Misclassification of Employees which is a violation of the California Labor Law Standards Costs FedEx $226.5 Million
FedEx just found out how costly the misclassification of employees as independent contractions can be.
In a case that had the attention of many California Human Resource Consultants and California Labor Law Attorneys. At the heart of the class action lawsuit was the premise that FedEx had improperly misclassified its drivers as independent contractors which are a violation of the California Labor Law Standards.
Before we talk about where FedEx went wrong, let’s take a minute and look at what an independent contractor is.
Independent Contractor Status Qualifiers:
- In most cases will be working for more than one company
- Will set their prices and schedules
- Will have their business license
- Will provide their tools and equipment
- A true independent contractor will exercise control
The ninth circuit did not buy the FedEx position that indeed the drivers did have control. As a result of not buying the FedEx position the court deemed that FedEx had was in violation of the California Labor Law Standards. Some of the issues that did not go well for FedEx were as follows.
- The drivers were working on regular schedules that were set and established by FedEx.
- The drivers had to have trucks that were painted white and these trucks also had to have the FedEx logo on them.
- The drivers were delivering FedEx packages to FedEx customers only.
- FedEx, not the drivers were the ones establishing the rate or cost of the deliveries.
- FedEx required the drivers to wear the company uniforms.
In addition to this the drives had routes that were set up by FedEx, and the drivers also had no control over what packages were delivered.
All of this painted a very clear picture that the drivers were not independent contractors but rather they were obviously employees. FedEx as big as they are really should have known this would never fly if anyone would blow the whistle.
One of the big tests that California Courts use to determine independent contractor status is the control. According to California Law, it is the drivers who should have been making all of the decisions that FedEx was making for the drivers.
This case goes back to 2000 and will not be finalized until more of the drivers that were involved at the time come forward and join the 70% who are already on board with this case. With the cost of employee lawsuits in California today employers need to spend more time complying then they do flying by the seat of their pants, this is no longer your grandfather’s California.
Class actions lawsuits only takes 2 or more employees, and there are many labor law attorneys that are more than happy to help employees to get their just dues, even at the expense of employers who are not taking the time to know the law and then comply with it.
The bottom line is being in compliance with California Labor Law Standards is the best thing that you as an employer can do…Seriously!