The U.S. Ninth Circuit Court of Appeals on Wednesday ruled two classes of individuals working for FedEx Ground in California and Oregon were misclassified as independent contractors instead of employees.
The decision by a three-judge panel in Portland reversed an earlier decision. It allows the groups to move forward with their litigation and pursue claims under federal and state laws.
The ruling stems from lawsuits originally filed in California involving about 2,300 full-time delivery drivers between 2000 and 2007, and two suits filed in Oregon involving more than 360 people who were full-time delivery drivers between 1999 and 2009.
FedEx may owe its workforce of drivers millions of dollars for shifting to these drivers 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.
FedEx said it would appeal the decision.
"We fundamentally disagree with these rulings, which run counter to more than 100 state and federal findings, including the U.S. Court of Appeals for the D.C. Circuit, upholding our contractual relationships with thousands of independent businesses," FedEx Ground Senior Vice President and General Counsel Cary Blancett said in a statement.
The court’s finding in this latest ruling that drivers in California are covered by California’s workplace protection statutes not only impacts one of FedEx Ground’s largest workforces, but also could influence the outcome in over two dozen cases nationwide in which FedEx Ground drivers are challenging the legality of their independent contractor classification, according a release from the law firm Leonard Carder, which represented the California plaintiffs.
“FedEx Ground built its business on the backs of individuals it labeled as independent contractors, promising them the entrepreneurial American dream,” said Leonard Carder Attorney Beth A. Ross.
According to the law firm, FedEx now requires its independent contractors in California to hire a secondary workforce of FedEx drivers, who do the same work as the plaintiffs under the same contract. The decision calls into question FedEx’s strategy of making plaintiffs the middle men between the secondary workforce of drivers and FedEx.
“We have heard of many instances where the secondary drivers are earning such low wages that they have to rely on public assistance to make ends meet,” said Ross.