FedEx Ground Workers Win in Kansas, Are Deemed Employees by Appeals Court
A federal appeals court has ruled that about 500 FedEx Ground workers in Kansas were employees in the latest of a series of recent rulings on worker status.
The 7th Circuit Court of Appeals rejected FedEx’s argument that the workers were independent contractors, upholding a 2014 Kansas Supreme Court decision that found the workers were employees under state law.
Last month, FedEx agreed to settle a similar case in California by agreeing to pay $228 million to more than 2,300 workers who sought employee status. Earlier this month, a federal judge in Massachusetts ruled that drivers at Xpressman, a courier service, were contractors rather than employees.
“We fundamentally disagree with this [Appeals Court] ruling and are exploring our legal options,” said Meredith Heighington Miller, a FedEx Ground spokeswoman.
FedEx changed its approach to contractor status at the Ground unit in 2011, requiring the unit to make contracts with entities that treat their drivers as employees. The Kansas case, like the California matter, extends back before 2000, applying to the status of drivers between 1998 and 2007. The case is Carlene M. Craig et al. v. FedEx Ground Package System Inc.
Gail Gottehrer, a New York attorney who specializes in worker status cases, said the Kansas case has broader implications.
“This case is part of a trend we are seeing toward greater [judicial] scrutiny of independent contractor relationships,” she told Transport Topics. She characterized the Appeals Court ruling as a “wake-up call” for companies “to take a close look at their independent contractor agreements.”
It’s particularly important to look at how the agreements are enforced in practice, rather than the language of the agreement, she said, because the Appeals Court ruling focused on FedEx’s actual control of drivers.
Gottehrer and New Jersey attorney Sean Mack, who represents freight carriers and workers alike, both said the 7th Circuit ruling can’t be applied on the federal level because the Appeals Court was interpreting a state issue in the Kansas case.
Both noted the Appeals Court ruling is significant, particularly in states relying on the so-called “20-factor” test that was used in Kansas to determine whether workers are employees or independent contractors. The test applies 20 factors to a worker’s relationship with a company.
“The decision has tremendous persuasive value,” Gottehrer said July 16. “Other courts will see this, and other plaintiffs will want to borrow from it. It gives them a strong hook to rely on.”
In addition to the Kansas, California and Massachusetts cases, litigation is being fought out in Florida.
Miller also noted an 11th Circuit ruling in May affirmed some of FedEx’s independent contractor claims in a Florida case. “We remain committed to protecting a business model that has consistently provided customers with outstanding service, while enabling thousands of independent business owners, in Florida and across the country, to own their own business,” she said.
“As with the 2008 finding by a Washington state jury that service providers for FedEx Ground are properly classified, we are confident that the same conclusion will be reached in this case,” Miller added.
Mack, the New Jersey attorney, said that dozens of state cases testing FedEx’s use of independent contractors were consolidated into multidistrict litigation in 2005 to decide the common issue of whether the workers were contractors or employees.
In a 2010 ruling on the multidistrict litigation, FedEx prevailed most of the time, Mack said. However, other cases, such as the Kansas matter, were decided in favor of plaintiffs, who were seeking employee status for their clients.
After the 2010 ruling, the Kansas case was returned to state jurisdiction, where the Supreme Court ruled last year that the workers were indeed employees, prompting an appeal from FedEx.
The Craig case in Kansas was sent back by the 7th Circuit to state District Court with instructions to consider the drivers as employees.
