According to the 7th Circuit Court of Appeals, FedEx drivers in Kansas are employees not independent contractors as FedEx claimed. The ruling is part of multi-district litigation that involved similar FedEx cases from 40 states that have been pending in an Indiana federal court since 2005.
In 2010, the district court in Indiana granted FedEx’s motion for summary judgment ruling that the drivers were independent contractors, not employees. In this case, the Kansas drivers appealed complaining that the company was making unlawful deductions from their pay for claimed FedEx business expenses. The drivers also claimed that the operating agreement that they signed with FedEx should be rescinded because it improperly characterized them as independent contractors. The Kansas drivers filed an appeal of the grant of summary judgment to FedEx arguing that because, among other factors, FedEx assigned drivers their routes, set appearance standards and required them to report to a FedEx official at the beginning and end of each day, they were employees. FedEx argued that the drivers were independent contractors as the drivers hired helpers, could sell their routes, controlled their own breaks and could cooperate with other drivers to complete their routes. Because the case involved an issue of Kansas state law that had not been addressed by the Kansas Supreme Court, the 7th Circuit Court of Appeals certified the issues to the Kansa court to have it rule on the state law issue. Last year, the Kansas Supreme Court applying a 20 factor test ruled that the drivers were employees not independent contractors. In agreeing with the Kansas Supreme Court, the 7th Circuit stated that “actual control” was not among the factors that needed to be considered in determining employee status.
The issue of independent contractor versus employee status is a hot issue with both the Department of Labor as well as private attorneys. Independent contractor status should be carefully reviewed to make sure that the individual is truly an independent contractor and not an employee as the potential liability of misclassification is substantial.
W.V. Bernie Siebert
Sherman & Howard