The California Court of Appeals has ruled that 2,300 FedEx Ground drivers in California wereemployees and not independent contractors but FedEx is strongly opposing the verdict which is part
of a long-running dispute over the legal status of the company’s drivers.The 2,300 plaintiffs were full-time delivery drivers for FedEx in California between 2000 and2007 working for the company’s two operating divisions, FedEx Ground, focusing on B2B deliveries,and FedEx Home Delivery, dealing primarily with residential deliveries.
The court ruled as following: “The panel held that the plaintiff FedEx drivers were employees asa matter of law under California’s right-to-control test.” In the decision by the Ninth CircuitCourt of Appeals, it was noted: “FedEx’s labeling their drivers as ‘independent contractors’ in itsOperating Agreement didn’t conclusively make them so.”
In support of its decision, the court explained that the drivers had to wear FedEx uniforms,drive FedEx-approved vehicles and “groom themselves according to FedEx’s appearance standards”.Furthermore, the drivers were told what parcels to deliver, on which days and at which time.“Although drivers may operate multiple delivery routes and hire third parties to help perform theirwork, they may do so only with FedEx’s consent,” the court argued. This undermined the“independent” status of the workers.
But FedEx contradicted the ruling. “We fundamentally disagree with these rulings, which runcounter to more than 100 state and federal findings – including the U.S. Court of Appeals for theD.C. Circuit – upholding our contractual relationships with thousands of independent businesses,”said FedEx Ground Senior Vice President and General Counsel Cary Blancett. “The operating agreementon which these rulings are based has been significantly strengthened in recent years, and we lookforward to continuing to work with service providers across our network to provide customers theindustry’s most reliable service.”
FedEx Ground claimed that the latest court decision reversed previous rulings by the DistrictCourt for the Northern District of Indiana in three class action cases, which mostly concernedformer independent contractors for FedEx Ground.
“The court held that those independent contractors operating in California from 2000-2007 andOregon from 1999-2009 were employees according to the panel’s interpretation of state laws. Themodel that the court reviewed is no longer in use. Since 2011, FedEx Ground has only contractedwith incorporated businesses, which treat their drivers as their employees,” FedEx argued.
FedEx Ground said it will review these decisions, including the latest one. It claimed that ithas enhanced its operating agreements with the independent businesses in recent years. As thelatest step in this ongoing effort, it will switch to new independent service provider (ISP)agreements in the states of California, Oregon, Washington, and Nevada.
The company added it has currently contracts in place with more than 550 businesses that providepickup and delivery services in California and with over 100 independent businesses working withFedEx Ground in Oregon.
“Small businesses are the foundation and growth engine of the US economy, and we are proud ofour long-standing contractual relationship with these service providers – each of which agrees totreat their personnel as employees and to comply with all applicable federal and state laws,” FedExGround Vice President of Contractor Relations, Sean O’Connor, concluded. “We remain committed tomaintaining a business model that has been proven successful for our customers, service providers,and shareowners.”
FedEx Ground has contracts for transportation, pickup and delivery services with more than 8,200service providers in the United States and Canada who employ more than 32,500 people as drivers,managers, helpers and staff. Those businesses generate more than $4 billion a year in revenue andaverage nearly $450,000 in annual revenue per business.
