Costco, Ryder Last Mile, and Mega Nice Trucking Cited $868,128: Joint Employers and Misclassified Delivery Drivers

A big-box logo on the manifest does not wash out the Labor Code just because a Chula Vista LLC signs the check. On October 30, 2025, the Labor Commissioner cited Costco Wholesale Corporation, Ryder Last Mile Inc., and Mega Nice Trucking LLC $868,128 for misclassification and wage violations affecting 58 delivery drivers. $662,978 of that citation is payable to the workers. DIR News Release 2025-111. All three employers appealed.

What the Law Says

Mega Nice Trucking, based in Chula Vista, subcontracted last-mile deliveries of large items from big-box retailers in the San Diego region, including work tied to Ryder Last Mile. DIR’s Bureau of Field Enforcement found drivers working under Mega Nice were systematically misclassified as independent contractors and denied minimum wage, overtime, and legally mandated meal and rest breaks. Drivers were later reclassified as employees in 2023, but DIR says the violations continued: a flat daily rate without proper overtime or missed-meal pay, plus falsified payroll records.

DIR also found Costco and Ryder Last Mile exercised direct and indirect control — scheduling deliveries, mandating uniforms, enforcing protocols, and monitoring performance — and therefore are joint employers equally liable with Mega Nice. The investigation began in July 2024 after two former Mega Nice employees filed complaints. During the investigation, Mega Nice admitted misclassifying its drivers. DIR reports the company had previously been penalized by the Employment Development Department for similar violations.

Labor Code section 2775 is the ABC test. The hiring entity must prove the driver is free from its control, does work outside its usual course of business, and is customarily engaged in an independent delivery trade. Uniforms, routes, and performance monitoring are control. Delivering the retailer’s goods is not “outside the usual course” of a last-mile operation.

Labor Code section 226.8 is willful misclassification, with civil penalties of $5,000 to $15,000 per violation, or $10,000 to $25,000 per violation for a pattern or practice. Labor Code section 510 is overtime. Sections 512 and 226.7 are meal and rest premiums. A flat daily rate does not buy those out. These figures are a cited amount on appeal, not a collected settlement.

How to Fight Back, Step by Step

1. Keep dispatch apps, route sheets, uniform photos, and every company name on the paperwork — Mega Nice, Ryder, Costco, or any other broker. Joint-employer cases live on who controlled the day.

1. Reconstruct hours: first stop to last stop, wait time, overtime after eight hours, and meal and rest breaks you did not get because the window was too tight. A flat day rate that never changes when the day runs 11 hours is the claim.

1. If you drove for Mega Nice on Costco or Ryder Last Mile work and were not contacted, call 1-833-LCO-INFO (833-526-4636) and cite DIR News Release 2025-111. Ask whether you are one of the 58. The citation is on appeal; that does not mean you should wait in silence.

1. File a wage claim naming all three if they controlled your work: Mega Nice Trucking LLC, Ryder Last Mile Inc., and Costco Wholesale Corporation. Section 2775 and joint-employer findings exist so the retailer and the logistics contractor stay on the caption.

1. Do not sign a new “owner-operator” packet without keeping a copy. A reclassification in 2023 did not, according to DIR, stop the flat-rate overtime problem. File for the periods you were short.

Common Questions

I was paid a day rate as a 1099. Doesn’t that settle overtime?

No. DIR found Mega Nice drivers were misclassified, then still paid a flat daily rate after they were put on payroll, without proper overtime or meal premiums. A day rate is a payment method, not an overtime waiver. Labor Code section 510 still counts hours.

Costco says it used a contractor. Why is Costco on the citation?

Because DIR found Costco and Ryder Last Mile scheduled deliveries, required uniforms, enforced protocols, and monitored performance. That is joint-employer control. The Labor Commissioner’s quoted line in 2025-111 is the point: companies that exert control cannot hide behind layers of subcontracting.

Get the free Wage Theft Recovery Kit at wagetheftkit.com — demand-letter templates, hours worksheets, and DLSE filing checklists. The same kit is at justiceprompt.com. Educational use only — not legal advice.