(Photo: Maggie Soladay/ALM)
FedEx Ground Package System, Inc. drivers are employees, not contractors, under Kansas’ wage law, that state’s high court has ruled in a class action.
The question was certified to the Kansas Supreme Court from the U.S. Court of Appeals for the Seventh Circuit.
In a per curiam opinion, the state court said that under the Kansas Wage Payment Act the class of drivers who operate a vehicle on a full-time basis would be considered employees even though “the company carefully structured its drivers’ operating agreements so that it could label the drivers as independent contractors in order to gain a competitive advantage, i.e., to avoid the additional costs associated with employees.”
Until this case, the Kansas Supreme Court had not specifically set out a test to determine whether a worker is an employee or an independent contractor under the Wage Payment Act. The court now says explicitly that the test is a 20-factor test that has been used in other Kansas cases. “This test includes economic reality considerations, while maintaining the primary focus on an employer’s right to control,” the justices said.
There are factors that favor FedEx’s position that its drivers are independent contractors, including that FedEx allows drivers to hire others to drive their trucks within their assigned service areas and that FedEx does not pay health insurance, Social Security taxes or any other typical employee expenses.
But the court found that there are more factors that favor the plaintiffs’ claim that they are employees. For example, “businesses do not ordinarily trust their core functions to independent contractors, over which the business has minimal control,” even though FedEx’s core function is the delivery of packages. FedEx also may remove vehicles from service if they do not meet the company’s standards for appearance. FedEx also may tell workers what hours they can keep, and drivers do not have enough time in the day to work somewhere else.
“Even where the factors should point us toward finding that the drivers are independent businesspersons, FedEx’s control and micromanaging undermine the benefit that a driver should be able to reap from that arrangement,” the court said. “For instance, the ability to make more money than a delivery driver who is an employee is diminished, if not destroyed, by FedEx’s control over the number of deliveries a driver can make, as well as essentially dictating the driver’s required expenditures for vehicles, tools, equipment and clothing.”
The Kansas class action is the lead case of several class actions consolidated into federal multidistrict litigation in the U.S. District Court of the Northern District of Indiana. The cases are on appeal after the district court found that the plaintiffs are independent contractors.
The plaintiffs are seeking reimbursement of costs and expenses they expended on behalf of FedEx and unpaid overtime wages.ß
Amaris Elliott-Engel contributes to law.com. Follow her on Twitter @AmarisESQ.