Many will be surprised to learn that for years FedEx has treated its delivery drivers as independent contractors rather than as normal employees.
Why you ask?
The answer is simple: Money.
FedEx avoided health care costs, workers compensation insurance payments, paid sick leave and vacation, retirement costs and more. FedEx made drivers pay for their FedEx-branded trucks, FedEx uniforms, and those little hand-held scanners they use. And don’t forget fuel, insurance, tires, oil changes, maintenance, even workers’ compensation coverage.
That all adds up to a lot of money. And that’s why these decisions out of the Ninth Circuit Court of Appeals are such a big deal. A three-judge panel of the appeals court ruled that FedEx drivers were employees “as a matter of law” under both California and Oregon law and “FedEx’s labeling of the drivers as ‘independent contractors’ in its operating agreement did not conclusively make them so.”
While I do not practice in California or Oregon, the tests at issue in these decisions do not appear all that different from the tests most other states that I am familiar with use to determine employee vs. independent contractor issues. And that fact could spell big trouble for FedEx and other employers attempting this strategy.
These decisions are part of a slowly-increasing level of scrutiny from the courts towards corporate efforts to save money by characterizing front-line workers as independent contractors and thus avoid normal employment costs. In another recent decision, the National Labor Relations Board’s general counsel issued an opiniondeciding to treat McDonald’s Corp. as a joint employer of its franchisees’ fast-food workers for the purposes of NLRB violation claims.
FedEx has already indicated that it plans to appeal these decisions.