FedEx To Settle With 2,300 California Drivers
On Friday a settlement was disclosed in a case that has been under judicial review since last August. The case, involving 2,300 FedEx Ground and FedEx Home Delivery drivers who worked in California between 2000 and 2007, and whom FedEx classified as independent contractors. In August 2014 the 9th U.S. Circuit Court of Appeals in Oakland found that the drivers were not in fact “independent contractors because Fedex controlled the manner in which drivers do their jobs, including scheduling, appearance and equipment requirements,” the San Francisco Business Times reported. Friday’s announced settlement comes after “FedEx immediately sought a judicial review” in the case, and involves $227 million in payments for back wages to the workers.
The San Francisco (CA) Chronicle reported that in a statement following Friday’s announcement, FedEx General Counsel Christine Richards said, “FedEx Ground faced a unique challenge in defending this case, given the decision of the 9th Circuit Court of Appeals last summer. This settlement resolves claims dating back to 2000 that concern a model FedEx Ground no longer operates.” Beth Ross, a lawyer for the plaintiffs, stated, “The $227 million settlement, one of the largest employment law settlements in recent memory, sends a powerful message to employers in California and elsewhere that the cost of independent contractor misclassification can be financially punishing, if not catastrophic, to a business.”
What Happens Next
The Chronicle noted that Friday’s settlement doesn’t mean the workers will get paid overnight. The 9th US Circuit Court of Appeals will have to approve the settlement terms before any payment can be distributed.
What This Means For Small Businesses
This case has been closely-eyed by the business community in San Francisco and around the US due to the nature of its tackling of a growing practice: companies increasingly relying on contractors and other non-traditional employees to fulfill their labor needs. The results of the case are troubling, particularly for small businesses in the so-called “sharing economy”, many of which are located in the Bay area. These businesses could face undue labor costs if forced to classify more workers as employees rather than contractors, because they would then be mandated to provide additional, costly employee benefits under current labor laws.
Additional Reading
Truckinginfo, the Journal of Commerce, Fleet News Daily, and Law 360 also cover the FedEx settlement. NFIB provides a helpful legal guide for small business owners looking to determine the classification status of employees.
