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Nancy Gray Nov. 3, 2018

The Ninth Circuit Court of Appeals in San Francisco has ruled that courier service FedEx misclassified approximately 2,300 California delivery drivers as contractors, instead of treating them as employees. FedEx required drivers as “independent contractors” to pay for their own trucks, along with fuel, insurance, maintenance, and other expenses, and did not pay workers compensation, vacation, sick leave, or retirement to workers.

The appellate court applied the California standard known as the “right to control test.” The court noted that, “The 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.”

Some of the factors the court considered included FedEx’s control of the appearance of its drivers and their vehicles, control over the time and schedule their drivers worked, and control over the aspects of how and when the drivers delivered their packages, requirements that drivers loaded and unloaded their packages at certain terminals on a daily basis, and other factors.

Forbes noted that there were a number of potential industries that might be affected by the outcome of this case. “There will be a flap about this case not only at FedEx, but across package delivery and transportation industries [and elsewhere]…From drivers to salespeople, custodians to lawyers, couriers to facialists, mercenaries to programmers…there is no one-size fits-all-solution.”

Here are a few tips for employers, following the FedEx decision:

  1. Even if workers sign a contract as “independent contractors” they may still sue. The contract is one factor a court might consider, but a business that treats its workers as employees, regardless of contracts, could still be liable to pay employee benefits.

  2. The lower the skill level of the work, the more an employer should carefully review worker status. Saving a few dollars on overtime or workers compensation may seem like a good idea, but if you are directing the work, and the employees are low level, a court is unlikely to be sympathetic, and a lawsuit could result in huge penalties.

  3. Review the eight California right-to-control test factors for your workplace situation, including (a) whether the worker has an occupation or business; (b) the kind of occupation; (c) the skill required; (d) whether the principal or the worker supplies the tools of the work; (e) the length of time that the services will be performed; (f) the method of payment (by time or by job); (g) whether the work is part of the regular business of the principal; and (h) whether or not the parties believe they are creating an employer-employee relationship.

When your California business needs advice on labor and employment matters, you can turn to Gray & Associates. Attorney Nancy Gray represents California businesses and individuals in all aspects of labor and employment law, including resolving hourly wage disputes, developing policies and best practices for human resources, and addressing potential labor and employment claims. Put a committed, knowledgeable labor and employment attorney to work for your business today. Call Attorney Gray at (310) 452-1211 or visit Gray & Associates online for a free consultation.