Federal Judge says FedEx Ground independent contractors are not employees

By Jeff Berman · August 25, 2010

FedEx received good news last week, when a federal judge in Indiana ruled that FedEx Ground drivers in Kansas are independent contractors and not full-time employees.

This verdict by Judge Robert Miller also ordered all drivers suing FedEx on this same matter to submit written arguments stating why their outcome should be different by September 10.

In his decision, Miller noted that the independent contractors have signed operating agreements indicating they are independent contractors whom can hire others to perform their assigned work and go work for another delivery company and sell their routes to other qualified employees and still maintain they are FedEx employees.

But he added that this argument does not stand up because FedEx has not retained the right to direct the manner in which drivers conduct their work, coupled with the fact that thee is no evidence under the operating agreement that FedEx has the authority to require independent contractor compliance with its suggestions and best practices for the performance of assigned tasks.

Other factors weighing into Judge Miller’s decision that support independent contractor status include: drivers have the ability to hire staff and replacement drivers, are responsible for acquiring a vehicle and can use the vehicle for other commercial purposes, they can sell their routes to other qualified drivers, and FedEx does not have the right to terminate contracts at-will.

This development follows a decision made in U.S. District Court in Boston earlier this month in which 31 current and former FedEx drivers sued FedEx for improperly classifying them as independent contractors instead of employees, according to a Reuters report.

And in July FedEx Ground paid the Massachusetts Attorney General’s Office $3 million in a dispute over alleged misclassification of drivers as independent contractors, according to the Boston Globe. The report said that Massachusetts contends the package delivery company’s actions denied the state payroll taxes, worker’s compensation and unemployment assistance contributions, as well as gain an unfair competitive advantage.

In a previous interview with LM, Hempstead Consulting President Jerry Hempstead said that rulings like the one by Judge Miller are a positive for FedEx in its argument that the drivers for their ground operation are in fact not employees of FedEx but independent businessmen who provide pick up and delivery services for FedEx ground and FedEx Home Delivery.

“This in no way is the end of the litigation,” cautioned Hempstead. “Several more states have piled on of late claiming that the drivers are FedEx employees. If it were ever ruled that they are in fact FedEx employees, it could significantly increase the company’s operating expense, which would then be passed onto shippers as higher prices. For now there is no immediate threat of that.”


About the Author

Jeff Berman
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

FedEx · Jerry Hempstead · Parcel · All Topics
Latest Whitepaper
Reduce Order Processing Costs by 80%
Sales order automation software will seamlessly transform inbound emailed and printed purchase orders into electronic sales orders that can be automatically processed into your ERP system with 100% accuracy.
Download Today!
From the June 2016 Issue
In the wildly unstable ocean cargo carrier arena, three major consortia are fighting for market share, with some players simply hanging on for survival. Meanwhile, shippers may expect deployment shifts as a consequence of the Panama Canal expansion.
WMS Update: What do we need to run a WMS?
Supply Chain Software Convergence: Synchronization Realized
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Optimizing Global Transportation: How NVOCCs Can Use Technology to Operate More Profitably
Global transportation isn't getting any easier to manage, especially for non-vessel operating common carriers (NVOCCs). Faced with uncertainties like surcharges—but needing to remain competitive when bidding against other providers—NVOCCs need the right mix of historical data, data intelligence, and technology support to make quick and effective decisions. During this webcast you'll learn how Bolloré Transport & Logistics was able to streamline its global logistics and automate contract management.
Register Today!
EDITORS' PICKS
Details Key to Cross-border Ease
Ever-changing regulations are making it risky for U.S. companies engaged in cross-border trade...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo