This is a Job for FedEx…or is it?

By looking at the uniforms and the trucks and scanners and just about everything else associated with any FedEx delivery driver, it’s more than reasonable that one would naturally assume they’re part of a massive payroll consisting of tens of thousands of employees for the Tennessee-based corporation. FedEx, however, would tell you that assumption is wrong. Instead, the company has a lengthy history of using independent contractors with dedicated routes to deliver its packages around the country.

Outfitted with FedEx logos, uniforms, and operating systems, it’s easy to see why a layperson might confuse the independent contractors for employees, and now courts around the country are beginning to agree. Fueled primarily by a string of class action labor lawsuits brought by FedEx drivers, state and federal courts have been thrust into deciding whether those drivers can proceed on claims reserved for employee-employer relationships. Last month, a pair of decisions from the Ninth Circuit appeals court found that, at least in California and Oregon, those drivers are actually employees of FedEx.

Spurred by claims for unpaid overtime and employment expenses as well as Family and Medical Leave Act violations, among other things, the first hurdle for the hundreds of drivers represented by the class action was to prove themselves eligible to recover on those bases. Doing so meant demonstrating that their arrangement with FedEx fell under the purview of employment. In a previous blog post, we discussed some of the basics of what distinguishes independent contractor status, but the Ninth Circuit went into great depth as it picked apart the many factors that demonstrated how little “independence” these drivers actually have.

The governing document in the FedEx-driver relationship is the Operating Agreement (OA) which begins with language of it being for the mutual benefit of the parties and sets the table for meeting business objectives while asserting a hands-off approach of how to achieve those goals, saying that is left to the discretion of the driver. Per the OA, “no officer, agent, or employee of FedEx shall have the authority to prescribe hours of work, whether or when the [driver] is to take breaks, what route the [driver] is to follow, or other details of performance.”

Drivers cover distinct areas, but they are free to devise a route as they see fit. Working hours are not set, but the workloads are designed to ensure 9.5 to 11 hours of work every day. If the workload is too great, drivers may hire qualified third parties to assist them. Training is provided by FedEx to help drivers with customer service, and drivers must adhere to FedEx’s safe driving standard. Managers may do quality assurance ride-alongs up to four times per year. So far, so good, as such an arrangement would be more akin to telling a contracted chef “please make this gourmet menu for my guests” versus explicitly directing a cook through every detail of sourcing and preparing the meal to exact specifications.

Things become a bit more inflexible, however, once the OA ventures into equipment and appearance requirements. Trucks, which must be provided by the drivers, must meet all government obligations and be specifically approved by FedEx, which can dictate the “identifying colors, logos, numbers, marks and insignia” of the vehicle, as well as its external cosmetics and internal shelving that must adhere to specific standards. Failure to maintain the trucks in the prescribed manner could result in managers refusing to allow drivers to work. Drivers are responsible for all expenses of the vehicles, which are reserved exclusively for use in FedEx business unless all identifying markings are removed or covered. Drivers’ uniforms, appearance, and scanners are all dictated by FedEx, and failure to comply with the standards may again lead to managers refusing to let them work.

In both cases, the Ninth Circuit used a “right-to-control” test according to California and Oregon law. Although each was slightly different in the language and factors considered, the primary issue was the manner and amount of control FedEx exercised over the drivers. Based on elements like the specific uniforms and appearance guidelines, the structured workloads and restrictions on when trucks can leave the FedEx facility, and the delivery windows negotiated directly between FedEx and its customers, the court determined that FedEx was, in fact, exercising significant control–which needn’t be absolute–over its drivers. Once that factor was satisfactorily settled for the court, weighing more factors was moot because the drivers had adequately qualified themselves as employees for purposes of proceeding with the class action suits.

Whether the drivers succeed in their class actions suits is still a long way from being determined, but the decisions reclassifying the legal relationship of FedEx’s driver network should prove interesting as courts in jurisdictions across the country will be forced into making similar distinctions as other driver class actions proceed. How much future decisions agree or conflict with the California ones may drive fundamental changes in how FedEx and other companies do business in all 50 states.

If you work in Georgia or Tennessee and have questions about your rights as an employee, contact an experienced Atlanta employment law attorney today at 404-873-8048. Parks, Chesin & Walbert represents plaintiffs in employment matters, including employment discrimination, wage and hour, FMLA, and more. With offices in Atlanta and Nashville, we offer a client-centered philosophy and strive to accomplish our clients’ goals as if they are our own.

Update (Oct. 3, 2014) – It appears that the Kansas Supreme Court agrees with the Ninth Circuit, as it has just ruled that FedEx drivers in a class action suit there were employees, not independent contractors.

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