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Federal court: FedEx misclassified drivers

On Behalf of | Sep 4, 2014 | Business Litigation

In disputes over employee misclassification and business models involving independent contractors, often the primary question is whether or not the company controls the contractors’ work. If the company does control the work, then workers who have been classified as independent contractors may in effect be employees of the company. When that is the case, the employer may be responsible for back-pay and benefits for misclassified workers.

A recent federal court ruling against FedEx, which has long classified its drivers as independent contractors, is expected to lead to wage claims against the company. A panel of judges in the 9th U.S. Circuit Court of Appeals reversed a lower court’s ruling and found that 2,300 FedEx drivers in Oregon and California had been misclassified as independent contractors.

Independent contractors are self-employed and therefore control their work and are responsible for the costs of their own small business. In the FedEx case, the court’s ruling asserts that FedEx controlled the truck drivers’ work, making them employees and not independent contractors, and FedEx should be held responsible as the drivers’ employer.

As one judge put it, the ruling “substantially unravels FedEx’s business model.”

FedEx issued a statement saying that the company changed its contractor model three years ago, and that the recent federal court decision doesn’t apply to the current model. FedEx also stated that it would ask the entire 9th Circuit to review the decision.

Whether you’re a plaintiff or a defendant, wage and hour disputes call for cost-effective solutions. If you find yourself engaged in such a dispute, then an experienced employment law attorney can help protect your rights and interests. To learn more, please visit our business law website.

Source: Huffington Post, “Reagan Appointee ‘Unravels FedEx’s Business Model’ In Court Ruling,” Dave Jamieson, Aug. 27, 2014