Three FedEx Ground employees brought a class action suit in California, contending that they are employees, not independent contractors, of the ubiquitous delivery company. They won at the initial trial, they won on two appeals and now they have won (for the most part) on the third appeal. The ruling lays out in compelling detail the employment law issues in this long-standing dispute. (Here and here are just a couple of samples of our prior coverage.)
The ruling states that “in practice, the work performed by the drivers is wholly integrated into FedEx’s operation. The drivers look like FedEx employees, act like FedEx employees, are paid like FedEx employees, and receive many employee benefits.”
I don’t think you can state the problem any better than the original court, which described the Operating Agreement as “a brilliantly drafted contract creating the constraints of an employment relationship with [the drivers] in the guise of an independent contractor model.” FedEx “not only has the right to control, but has close to absolute actual control over [the drivers] based upon interpretation and obfuscation.” The ruling goes on to site FedEx’s control over every “exquisite detail” of the drivers’ performance, including the color of their socks [no white] and the style of their hair [no pony tails].
No doubt at all about the color of the feathers: “The essence of the trial court’s statement of decision is that if it looks like a duck, walks like a duck, swims like a duck, and quacks like a duck, it is a duck.” These drivers (and thousands of others across the country) are employees.
The appeals court did reject some of the prior award. Here’s one item that may break the hearts of our colleagues at the bar: Estrada’s motion asked for $619,691 in costs and $6,789,325 for his attorneys’ fees, a total of $7,409,016 — plus a 2.0 multiplier as compensation for delay and contingency, a total of $14,818,032. The appeals court found this excessive and asked the lower court to revisit the issue of fees.
What about Workers Compensation?
The court addresses the issue of workers comp only marginally. The drivers were required to purchase “work accident” insurance. They sought reimbursement for this expense, which the appeals court granted. However, the court did not address the issue of retroactive workers comp coverage for all FedEx drivers. Given that these “independent contractors” are actually employees, and regardless of this accident insurance (which is unlikely to be as generous as workers comp), what is the status of all the drivers injured during the course and scope of their FedEx employment? Among the many retroactive liabilities looming for FedEx as they lose appeals at different levels of the judicial system, this may be one of the biggest.
As the (politically incorrect) saying goes, “it ain’t over ’til the fat lady sings.” FedEx surely has the deep pockets needed to continue their doomed appeals. But I do think I see a fat duck, waddling to the front of the stage, about to break into song.
