Lund stated that she was aware of "at least several dozen" drivers across the hub network who performed services for FleetDash or Brightwater Industries, and that this information was generally communicated informally through hub managers rather than tracked systematically.
Dennis Faulkner, Hub Manager at HUB-01 Fort Worth, stated that he was aware of approximately 8 to 10 drivers at his hub (out of 142 total) who he believed were concurrently engaged with one or more competing platforms during the relevant period. Faulkner identified FleetDash and Brightwater Industries by name as the platforms most commonly used by Fort Worth drivers. When asked about Marcus Delano specifically, Faulkner stated that he was not aware of Delano working for any other company during his tenure, but acknowledged that he did not systematically track drivers' outside activities.
4. Acceptance Rate Data as a Proxy. We analyzed delivery acceptance rate data from the RouteSync platform for the 50-driver sample as an additional proxy for multi-platform engagement. The logic underlying this analysis is that drivers who consistently maintained acceptance rates at or near the 85% minimum threshold — i.e., who declined the maximum number of deliveries permitted without triggering performance review — may have been strategically managing their SLG workload to preserve time for competing platform work. Conversely, drivers with acceptance rates near 100% were accepting virtually all offered deliveries and were less likely to have been engaged in significant outside work.
The distribution of average acceptance rates across the 50-driver sample was as follows:
The 11 drivers (22%) with acceptance rates between 85.0% and 89.9% were operating at the margin of the minimum threshold, declining approximately 10-15% of offered deliveries. This pattern is consistent with strategic workload management to preserve time for other activities, though it is not definitive evidence of multi-platform engagement — drivers may have declined deliveries for personal reasons, vehicle maintenance, or other non-work-related factors.
Performance Review Records. Our review of performance review records triggered by sub-85% acceptance rates revealed that 23 drivers across the full 1,187-driver population received performance review notifications during the relevant period. Of these, 7 resulted in termination of the ICOA, 11 resulted in the driver's acceptance rate returning to compliance within the subsequent 30-day period, and 5 were pending or otherwise unresolved at the time of this analysis. The relatively low number of performance reviews (23 out of 1,187 drivers, or 1.9%) suggests that the 85% threshold was generally effective in maintaining delivery volume, but also that the overwhelming majority of drivers complied with the requirement, potentially limiting their ability to engage in outside work.
Hub-by-Hub Acceptance Rate Variance. Average acceptance rates varied meaningfully across the five sampled hubs:
HUB-06 Oklahoma City had the lowest average acceptance rate (88.9%), consistent with the observation from the scheduling gap analysis that Oklahoma City drivers had the highest average number of delivery-free days and the highest apparent rate of multi-platform engagement. HUB-09 New Orleans had the highest average acceptance rate (94.2%), consistent with its lower scheduling gap average and lower apparent multi-platform engagement.
C. Known Multi-Platform Drivers
1. Quantitative Findings. Triangulating across the four categories of indirect evidence described above — RouteSync scheduling gaps, intake questionnaire responses, hub manager reports, and acceptance rate patterns — we identified 16 of the 50 sampled drivers (32.0%) as having performed services for at least one other delivery or logistics company during some portion of the relevant period. We further classified the outside work into the following categories:
• Competing last-mile delivery platforms (FleetDash, Brightwater Industries, SwiftRoute): 11 drivers (22.0% of sample)
• Ride-share or ride-hail platforms: 3 drivers (6.0% of sample)
• Independent freight hauling: 1 driver (2.0% of sample)
• Non-delivery employment (unrelated to logistics): 1 driver (2.0% of sample)
If the 32.0% rate in our sample is representative of the full 1,187-driver population, this would suggest that approximately 380 drivers engaged in multi-platform work during some portion of the relevant period. However, we emphasize the caveats identified in Section II.B regarding the limitations of the 50-driver sample and the reliance on indirect evidence. A formal statistical analysis with appropriate confidence intervals and methodology validation is reserved for Dr. Priya Ramanathan's expert report through Corbin Risk Advisors LLC, and the 32.0% figure should be treated as a preliminary directional estimate.
An additional refinement is warranted: the 32.0% figure reflects drivers who engaged in multi-platform work during some portion of the relevant period. It does not necessarily mean that 32% of drivers were working for competitors at any given point in time. Some drivers may have engaged with a competing platform for only a few weeks or months before ceasing that engagement. A more conservative estimate of the percentage of drivers concurrently engaged with a competing platform at any given point in time during the relevant period is approximately 15-20%, based on the temporal distribution of the evidence.
