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  • How the Ninth Circuit Delivered for Plaintiff

    In a significant move, the Ninth Circuit Court of Appeals (“Ninth Circuit”) reversed a grant of summary judgment in favor of Federal Express (“FedEx”), and remanded the case to the respective district court with instructions to enter summary judgment for the plaintiff drivers.

    This decision comes as a result of the Ninth Circuit finding that FedEx misclassified its drivers as independent contractors. As a result of the misclassification, drivers had been unable to receive many employee benefits, including sick leave, health care, workers’ compensation and retirement. Furthermore, drivers were allegedly forced to pay the wages of their replacements when they were unable to work.

    In coming to its decision, the Ninth Circuit applied the “right to control” test, typically utilized in these cases, and the three-judge panel found that FedEx drivers were clearly employees, not independent contractors. “The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards,” wrote Judge William Fletcher. He added, “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.”

    By hiring independent contractors instead of employees, companies, such as FedEx, can potentially save a lot of money that would normally go toward overtime pay and other benefits.

    FedEx Ground senior vice president and general counsel, Cary Blancett, responded to the Ninth Circuit’s holding, stating that, “[w]e fundamentally disagree with these rulings, which run counter to more than 100 state and federal findings … upholding our contractual relationships with thousands of independent businesses.”

    This ruling will have a significant impact on this industry and the lives of FedEx drivers in California. If the holdings do not get reversed on appeal, FedEx could potentially have to pay millions of dollars in damages for overtime pay, back pay for missed meal and rest periods and compensation for worker-provided equipment.

    If you or your institution has any questions or concerns regarding employment related issues, please email Cynthia A. Augello at caugello@cullenanddykman.com or call her at (516) 357-3753.

    A special thank you to Lauren Dwarika, a law clerk at Cullen and Dykman LLP, for her assistance with this blog post.