The Kansas Supreme Court has ruled that a group of about 500 drivers working for FedEx Ground had been misclassified as independent contractors instead of employees.
As a result of the decision, FedEx will be liable for money illegally deducted from their wages as business costs such as uniforms, scanners, overtime compensation, lost or damaged packages and penalties. The amount owed will be in the millions of dollars.
“The Kansas Court has once again resoundingly rejected FedEx’s elaborately designed independent contractor scheme as a subterfuge,” said an attorney for the drivers in the Kansas case.
In the case, FedEx Ground admitted that it structured its operating agreements to label the drivers as independent contractors to gain a competitive edge by pushing some costs onto the drivers, according to the attorneys.
The ruling covers employees in Kansas who signed contracts with FedEx between 1998 and 2007 and was part of a consolidated case with two others in California and Oregon which were decided by the Ninth Circuit Court of Appeals last month. The court in the California and Oregon case also ruled in favor of the drivers.
“This is the next domino to fall in the 10-year legal battle FedEx drivers have waged in dozens of states to establish the most basic rights to the benefits and protections of the law enjoyed by all employees,” said the driver’s attorney in the Kansas case. “We expect the ruling will have a cascade effect in the 20-plus cases that have yet to be decided in the Seventh Circuit Court of Appeals and elsewhere.”
FedEx issued a statement on the ruling saying that since 2011, FedEx Ground has only contracted with incorporated businesses which treat their drivers as employees.
“We fundamentally disagree with this ruling and are committed to protecting the rights of thousands of independent business owners to continue owning and operating their own businesses,” stated FedEx. “More than 100 state and federal decisions have upheld our contractual relationships with independent businesses.”
The Kansas Supreme Court found that drivers are employees covered by the Kansas Wage Payment act after being asked by the Seventh Circuit Court of appeals to rule on the question of whether drivers were employees under Kansas law. The case will now return to the Seventh Circuit for further proceedings.