USD 27m final judgment in landmark FedEx case

Company agrees to end 10-year fight; IRS audit of Fedex still pending.

Putting an end to a nearly decade-long, landmark legal battle, FedEx Ground/Home Delivery has agreed to a $27 million Court judgment that includes payment of $14.5 million to 203 California drivers who were misclassified by the company as independent contractors. FedEx will also be paying $12.5 million in full attorney fees and most costs of the case that was the first to challenge and eventually expose the shipping giant’s independent contractor scheme. Final court approval of the stipulated judgment is expected soon.

The case of Estrada vs. FedEx Ground Package System, Inc. went to trial before California Superior Court Judge Howard Schwab (ret.) in 2004. He ruled that the drivers were legally employees and entitled to be reimbursed for all the expenses they were illegally required to pay by the company. In August 2007, the California Court of Appeals affirmed the judgment that the drivers were employees and doubled the damages awarded to the drivers in a published decision. That decision has sparked nationwide litigation against many large corporations that have misused the independent contractor concept to the detriment of American workers and the US Treasury which has lost billions in unpaid payroll taxes. Approximately 27,000 FedEx drivers nationwide have a multi-district lawsuit against the company for misclassification pending in South Bend, Indiana. As in the California Estrada case, the drivers are asking the court to find that FedEx treats them like employees and rule that they are entitled to the same legal rights of employees.