FedEx Ground Continues Its Contractor Battle
FedEx has lost another round in court in the latest chapter of a long-running dispute that is being closely watched for its potential influence on how companies outsource jobs to independent contractors.
FedEx Ground, a division of FedEx Corp., lost an appeal in California in August over whether a group of former route drivers whom the company considered independent contractors should actually have been treated as employees. FedEx Ground saves millions of dollars in costs, including payroll taxes and employee expenses, by categorizing some 15,000 drivers around the country as independent contractors.
But a three-judge California Court of Appeal panel held last month that the drivers who sued, despite owning their own trucks, were controlled by the company in much the same way as employees would be, and as a result they should have been compensated like employees.
Although the decision applies to just 200 drivers who worked for FedEx Ground in California, attorney Lynn Faris, who represented the drivers, said the decision sends a strong message to corporate America. FedEx can still appeal to the California Supreme Court, but Faris said the fact that a lower court and an appeals court have now ruled against FedEx should be a warning to other companies using or contemplating similar independent contractor arrangements.
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