FedEx has fiercely fought the employee v. independent contractor issue for many years. About a year ago, Fed Ex settled a dispute with Fed Ex Ground California Drivers – which date back to the year 2000 and extended through 2007- for about $228 Million. This settlement came about in the wake of a 2014 Ninth Circuit ruling that FedEx misclassified drivers as independent contractors. I’ve written on this issue before and so you may know that some companies try to avoid federal and state obligations by hiring independent contractors, as FedEx has done here. In this case the Ninth Circuit said that FedEx controlled their drivers and that they were independent contractors in name only. This settlement only impacted drivers in California. Until now, the outcome of dozens of other FedEx worker status cases nationwide was not yet clear.
Today, FedEx Ground Package System announced they have agreed to pay drivers in 20 states $240 million to settle lawsuits claiming that the company misclassified their drivers as independent contractors. This misclassification allowed the company to save on taxes, fringe benefits, health care costs, pensions and other workers’ costs. Since 2011, FedEx has discontinued working with independent contractors. This settlement, pending an Indiana Judge’s approval, would end a nationwide litigation claiming that because drivers were required to use company-branded trucks, uniforms and scanners FedEx was their employer under federal and state laws.
Misclassification lawsuits have been on the rise over the last several years. Many other companies- including a number of trucking companies and delivery operations- employ a model that is similar to that used by FedEx Ground. Attorney, Beth Ross of Leonard Carder LLP, represents the class. Back in 2015, Ms. Ross stated, “Given how fiercely FedEx has fought this issue for so many years, it is not hyperbole to call the impact of this case, “seismic”. Once again, the powerful message from Ms. Ross is that “the cost of Independent Contractor misclassification can be financially punishing, if not catastrophic, to a business.”