Thousands of FedEx drivers all over the United States sued or are currently in the process of suing FedEx for classifying these drivers as “independent contractors”, as opposed to normal employees—and many are winning.
Specifically, the FedEx Ground division offers small package pick-up and delivery services in the United States, through a network of nearly 32,500 FedEx-uniformed drivers. These workers all executed some type of “Pickup and Delivery Contractor Operating Agreement” (“OA”) with FedEx, which classifies these drivers as independent contractors and not employees.
Accordingly, the OA allows FedEx to potentially save money in a number of areas, including: health benefits, unemployment insurances, retirement accounts, and overtime pay. In the majority of these actions, the Plaintiff-Drivers are alleging that they were misclassified as independent contractors when they were in fact employees; thus the Plaintiff-Drivers are seeking reimbursement of business expenses and back pay for overtime.
In general, the most significant factor any court will examine for determining whether a person is an employee versus an independent contractor is the “employer’s control.” If the employer has a right to control the means and manner of a person’s service—as opposed to controlling only the results of that service—the person is an employee and not an independent contractor.
In determining whether a worker is under the “employer’s control”, Courts typically look for: (1) the extent of the employer’s control, (2) the actual exercise of the employer’s control, (3) the duration of the employment, (4) the employer’s right to discharge, (5) the method of payment, (6) how the employer furnishes the employees’ equipment, (7) the employer’s control over regular work business, and/or (8) the employment contract.
Generally, FedEx requires its drivers to wear a FedEx uniform. Also, FedEx somewhat monitors the drivers’ route, and FedEx cannot discharge its employees at will (as an employer can do in a standard employer-independent contractor relationship). Some drivers have worked for FedEx for years. It is true that FedEx’s drivers provide their own trucks and equipment; however FedEx is heavily involved in the purchasing process, providing funds, and recommending vendors.
The company is currently facing 30 active lawsuits from former contractors in several states. Moreover, FedEx drivers already won some significant legal battles in Oregon, Missouri, California, Connecticut, and Kansas courts, which all concluded that FedEx Ground drivers fit the legal definition of an employee.
To combat these issues, FedEx Ground changed its policy in 2011. The drivers are still not FedEx employees, but now FedEx contracts with incorporated businesses that agree to treat staff as employees. In turn, drivers get basic protections required by law, e.g. workers compensation coverage and unemployment insurances. Still, it is the incorporated businesses providing the contractors with these protections—and not FedEx. FedEx’s current legal battle is a good reminder to make sure employers correctly categorize their workers in order to avoid potential liability.
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