Federal court: FedEx employees are indeed FedEx employees

The following report by Kenneth Quinnell is from AFL-CIO Now:

(Sept. 4, 2014) — Let’s pose a hypothetical situation. You’re sitting at home and a truck pulls up outside. On the side of the truck, it says FedEx. The driver who gets out is wearing a hat that says “FedEx” and a shirt that says “FedEx.” She walks up to your front door, rings the bell and has you sign a FedEx clipboard scanner thing. She hands you a package with FedEx printed on the box. You ask the delivery driver about her job and she tells you that FedEx controls virtually every aspect of her workday, including her appearance, the way the truck looks, the areas she delivers to and the hours she works. You get the idea.

Using your Sherlock Holmes level of deductive logic, you guess that the driver is a FedEx employee.

But like Professor Moriarty, FedEx would say you are wrong. According to them, the driver is an “independent” contractor and not a FedEx employee.

If that sounds like logic so tortured that you’re looking to see if Dick Cheney is involved, the 9th U.S. Circuit Court of Appeals agrees with you, and not FedEx. In a ruling that one of the participating judges said “substantially unravels FedEx’s business model,” the court ruled that since FedEx maintained significant control over the drivers’ work, they couldn’t be misclassified as independent contractors, since they weren’t, you know, independent.

FedEx has pioneered the practice of classifying employees as independent contractors, saying the practice allows their drivers “flexibility” and “strong incentives” as “small businesses,” but the outcome of the lawsuit could lead to FedEx having to pay millions in back pay, and, the Huffington Post notes, the drivers often work “long hours for low pay and little job security.” Notably, the policy allows the company to avoid paying many of the costs of conducting business (such as gas and uniforms), payroll taxes and workers’ compensation costs.

While this ruling only applies to some 2,300 FedEx Ground employees in California and Oregon, the company is appealing the decision, if it is upheld, it could affect numerous similar lawsuits in other states. And the impact could be much broader, considering so many other companies in the logistics industry (and beyond) have copied the FedEx model. Beth Ross, an attorney for the plaintiffs in the case, said: “We expect that the 9th Circuit’s ruling will have a cascade effect on all other appeals pending around the country, and it really heralds the end of FedEx’s way of doing business.”

Hopefully this is the first step toward the end of the anti-worker practice of misclassification, which FedEx might have helped pioneer, but it is a significant and growing problem in many U.S. industries.