Appeals Court Rules Some FedEx Ground Workers Are Employees

Victor J. Blue/Bloomberg News

In the latest decision on worker status, a federal appeals court in California ruled that 2,300 workers at FedEx Corp.’s Ground unit were employees and not contractors to the package delivery company.

The 35-page decision by the 9th U.S. Circuit Court of Appeals, ruled that the Ground workers were misclassified as independent contractors, in violation of California law.

“We fundamentally disagree with these rulings, which run counter to more than 100 state and federal findings – including the U.S. Court of Appeals for the D.C. Circuit – upholding our contractual relationships with thousands of independent businesses,” said FedEx Ground Senior Vice President Cary Blancett said in a statement, noting that the operating agreement in the latest case is no longer in use.

FedEx in its statement said it’s enhanced operating agreements with the independent contractors, and will change its independent service provider  agreements in the states of California, Oregon, Washington, and Nevada.

“The panel held that the plaintiff FedEx drivers were employees as a matter of law under California’s right-to-control test,” the court ruling said.

The case is the latest in a series of battles over employee status in the industry, involving carriers such as FedEx, which is No. 2 on Transport Topics Top 100 list of U.S. and Canadian for-hire carriers.

The case traces to a class-action suit filed in California Superior Court in 2005. Between 2003 and 2009, other classification cases were brought against FedEx in about 40 states, also on a class-action basis.

They were consolidated into a single multidistrict case, which was decided in U.S. District Court, in favor of FedEx’s view that the workers were contractors.

The plaintiffs then appealed, arguing that the workers were employees based on the job duties, assignments and other criteria.

A statement from Leonard Carder, one of the plaintiffs’ law firms, said the case covered workers’ activities over eight years, potentially exposing FedEx to “hundreds of millions of dollars” of additional costs for compensation and equipment purchases.