2. Hub-Level Variation. The percentage of sampled drivers identified as multi-platform engaged varied significantly across hubs:
HUB-09 New Orleans had a notably lower rate of identified multi-platform engagement (10%) compared to the other four hubs. This may reflect the smaller number of competing delivery platforms with a meaningful presence in the New Orleans market, or it may reflect the higher average acceptance rate at HUB-09 (94.2%), which left less time for outside work. By contrast, the three Texas hubs (Fort Worth, Dallas, Houston) and Oklahoma City all showed multi-platform engagement rates of 30-40%, suggesting that in larger markets with more competing platform opportunities, drivers were more likely to diversify their income sources.
Geographic and market factors likely play a significant role in this variation. The Dallas-Fort Worth and Houston metropolitan areas are home to the headquarters or regional operations of FleetDash and Brightwater Industries, respectively, creating more abundant competing platform opportunities in those markets. Oklahoma City has a growing logistics sector that provides additional opportunities for delivery drivers. By contrast, New Orleans has a smaller and less competitive last-mile delivery market, potentially limiting outside opportunities.
This hub-level variation in multi-platform engagement rates is a valuable data point for the conditional certification opposition, as it further demonstrates that the drivers in the proposed collective had materially different experiences regarding the opportunity for entrepreneurial initiative based on the geographic market in which they operated.
D. Named Plaintiff Marcus Delano's Multi-Platform Engagement
Available information regarding Marcus Delano's engagement with other companies during his tenure at HUB-01 Fort Worth (March 2021 – September 2024) is currently limited. Dennis Faulkner, Delano's hub manager, stated that he was not aware of Delano performing work for any other company. Delano's intake questionnaire from March 2021, which we reviewed in his onboarding file, indicated "No" in response to the question regarding concurrent engagement with other companies. However, as noted above, the questionnaire reflects only Delano's status at the time of onboarding and does not address whether he subsequently engaged in outside work.
Delano's tax returns (Schedule C) and bank records, which would provide the most definitive evidence regarding income from competing platforms, have been requested in Defendant's First Set of Requests for Production (served June 23, 2025) at Request Nos. 3, 5, 8, and 14. These documents have not yet been produced, and Delano's responses are not yet due. Interrogatory Nos. 4, 7, and 12 in Defendant's First Set of Interrogatories (also served June 23, 2025) specifically ask Delano to identify all companies for which he performed delivery, driving, or logistics services during the relevant period and to state the income he received from each. Delano's responses to these discovery requests will be critical to the analysis.
Based on the RouteSync data analyzed in the June 25, 2025 memorandum, Delano's average weekly hours of SLG delivery work was approximately 58 hours, and his average weekly gross pay was approximately $1,247, yielding an effective hourly rate of approximately $21.50. The 58-hour average weekly work schedule, when combined with the 7:00 AM – 8:00 PM delivery window, suggests that Delano was performing SLG deliveries for roughly 9-10 hours per day over a 6-day work week. While this schedule would have left evenings and Sundays theoretically available for other work, the most common competing last-mile delivery platforms (FleetDash, Brightwater Industries) operate primarily during the same daytime hours as SLG, meaning that Delano's schedule may not have left meaningful time for competing platform work during the hours when such work was most available.
The significance of Delano's multi-platform engagement (or lack thereof) for the economic reality test is substantial. If Delano did not work for other platforms during his SLG tenure, plaintiff's counsel will argue that the opportunity to do so was effectively illusory given the demands of the SLG relationship, and that the 58-hour average work week left insufficient time for entrepreneurial initiative. If, on the other hand, Delano did perform services for competing platforms — which his discovery responses should reveal — SLG can argue that his actual exercise of the freedom to work for others demonstrates the independent nature of the relationship and the existence of genuine entrepreneurial opportunity.
E. Impact of Contractual Constraints on Multi-Platform Engagement
1. Minimum Acceptance Rate (85%). The 85% minimum acceptance rate is the contractual provision with the most direct impact on drivers' ability to engage in multi-platform work. A driver who is required to accept 85% of offered deliveries during the 7:00 AM – 8:00 PM service availability period has limited flexibility to decline SLG deliveries in favor of a competing delivery for FleetDash or Brightwater Industries. In practical terms, the 85% threshold means that a driver who is offered an average of 12 deliveries per day can decline at most 1-2 deliveries per day. Over the course of a rolling 30-day period, the margin is somewhat wider, as the 85% threshold is computed on a cumulative basis, allowing a driver to have occasional days with lower acceptance rates so long as the 30-day rolling average remains at or above 85%.
Nonetheless, the minimum acceptance rate functions as a significant constraint on multi-platform engagement. A driver cannot routinely decline SLG deliveries to prioritize competing platform work without risking a performance review and potential ICOA termination. This constraint is especially pronounced when combined with the mandatory delivery windows: because competing platforms like FleetDash and Brightwater Industries offer thei

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