Court finds that FedEx Ground drivers are employees, not independent contractors

Fedex logoOAKLAND, Calif., Aug. 27, 2014 /PRNewswire-USNewswire/ — Today, the Ninth Circuit Court of Appeal ruled that a class of 2,300 individuals working for FedEx Ground was misclassified as independent contractors instead of employees.  As a result, FedEx may owe its workforce of drivers hundreds of millions of dollars for illegally shifting to them the costs of such things as the FedEx branded trucks, FedEx branded uniforms, and FedEx scanners, as well as missed meal and rest period pay, overtime compensation, and penalties.  The case, known as Alexander v. FedEx Ground, covers employees in California from 2000 – 2007. The ruling can be found on the Leonard Carder website at leonardcarder.com.

Judge Fletcher’s majority opinion was very clear on the question of whether these workers are employees or independent contractors, stating “We hold that plaintiffs are employees as a matter of law under California’s right-to-control test.”

The court’s decision is the most recent in a series of cases that have methodically proven that FedEx Ground’s independent contractor model is built on the legal fiction that its drivers are in business for themselves. The Ninth Circuit decisively rejected that claim.  The court’s finding in Alexander that drivers in California are covered by California’s workplace protection statutes not only impacts one of FedEx Ground’s largest workforces but could influence the outcome in over two dozen cases nationwide in which FedEx Ground drivers are challenging the legality of their independent contractor classification.  Millions of packages are delivered every day across the state under the control, direction, and supervision of FedEx Ground.  In addition, many trucking companies have been operating under a similar model in which they classify their drivers as independent contractors.

“FedEx Ground built its business on the backs of individuals it labelled as independent contractors, promising them the entrepreneurial American Dream,” said Leonard Carder Attorney Beth A. Ross who is a national leader on cases covering the exploitation of workers by mischaracterizing them as independent contractors.  “However, as Judge Trott said in his concurring opinion, not all that glitters is gold.”

FedEx now requires its so-called contractors in California to hire a secondary workforce of FedEx drivers, who do the same work as the plaintiffs under the same contract.  The Alexander decision calls into question FedEx’s strategy of making plaintiffs the middle men between the secondary workforce of drivers and FedEx.

“We have heard of many instances where the secondary drivers are earning such low wages that they have to rely on public assistance to make ends meet,” said Ross.

Background on the everyday experience for FedEx Ground drivers includes:

  • FedEx Ground drivers were required to pay out of out of pocket for everything from the FedEx Ground branded trucks they drove (painted with the FedEx Ground logo) to fuel, various forms of insurance, tires, oil changes, maintenance, etc. as well as their uniforms, scanners and even workers compensation coverage.
  • In some cases workers were required to pay the wages of employees who FedEx Ground required them to hire to cover for them if they were sick or needed a vacation, to help out during the Christmas rush, and in some cases to drive other FedEx Ground trucks.
  • After paying these expenses, a typical FedEx driver makes less than employee drivers at FedEx Ground’s competitors like UPS, and receives none of the employee benefits, like health care, workers compensation, paid sick leave and vacation, and retirement.
  • In addition, their employment was subject to the whims of FedEx management and FedEx Ground’s decisions on staffing and routes left the employee drivers stuck with expensive long-term truck leases on FedEx branded trucks.

The drivers’ attorney Beth Ross added, “Nationally, thousands of FedEx Ground drivers must pay for the privilege of working for FedEx 55 hours a week, 52 weeks a year.  Today, these workers were granted rights and benefits entitled to employees under California law.  To be clear, the Ninth Circuit exposed FedEx Ground’s independent contractor model as unlawful.”

Among the noteworthy elements to emerge from the litigation, FedEx Ground’s practices take advantage of workers and are anti-competitive.  FedEx Ground’s so-called “contractors” do the same work as UPS and U.S. Postal Service drivers for substantially less pay and without benefits. This plays out in two distinct ways.   FedEx Ground saves money and harms drivers and the public by avoiding employment taxes and workers’ compensation insurance, and complying with all other workplace protections.

Ross added, “This ruling will have seismic impact on this industry and the lives of FedEx Ground drivers in California.”

  • Captain Obvious

    Oh no! How can this be? I am shocked! A privatize delivery company treating their employees like second class citizens… Preposterous! Just wait and see what this is going to cost their customers!

  • Grievin Gary

    Can anyone else see the huge legal action that could be brewing against the USPS based on this decision?? How many people are employed, er, “Contracted” by the USPS to do postal work in lieu of postal workers, ie truck drivers, contract post office workers, presort company workers, and the list goes on and on. If they are paid by the Post Office in any way, they should be considered postal employees. Let the grieving, workmans comp and other labor issues begin, and oh, yes, maybe the PO will have to offer them all health benefits, too? This is not much different than the “Kelley Girls” arbitration the APWU worked on around 10 years ago.

  • Liam Skye

    There goes that whole fiction that USPS spends 80% of its costs on its employees while FedEx only spends 47% on its employees. If FedEx can’t hide its true employee costs under “transportation contracts” that nonsensical old saw goes right out the window.

  • old letter carrir

    This is a great judicial decision for the hard working drivers at FedEx. Now you should join a union to protect your court awarded rights and let’s hope the other 49 states follow the lead of California!!!

  • Joe Gibson

    Wow. All I can say is wow.

  • joe

    Actually wrong. The usps is required by law to contract. Usps cant own its own long haul trucks. Cant own its own planes. As for presort..elected option for mailers to get a discount. Not required. If they want to pay less than 49c they do it themselves. Read the law…ever see a a jet with the usps logo? Ever see a 53 tractor trail goin up I95 painted red whit q blue with the eagle?…nope because by law the uspscant have them and must support private sector. Title 39. Us law

  • biggie

    Well your wrong I do see big trailers with usps all over it we have truck drivers .all we need is planes that we sub out now

  • biggie

    You must be kidding we go after the business if fed ex can have usps deliver it pay a sub contractor to drop off at all po’s and still turn a profit on it then there prices are higher so cut them out pay them to use there planes like they do now and take over all there accounts .

  • Nancy

    Gary has a great point or two. In fact, under this ruling, maybe the USPS could be considered and employee of FED EX, also, what with our last mile of delivery deal. As far as being required by law to contract, sounds like management talk to me. In the past, the PO did their own transporting, but thinks it saves money by contracting everything out, as opposed to owning their own fleet an using their own employees. I hope this comes up when contract talks kick in next year for the craft workers.

  • BobW

    Let’s see: FedEx charges the most for parcel delivery yet pays it’s ‘contract’ drivers peanuts.

    On top of that, the ‘contract’ drivers:
    “were required to pay out of out of pocket for everything from the FedEx Ground branded trucks they drove (painted with the FedEx Ground logo) to fuel, various forms of insurance, tires, oil changes, maintenance, etc. as well as their uniforms, scanners and even workers compensation coverage.”

    It’s both amazing and very sad that people are desperate enough to take a job like this.

    In case you were wondering, FedEx CEO Frederick W Smith makes $25.37 million a year.

  • sinatra

    FEDEX SHOULD GO UNION. YEAH; THAT’S RIGHT. UNION

  • joe

    No what you see are contracted trucking companys that have identiying marks of us mail. You do not see trucks that belong to the post office. The only trucks we own are MVS and drivin by union employees.