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FedEx Settles Worker Misclassification Case for $228 Million

FedEx Settles Worker Misclassification Case for $228 Million

Posted by Kathy Harrington-Sullivan | Jul 30, 2015 | 0 Comments

FedEx has recently agreed to pay a $228 million settlement to resolve case involving more than 2,000 worker misclassification claims brought against the company by its drivers. The settlement of these claims, some of which date back to 2000, could end up having profound impacts on how FedEx classifies workers and operates its business moving forward.

A Closer Look at the Case

The case against FedEx has been pending in the U.S. District Court in Northern California, and it's related to two other legal actions ruled on by other courts during 2014. Specifically, the prior rulings against FedEx were handed down by the:

  • Ninth Circuit Court, which found in August 2014 that FedEx had control over the drivers that it classified as “independent contractors” and that these workers were really only independent contractors in name alone
  • Kansas Supreme Court, which issued a similar decision in October 2014 in regards to a group of 500 other FedEx drivers.

FedEx has stated that it plans on appealing these decisions against it.

The Next Steps…

At this point, the $228 settlement has to be approved by the court before a fund can be set up to start issuing payments to individual claimants. While this settlement is only for California FedEx drivers who were a party to the case, the fact that a settlement has been reached could end up impacting other worker misclassification litigation pending against FedEx nationwide.

Interestingly, this settlement has come at a time when the DOL is focused on curbing the problem of worker misclassification in the U.S., as we noted in a previous blog.

It remains to be seen if the DOL guidance regarding worker misclassification, as well as this massive FedEx settlement, may impact other “economy sharing” companies that rely on independent contractors, such as Uber, Homejoy and Taskrabbit.

What do you think about this settlement and the bigger issue of worker misclassification? Post your opinions on our Facebook & Google+ pages.

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About the Author

Kathy Harrington-Sullivan

Kathy Harrington Sullivan is a Partner at Barrett & Farahany and manages the firm's case evaluation team. Because knowledge truly is power, Kathy and the Atlanta employment attorneys on her team regularly consult with and empower potentia...

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