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Another Court Finds FedEx Drivers Are Employees, Not Contractors

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By Mark Wilson, Esq. on October 07, 2014 9:44 AM

Back in 2012, we wrote about a Seventh Circuit case in which FedEx drivers claimed they were entitled to the same benefits as non-drivers, but FedEx claimed they were independent contractors. The case encompassed different lawsuits in different states. The Seventh Circuit decided to certify a question to the Kansas Supreme Court.

In the meantime, the Ninth Circuit had independently determined that FedEx drivers were employees under either an Oregon test or a California test. Last week, the Kansas Supreme Court finally answered the Seventh Circuit's certified question -- FedEx drivers are employees.

The 20-Factor Test

The question dealt specifically with whether employees were independent contractors under the Kansas Wage Payment Act, and whether that equation changed if drivers took on other drivers' routes. At the outset, the court noted that the "answer defies such simplicity" because "the company carefully structured its drivers' operating agreements so that it could label the drivers as independent contractors in order to gain a competitive advantage, i.e., to avoid the additional costs associated with employees."

As you might expect, the operating agreement (OA) between FedEx and its drivers was hardly dispositive. The problem, though, is that Kansas doesn't already have a test for determining employee classification under the KWPA.

The court decided to adopt and modify a 20-factor test used in a prior state employment law case, paying particular attention to the employer's "right to control the worker." While FedEx argued that its OA gave drivers discretion to determine how to do their jobs, in practice, FedEx controlled most of a driver's actions, including delivery methods, reporting requirements, and vehicle specifications. As the California Court of Appeal noted in a 2007 case, FedEx controlled "every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair."

Some of the 20 factors tilted in FedEx's favor: For example, drivers could hire others to drive their routes, subject to FedEx's approval. They could also hire assistants -- again, subject to FedEx's approval. Drivers are responsible for the costs of maintaining their trucks, as well as purchasing uniforms and equipment -- which FedEx helpfully allowed them to do directly from FedEx.

Taking all the factors together, however, it appeared to the court that "FedEx has established an employment relationship with its delivery drivers but dressed that relationship in independent contractor clothing." Much of the OA recites language that is theoretically precatory or hortatory, but in practice ends up being mandatory. (The court briefly addressed the second question, saying that the result doesn't change if a driver also drives someone else's delivery route.)

Don't Pee on My Leg and Tell Me It's Raining

The bottom line here, as with other cases in this family of FedEx litigation, is that courts will see through a too-clever-by-half agreement claiming that employees are independent contractors. A contract can't alter the way that an employer actually treats its employees, which is what's most important for determining independent contractor status.

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