Labor

Thousands of California FedEx Drivers Exploited By Corporate Execs, Court Rules

A Ninth Circuit panel says the drivers are employees, not contractors.

Photo Credit: Image by Shutterstock, Copyright (c) OneInchPunch

In a big win for labor, a federal appeals court in northern California ruled in a class-action suit Wednesday that 2,300 FedEx Ground drivers are not contractors, as the giant corporation claimed, but employees. This means FedEx may now owe hundreds of millions in back wages, lawyers for the drivers said.

“FedEx Ground Package System, Inc. ('FedEx'), contracts with drivers to deliver packages to its customers,” wrote Judge William Fletcher for the Appeals Court. “The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards. FedEx tells its drivers what packages to deliver, on what days, and what times.

"Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent,” the ruling continued. “FedEx contends its drivers are independent contractors under California law. Plaintiffs, a class of FedEx drivers in California, contend they are employees. We agree with plaintiffs.”

As a result, FedEx may owe drivers “hundreds of millions of dollars for illegally shifting to them the costs of such things as the FedEx branded trucks, FedEx branded uniforms, and FedEx scanners, as well as missed meal and rest period pay, overtime compensation, and penalties,” the drivers’ attorneys said in a press release from the Leonard Carder law firm, which specializes in unions, workers and benefit plans.   

The case, Alexander v. FedEx Ground, concerned FedEx employees in California from 2000-2007. The decision is the latest in a series of cases that have shown FedEx’s independent contractor model is “built on the legal fiction that its drivers are in business for themselves,” the lawyers said, saying they hope the Ninth Circuit ruling “could influence the outcome in over two dozen cases nationwide in which FedEx Ground drivers are challenging the legality of their independent contractor classification.”

“FedEx Ground built its business on the backs of individuals it labeled as independent contractors, promising them the entrepreneurial American Dream,” said attorney Beth A. Ross, who specializes in cases concerning the exploitation of workers by calling them contractors. “However, as Judge [Stephen S.] Trott said in his concurring opinion, not all that glitters is gold.”

FedEx Ground drivers literally had to pay for the privilege of working for the large delivery company, the drivers’ lawyers said. The legal team provided this background:

• Drivers were required to pay out of pocket for everything from the FedEx Ground branded trucks they drove (painted with the FedEx Ground logo) to fuel, various forms of insurance, tires, oil changes, maintenance, etc. as well as their uniforms, scanners and even workers compensation coverage.

• In some cases workers were required to pay the wages of employees who FedEx Ground required them to hire to cover for them if they were sick or needed a vacation, to help out during the Christmas rush, and in some cases to drive other FedEx Ground trucks.

• After paying these expenses, a typical FedEx driver makes less than employee drivers at FedEx Ground’s competitors like UPS, and receives none of the employee benefits, like healthcare, workers compensation, paid sick leave and vacation, and retirement.

• In addition, their employment was subject to the whims of FedEx management and FedEx Ground’s decisions on staffing and routes left the employee drivers stuck with expensive long-term truck leases on FedEx branded trucks.

“Nationally, thousands of FedEx Ground drivers must pay for the privilege of working for FedEx 55 hours a week, 52 weeks a year,” Ross said. “Today, these workers were granted rights and benefits entitled to employees under California law. To be clear, the Ninth Circuit exposed FedEx Ground’s independent contractor model as unlawful.”

The litigation also revealed that FedEx Ground’s practices took advantage of workers and were anti-competitive, she said. The so-called “contractors” do the same work as UPS and U.S. Postal Service drivers, but for substantially less pay and without benefits. That helped corporate profits in two ways: FedEx Ground saved money by avoiding employment taxes and workers’ compensation insurance; and it helped FedEx evade other workplace protections.

“This ruling will have seismic impact on this industry and the lives of FedEx Ground drivers in California.”

It’s not known if FedEx will appeal the ruling, which would go before the U.S. Supreme Court. However, it seems unlikely that possible action would have traction, because the legal issues in play are California law, not federal law.

Steven Rosenfeld covers national political issues for AlterNet, including America's retirement crisis, democracy and voting rights, and campaigns and elections. He is the author of "Count My Vote: A Citizen's Guide to Voting" (AlterNet Books, 2008).