FedEx Ground Wins Latest Court Challenge to Classify Kansas Drivers as Contractors

This story appears in the Aug. 30 print edition of Transport Topics.

A federal judge has ruled that FedEx Ground drivers in Kansas are independent contractors and not employees, handing the company a victory in its ongoing litigation over the classification of its drivers.

In a separate ruling, Judge Robert Miller in the U.S. District Court for the Northern District of Indiana also sent similar lawsuits by drivers in nearly a dozen other states back to state courts for further consideration.

“Although some facts weigh in favor of employee status, after considering all the relevant factors, the court finds that the plaintiffs are independent contractors as a matter of law,” Miller said in his Aug. 11 ruling.

Miller added that while FedEx can control “the results of the work — telling the worker what must be accomplished — [that] doesn’t indicate employee status.”

The Kansas lawsuit was brought by a handful of FedEx Ground drivers working in the state and is part of a larger, multistate suit that covers about 30,000 drivers in 40 states.

Patrick Fitzgerald, spokesman for FedEx Ground, which is the home package delivery unit of FedEx Corp., told Transport Topics that the company viewed Miller’s ruling “as a significant decision.”

“It says . . . the court holds that the plaintiffs are independent contractors as a matter of law,” Fitzgerald said. “It really just supports our position that FedEx Ground independent contractors are properly classified.”

An attorney for the drivers said they were “surprised and dismayed by this opinion.”

Lead counsel Lynn Faris said, “Drivers know that what FedEx may call a ‘suggestion’ is, in reality, a mandate, because not following it leads to termination.

“There is no doubt in my mind — or the drivers’ minds — that they are required to do what they are told and are therefore employees,” Faris continued. “At the very least, there is ample evidence of employment status that warrants a trial.”

In a note to investors, analyst Ed Wolfe of Wolfe Trahan & Co. said the decision was “an important precedent,” because it is the first determination on contractor status Miller has made.

“Ultimately, it seems plausible that certain drivers/states will be classified as employees, while others [as contractors],” Wolfe wrote. “However, it seems increasingly likely . . . that FedEx should avoid a single, very large liability and an expensive restructuring in the foreseeable future resulting from the [lawsuit].”

In the judge’s other related ruling, Miller said, he was remanding the cases of drivers in Colorado, Connecticut, Illinois, Massachusetts, Michigan, Mississippi, Missouri, Montana, South Dakota, Vermont and Virginia back to state courts.

Faris, the attorney for the drivers, said the “upshot of these two rulings means that drivers in some places will be legally employees and in other places, if the decision is not reversed, the drivers will be considered independent contractors.”

State courts have previously ruled on the status of FedEx drivers, with a court in Washington ruling they are contractors and a California court ruling they are employees.

FedEx also has settled a previous case of improper classification in Massachusetts after several drivers were ruled to be employees. Another group of 31 drivers in the state has sued FedEx, filing a complaint on Aug. 17 that they, too, have been misclassified.

“Although the [contract between the drivers and FedEx] labels the drivers as independent contractors, the behavioral and financial control manifested over the drivers by [FedEx] demonstrates that the drivers are employees rather than independent contractors,” the new Massachusetts lawsuit alleges.

FedEx has until Sept. 7 to respond to this lawsuit.