California's “Right-To-Control” Test Cited in Federal Ninth Circuit Court Of Appeals Ruling FedEx Drivers Are “Employees”, Not “Independent Contractors”
Class actions were brought against FedEx in both California and Oregon by FedEx drivers contending they had been misclassified as independent contractors. The California plaintiff class alleged claims for employment expenses, unpaid wages, and benefits purportedly due them as employees based on their misclassification as independent contractors. The class action was originally filed in the California Superior Court in December 2005.
The plaintiffs in the California case represented a class comprising approximately 2,300 individuals who were full-time delivery drivers for FedEx in California between 2000 and 2007. Plaintiff class members worked for FedEx's two operating divisions, FedEx Ground and FedEx Home Delivery. (Alexander, et al. v. FedEx Ground Package System, Inc.)
FedEx's Operating Agreement (“OA”) governs its relationship with the drivers, and the company contends its drivers are independent contractors under California law.
Similar Class Actions Filed Across the Country
The California action originally commenced in state court but was removed to the federal Northern District court in San Francisco. Since similar cases against FedEx were filed across the country, the cases were consolidated into a multidistrict litigation. Plaintiffs in the multidistrict litigation moved for partial summary judgment asserting they were employees as a matter of law. FedEx filed cross-motions for summary judgment arguing the drivers were classified properly as independent contractors. The court overseeing the multidistrict litigation denied nearly all of the plaintiffs' motions and granted nearly all of FedEx's motions, holding that plaintiffs were independent contractors as a matter of law in each state where the employment status is governed by common-law agency principles (such as California).
Following its ruling on the summary judgment motions, the multidistrict court remanded these cases back to the federal district courts from which they had originated to handle ancillary matters and for entry of final judgment. Upon entry of final judgment, the plaintiff classes appealed in both cases.
Opinion of the Federal Ninth Circuit Court of Appeals
“As a central part of its business, FedEx Ground Package System, Inc. (“FedEx”), contracts with drivers to deliver packages to its customers. The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx's appearance standards. FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx's consent.”
With respect to the application of California law, the Ninth Circuit found that “[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired,” citing, S.G. Borello & Sons, Inc. v. Dept. of Ind. Relations (1989) 48 Cal.3d 341, 346. The court further found that under California law, “[t]he label placed by the parties on their relationship [in this case “independent contractor” by virtue of the FedEx Operating Agreement] is not dispositive, and subterfuges are not countenanced.”
Because the Operating Agreement, as well as FedEx's policies and procedures, unambiguously allowed FedEx to exercise a great deal of control over the manner in which its drivers did their job, the court ruled they properly were characterized under California law as employees, not independent contractors.
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