FedEx Ground loses appeal over drivers’ status as “independent contractors”
Appeal court judges in the United States have declared that some former FedEx Ground drivers who were classified as independent contractors should have access to pay and benefits as full company employees, under California and Oregon state laws. The class-action rulings overturned previous rulings by the District Court that had gone FedEx Ground’s way.
The San Francisco-based US Court of Appeals for the Ninth Circuit decided that about 2,300 independent contractors operating in California from 2000 to 2007 and in Oregon from 1999 to 2009 were employees according to state laws.
The ruling could cost FedEx millions.
FedEx said this week that it “fundamentally” disagrees with the ruling, and will seek a review of the decision.
The Memphis-based company also said the ruling refers to a business model that is no longer in use, since it now contracts only with incorporated businesses, rather than individual drivers, and those incorporated businesses treat their drivers as their employees.
FedEx Ground Senior Vice President and General Counsel Cary Blancett said: “The operating agreement on which these rulings are based has been significantly strengthened in recent years, and we look forward to continuing to work with service providers across our network to provide customers the industry’s most reliable service.”
Contractors
FedEx Ground contracts with more than 8,200 service providers in the US and Canada, whose businesses employ more than 32,500 people as drivers, managers, helpers and staff, the company said.
Those businesses generate more than $4bn a year in revenue, each averaging nearly $450,000 a year in revenue, it added.
Describing drivers as independent contractors, rather than employees, FedEx was able to reduce its liability for paying overtime, healthcare costs or unemployment insurance.
Dozens of drivers had challenged the designation in court, but the cases were consolidated into two class action lawsuits, one covering California and the other Oregon.
The appeals court judges ruled this week that just because FedEx labelled the drivers as independent contractors, “did not conclusively make them so”.
Judge Fletcher wrote in his opinion on the California case: “The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards. FedEx tells its drivers what packages to deliver, on what days, and at what times.
“Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent.
“FedEx contends its drivers are independent contractors under California law. Plaintiffs, a class of FedEx drivers in California, contend they are employees. We agree with the plaintiffs.”
