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Good News for Workers: Ninth Circuit Holds that FedEx Drivers Are Employees

Good News for Workers: Ninth Circuit Holds that FedEx Drivers Are Employees

photo credit: International Transport Workers’ Federation via photopin cc

By Leah Nicholls 

Kazan-Budd Attorney

If you thought that the FedEx driver who delivered a package to your doorstep was an employee of FedEx, it turns out that you were right. And FedEx was wrong. 

Yesterday, in a pair of cases from California and Oregon, the Ninth Circuit federal appeals court held that FedEx illegally classified its drivers as independent contractors—they are really employees. This is great news, not only for the drivers, but for any low-wage worker who works under a contract that labels him or her an “independent contractor” rather than an “employee.”

In these suits, classes of FedEx drivers alleged, among other things, that, even though their contract says they are “independent contractors,” they should be treated as employees. In holding in favor of the drivers, the court applied what the concurring opinion described as “duck test”: Does FedEx walk like an employer, talk like an employer, swim like an employer, and quack like an employer? In other words, what the contract says doesn’t matter—what matters is whether the relationship between FedEx and its drivers has more of the attributes of an employee-employer relationship than a contractor relationship.

FedEx requires its drivers to wear only approved FedEx uniforms and comply with strict grooming standards (including standards about body odor). Though drivers supply their own vehicles, they must comply with detailed FedEx rules, down to the dimensions and materials of the shelves and the shade of white paint; drivers can obtain vehicles through financing and vendors supplied by FedEx; and drivers cannot use their vehicles (with the logos showing) for anything other than delivering FedEx packages. FedEx also controls when and how long the drivers work, and what and how many packages the drivers deliver each day. It manages the drivers’ service areas, and can reject a drivers’ proposed delivery route.

Based on these and other factors, the Ninth Circuit concluded that FedEx’s relationship with its drivers was more like an employee-employer relationship. That decision aligns with a similar finding made by a California state court of appeal.

So why does misclassification matter to the FedEx drivers and other so-called “independent contractors? ” Because all the legal protections for employees go out the window when a worker is treated as an “independent contractor.” There’s no right to minimum wage, overtime pay, or leave for independent contractors, and only employees can form unions. Meanwhile, the would-be employer avoids financial responsibility for the worker—costs like workers’ compensation premiums, unemployment insurance, and liability for unsafe driving.

And the employer gets to push the operating costs of its core business on to the worker. In the case of the FedEx drivers, the drivers had to pay for scanners, uniforms, and “all costs and expenses incidental to operation” of the trucks—including truck maintenance, licenses, fees, and taxes. In short, companies can easily reduce their labor and operating costs by calling its core workforce “independent contractors.”

No wonder the (mis)classification of low-wage workers as “independent contractors” is on the rise, from cheerleaders to janitors to port truck drivers. And that has meant a decrease in real pay for those low-wage workers.

The FedEx cases are a big victory for those workers who are fighting back; workers who seek the basic legal protections that apply to what they are—employees.