The most recent federal court decision in late August is part of the ongoing battle between FedEx Ground and its drivers over the company’s classification of the drivers as independent contractors. The drivers’ lawsuit(s), which have been ongoing for several years, claim that the drivers should be classified as employees and not as independent contractors and therefore entitled to certain employee benefits. This latest case was part of several class action suits that were consolidated before Judge Robert Miller in the U.S. District Court.
The court concluded that the FedEx drivers in Kansas were properly classified by the company as independent contractors under the applicable Kansas law, primarily on the fact that FedEx did not retain the right to direct the manner in which the drivers perform their work. Several other cases involving states other than Kansas were remanded back to the state courts by Judge Miller for further review. The classification of workers is a facts-and-circumstances determination based upon numerous factors. This determination is based on Kansas law interpretation, and many observers are waiting to see if other states will reach similar conclusions or other states’ cases will result in a contrary determination.
Although this is considered a significant victory for FedEx Ground, it is expected that the plaintiffs will appeal the decision and the battle will continue. This is an issue faced by companies in many varied industries, and certainly has been watched closely by transportation companies since the FedEx challenges began several years ago.
For more information on Schneider Downs Transportation and Logistics Industry Group, please visit our website here.
Schneider Downs provides accounting, tax, wealth management and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.