Staffing Management

Is This the End of the Independent Contractor as We Know It?

By Jon Hyman

Sep. 8, 2014

In Alexander v. FedEx Ground Package Sys. (8/27/14), the 9th Circuit Court of Appeals concluded that FedEx’s delivery drivers are employees of the company, not independent contractors.

The opinion’s introductory two paragraphs pretty much sum up the entire case:

As a central part of its business, FedEx contracts with drivers to deliver packages to its customers. The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards. FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent. 

FedEx contends its drivers are independent contractors under California law. Plaintiffs, a class of FedEx drivers in California, contend they are employees. We agree with plaintiffs.

Even though this case is decided under California law, it confirms that in determining whether one who performs services for pay is an employee or a contractor, the label placed by the company is irrelevant. As noted by the concurring opinion:

Abraham Lincoln reportedly asked, “If you call a dog’s tail a leg, how many legs does a dog have?” His answer was, “Four. Calling a dog’s tail a leg does not make it a leg.” … Bottom line? Labeling the drivers “independent contractors” in FedEx’s Operating Agreement does not conclusively make them so.… [O]ur decision substantially unravels FedEx’s business model.…

This case also confirms that if you exercise any control over how workers perform services for you, it is likely that they should be classified as employees, not independent contractors. This distinction is important, because, unlike contractors, employee are subject to a host of employment laws, including the anti-discrimination laws, workers’ comp laws, and wage-and-hour (minimum wage and overtime) laws.

While this case only covers employers governed by California law in the 9th Circuit, I would expect the filing of copycat lawsuits under the laws of different states in different courts. In other words, this case is not the final word on this issue. Thus, to answer the specific question I posed in the title to this post, while this case does not necessarily spell the end of the independent contractor, it very well could be the beginning of trend of cases leading down this path.

Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at JHyman@Wickenslaw.com.

What’s New at Workforce.com?

blog workforce

Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.

Book a call
See the software

Related Articles

workforce blog

Staffing Management

Managing employee time-off requests: A guide for business owners

Summary Vacation, sick time, PTO banks, and unpaid leave are only a few forms of employee time off — Mo...

workforce blog

Staffing Management

4 proven steps for tackling employee absenteeism

Summary Identifying the cause of employee absenteeism not only helps uncover deeper-rooted issues — Mor...

absence management, Employee scheduling software, predictive scheduling, shift bid, shift swapping

workforce blog

Staffing Management

Employee or contractor? 6 worker misclassification FAQs

Misclassification of employees as independent contractors led to overtime violations, according to a La...

compliance, Department of Labor, employee engagement, FLSA, HR technology, Worker misclassification