Monday, September 8, 2014

Is this the end of the independent contractor as we know it?


In Alexander v. FedEx Ground Package Sys. (8/27/14), the 9th Circuit Court of Appeals concluded that FedEx’s delivery drivers are employees of the company, not independent contractors.

The opinion’s introductory two paragraphs pretty much sum up the entire case:
As a central part of its business, FedEx contracts with drivers to deliver packages to its customers. The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards. FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent. 
FedEx contends its drivers are independent contractors under California law. Plaintiffs, a class of FedEx drivers in California, contend they are employees. We agree with plaintiffs.
Even though this case is decided under California law, it confirms that in determining whether one who performs services for pay is an employee or a contractor, the label placed by the company is irrelevant. As noted by the concurring opinion:
Abraham Lincoln reportedly asked, “If you call a dog’s tail a leg, how many legs does a dog have?” His answer was, “Four. Calling a dog’s tail a leg does not make it a leg.” … Bottom line? Labeling the drivers “independent contractors” in FedEx’s Operating Agreement does not conclusively make them so.… [O]ur decision substantially unravels FedEx’s business model.…
This case also confirms that if you exercise any control over how workers perform services for you, it is likely that they should be classified as employees, not independent contractors. This distinction is important, because, unlike contractors, employee are subject to a host of employment laws, including the anti-discrimination laws, workers’ comp laws, and wage-and-hour (minimum wage and overtime) laws.

While this case only covers employers governed by California law in the 9th Circuit, I would expect the filing of copycat lawsuits under the laws of different states in different courts. In other words, this case is not the final word on this issue. Thus, to answer the specific question I posed in the title to this post, while this case does not necessarily spell the end of the independent contractor, it very well could be the beginning of trend of cases leading down this path.

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