Unlike competitor UPS, which treats all its drivers as employees, FedEx has long called many of its FedEx Ground drivers Independent Contractors, which means it doesn't have to provide basic benefits, overtime pay, workplace protections, or other employee rights.
FedEx drivers, however, have increasingly pushed back, suing the company and – in many cases – winning.
FedEx Independent Contractor Lawsuit
Driver Reggie Gray sued FedEx after learning from the IRS that the terms of his contract with FedEx and FedEx's extensive control over his work actually made him an employee under the law, rather than an independent contractor.
Gray had been forced to spend almost $30,000 to buy his own vans, $5,000 to “buy” rights to his delivery route, and thousands more to purchase FedEx logos and uniforms he was required to use. He also had to lease FedEx mapping software and a FedEx scanner from the company, again at his own expense. FedEx required him to hire another driver, but as with Gray himself didn't pay for the driver, worker's compensation insurance, or any benefits. All told, Gray had to spend so much on things FedEx required that his own take-home was basically minimum wage – only about $25,000-$35,000 a year, despite 12 to 16 hour days.
After almost eight years in court, Gray won his suit against FedEx and was awarded more than $90,000 in damages.
Reports indicate that FedEx has at least thirty other suits by “contractor” drivers currently going on across the country and has likely had hundreds of cases total. While FedEx claims that it's had at least 100 decisions in its favor, other sources indicate FedEx has actually lost more contractor cases than it has won.
FedEx Independent Contractor Misclassifications
California has recently increased its focus on companies trying to incorrectly classify employees as independent contractors to save money. In 2012, a new law added hefty penalties for companies who intentionally misclassify employees as independent contractors, including fines of up for $25,000 per violation for repeat offenders.
So how do you know if you are an employee instead of an independent contractor? While there is no set definition under the law, California generally looks at the following factors:
1. Are you doing work different from the main business of the company hiring you?
2. Is the work you're doing part of the regular business of the company?
3. Does the company supply the tools, instruments, and place for you to work?
4. Do you have significant investment in your own tools or assistants outside of that provided by the company?
5. Does the work you do require special skills?
6. Do most people doing your type of work do it on their own, or are most of them employed and supervised by companies?
7. Do you have a significant opportunity to make more money based on how well you manage the business?
8. How long will you be performing services for the company?
9. How permanent is the relationship with the company – for example, have you worked for them for a decade or more?
10. Are you paid by time or per job?
The most important, factor, however, is the one at issue in Gray's FedEx case: how much control does the company have over you? If the company sets your hours, tells you what work to do and how, and you don't have a lot of control or discretion, chances are you are an employee.
If you feel your company has misclassified you as an independent contractor, we may be able to help.