FedEx Ground Loses Another Court Decision about Driver Classification Practices

FedEx Ground Loses Another Court Decision about Driver Classification Practices

Kansas Supreme Court rules that FedEx Ground misclassified some of its employees, which could cost the company hundreds of millions of dollars.

The Kansas Supreme Court has ruled unanimously that a class of approximately 500 drivers working for FedEx Ground was misclassified as independent contractors instead of employees. The case, Craig v. FedEx Ground, covers employees in Kansas who signed contracts with FedEx between 1998 and 2007.

According to Leonard Carder LLP, which represented the drivers, FedEx faces liability to these drivers for millions of dollars for deducting from their wages FedEx’s business costs, such as FedEx branded uniforms, FedEx scanners, and lost or damaged packages, and for overtime compensation, and penalties.

The Kansas case was part of the same consolidated action as the California and Oregon cases decided by the Ninth Circuit Court of Appeals last month. In that decision, the court ruled that FedEx Ground drivers in California and Oregon were employees as a matter of law.

In its decision, the Court ruled, “Viewing the factors as a whole leads to the conclusion that FedEx has established an employment relationship with its delivery drivers but dressed that relationship in independent contractor clothing. Even where the factors should point us toward finding that the drivers are independent businesspersons, FedEx’s control and micromanaging undermine the benefit that a driver should be able to reap from that arrangement.”

In a statement, FedEx said, “The Kansas Supreme Court issued a decision finding that a class of mostly former contractors in the state of Kansas should be considered employees under the Kansas Wage Payment Act, contrary to previous rulings by the United States District Court for the Northern District of Indiana. The decision applies to those independent contractors operating in Kansas from 1998-2007. The model that the court reviewed is no longer in use. Since 2011, FedEx Ground has only contracted with incorporated businesses, which treat their drivers as their employees.

“We fundamentally disagree with this ruling and are committed to protecting the rights of thousands of independent business owners to continue owning and operating their own businesses. More than 100 state and federal decisions–including that of the U.S. Court of Appeals for the D.C. Circuit–have upheld our contractual relationships with independent businesses. At this time we are considering available options in response to the court’s decision.”

The Seventh Circuit Court of Appeals asked the Kansas Supreme Court to rule on the question of whether the drivers were employees under Kansas law. The case will now return to the Seventh Circuit for further proceedings.

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