The classification of workers as either employees or independent contractors has been a major issue across the nation. In an attempt to protect employee rights, the fight to properly classify independent contractors as employees has increased in order to ensure they are properly being paid and receiving benefits. Amongst the employers involved in the classification debate are the ride-sharing app giant, Uber, and FedEx. In a recent California lawsuit, FedEx has agreed to settle multiple lawsuits alleging that it misclassified its delivery drivers as independent contractors. The settlement amount is $227 million.
In the lawsuit against FedEx, over 2,000 FedEx workers who were classified as independent contractors, were unable to receive many employment benefits, including sick leave. In fact, some of the drivers claim they were forced to pay the wages of their replacements when they were sick and unable to work. Drivers did not get health care insurance, workers’ compensation, or retirement benefits. Their employment was “subject to the whims of FedEx management and FedEx Ground’s decisions on staffing and routes left the employee drivers stuck with expensive long-term truck leases on FedEx branded trucks.”
Courts consider a number of factors in determining whether workers are independent contractors or employees. One of those factors is how much control the employer exercised over the workers and how they do their job. In the FedEx case, the delivery giant controlled tiny details of how its employees behaved and appeared, and had them purchase company-approved trucks, uniforms, and other equipment. This extent of oversight over workers lent to the fact that they were more like employees, entitled to benefits, than independent contractors.
Although many employers chose to classify workers as independent contractors to save money, this case shows that the cost of independent contractor misclassification can be a huge financial burden on a company in the end.
Sacramento, CA 95821