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FedEx Workers Win Another Circuit in Employment Classification Suit

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he Seventh Circuit ruled that FedEx Ground workers are employees under Kansas state law last week on the heels of a $228 million verdict for FedEx Ground workers in California.

The delivery drivers’ class action is part of the ongoing multidistrict litigation against FedEx alleging the packaging system corporation misclassified its drivers as independent contractors.

Plaintiff Carlene M. Craig, who brought the lawsuit on behalf of her fellow drivers, for those “contractors” operating in Kansas from 1998-2007 under a FedEx Ground business model that is no longer in use. Perry Colosimo, spokesman for FedEx Ground, said,

“Since 2011, FedEx Ground has contracted only with incorporated businesses, which treat their drivers as employees. We fundamentally disagree with this ruling and are exploring our legal options.”

An obvious next legal option for FedEx would be to petition for a writ of certiorari to the Supreme Court. Yet, Colosimo’s statement about FedEx’s immaculate 2011-business model does not explain the implementation of the independent contractor model during 1998-2007.

Drivers not independent contractors

Circuit Judges Frank H. Easterbrook, Ilana Diamond Rovner, and John Daniel Tinder determined the Indiana federal court overseeing the litigation, which ruled FedEx drivers are independent contractors under the Kansas Wage Payment Act, erred in granting summary judgment in favor of FedEx. Upon remanding the case for further proceedings in line with the concept that the drivers are employees under Kansas state law, the panel of judges commented this “ultimately may require a remand of the case to the Kansas district court for a determination of damages.”

Appeals stayed due to this pending decision total 21. The suit is one small part of massive multidistrict litigation throughout approximately 40 states, currently pending in Indiana federal court since 2005. Consistent throughout the multi-district litigation is the allegation of FedEx’s improper classification of its employees, which has cost them important employee benefits.

Beth Ross of Leonard Carder LLP, plaintiffs’ counsel, said:

“FedEx’s independent contractor business model has now been exposed by multiple federal courts of appeal as unlawful. Because FedEx operates a uniform national business in which it reserves the same rights of control over its pick up and delivery workers from coast to coast, the chance that the other 21 appeals will come out differently are slim to none.”

Ross described the decision as the “harbinger of things to come for FedEx,” referencing the other appeals currently pending in the Seventh Circuit.

FedEx ground workers argued their employment status by demonstrating the control FedEx exerts over the employment relationship. Examples of a clear employment relationship argued in court include:

  • FedEx assigns the drivers specific routes.
  • FedEx requires drivers to check in with FedEx managers at the start of their day.
  • FedEx regulates the appearance of its drivers.
  • FedEx requires interested drivers to provide resumes and references like any employee, and FedEx ultimately decides whether to hire the drivers.
  • FedEx also took deductions from drivers’ pay to cover business expenses.

[sws_pullquote_right]See Also: Independent Contractor Classification of Ground Workers Costs FedEx $228 Million [/sws_pullquote_right]

In addition to a determination of employee-status, FedEx Ground workers also sought for the operating agreements between FedEx and its drivers to be rescinded. FedEx attempted to argue the operating agreement affords its drivers certain rights, such as the drivers’ ability to choose when to take their breaks.

After examining 20 factors used to determine whether an employer-employee relationship exists under the Kansas Wage Payment Act, the Kansas court determined the drivers are indeed employees.

The case is Carlene Craig et al. v. FedEx Ground Package System et al., Case Number 10-3115, in the U.S. Court of Appeals for the Seventh Circuit.

The MDL is In re: FedEx Ground Package System Inc. Employment Practices Litigation, Case Number 3:05-md-00527, in the U.S. District Court for the Northern District of Indiana.

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