FedEx Settles Independent Contractor Suit for $228 Million
FedEx says its contractors no longer operate under the model challenged in this case. Photo: FedEx
FedEx Ground reached an agreement with plaintiffs in an independent contractor lawsuit to settle for $228 million, the company announced.
The settlement resolves claims, which date back to 2000, of workers who were classified as independent contractors. The lawsuit contended in reality they were employees. The case was pending in the U.S. District court for the Northern District of California and the settlement is subject to court approval.
Just last summer, the U.S. Ninth Circuit Court of Appeals ruled that several FedEx Ground workers had been misclassified as independent contractors instead of employees. FedEx vowed to appeal the decision at the time.
In another case in Kansas later that year, the court also ruled in favor of FedEx Ground workers being classified as employees instead of independent contractors.
“FedEx Ground faced a unique challenge in defending this case given the decision of the Ninth Circuit Court of Appeals last summer,” said Christine P. Richards, executive vice president and general counsel of FedEx Corp. “This settlement resolves claims dating back to 2000 that concern a model FedEx Ground no longer operates.”
The company also announced that it would charge $133 million after taxes or 0.47 cents per diluted share in the fourth quarter of 2015 to increase its reserve of money to pay toward the settlement.