December 30, 2005 (PLANSPONSOR.com) - FedEx has been
ordered to pay $5.3 million to a group of drivers classified
as independent contractors, for expenses incurred.
Los Angeles County Superior Court Judge Howard Schwab
said FedEx had violated California law by classifying all
of its single-route drivers as independent contractors,
forcing them to incur expenses for fuel, oil, tires,
repairs and liability insurance that the company should
have covered. According to The Reporter, Schwab
ordered FedEx to pay $5.3 million to the group of
Each of the 200 class members of the suit will
receive payments ranging from a few hundred dollars to as
much as $98,000.
He also ordered FedEx to end the practice,
instructing the company to provide drivers with a copy of
his December 19 order.
The company has until April 5 to comply with
Schwab's order, according to the news report.
Similar claims from FedEx drivers in a series of 32
suits, filed in 25 states, have been consolidated in
FedEx spokesman David Westrick said the company plans
to appeal. "We firmly believe that the 14,000-plus men
and women we have around the country understood the terms
of the contract when they signed it," he said,
according to the Reporter.
FedEx argued in court that, while it sets work rules
for some contractors, they aren't employees because
they don't have set start times, they can hire and fire
workers, they use their own vehicles, and they choose their
Lead plaintiff attorney Lynn Faris said she expects
the ruling to have a broader affect on the courier
industry, whose employment classification arrangements have
attracted increasing scrutiny from state regulators and the
attorney general's office over the past few
"[The decision] has very broad national
implications for a big company that has chosen to do
business in a way that is inconsistent with California
law," she said, according to the report.
In response to complaints that courier companies
have released hourly workers and then hired them back as
contractors who are paid to deliver packages using their
own vehicles, California's Employment Development
Department has said it plans to audit an additional 450
delivery companies by July.