To be deemed an Independent contractor, workers need to meet a certain set of criteria that differentiates them from being labelled an employee. It’s this classification, or misclassification, that has got US company, FedEx, in hot water.
FedEx Ground Package System, Inc is being sued by its drivers, who are alleging they are employees, not contractors. The U.S. District Court determined that workers under FedEx in St. Louis, Missouri are employees, and not independent contractors. FedEx has appealed that decision and the 8th Circuit Court of Appeals is now weighing in on this debate, determining whether or not the case should be decided by a jury, rather than a court.
There are eight different criteria that the court is using to look at the evidence. These criteria are:
- The extent of control granted by the contracts
- FedEx’s actual exercise of control
- The duration of the operator’s contractual relationship
- FedEx’s ability to terminate the contracts at will
- The method FedEx used to pay the operators
- The degree to which FedEx furnished equipment
- Whether the operators’ work was FedEx’s regular business
- The label FedEx used to refer to the operators in the contracts.
The 8th circuit court looked in depth at each criteria. Some leaned more heavily towards independent contractor, while others were more heavily towards employees.
One area that heavily figured towards employee status was the seventh factor (Whether the operators’ work was FedEx’s regular business). The entire job of FedEx and anyone employed for them – whether employee or contractor – is to deliver packages. Without any of their workers, they could not do any of what they do, and therefore we could not have FedEx.
It was a close call when it came to the equipment factor. An incredibly close call, according to the 8th Circuit. Although all operators are required to use their own trucks and dollies, all trucks must have a logo on in a specific dimension and all drivers must wear a uniform and carry a scanner issued by FedEx.
Furthermore, the contracts that these workers sign do not state that those who signed the contracts actually have to drive. Therefore, they can hire out the job to others. It is only those that drive that are governed by the rules in the actual contract – i.e how they are paid, what they must wear, etc.
How they are paid is an interesting part of the decision. The drivers are paid per completed delivery and not by the hour. This is incredibly indicative of a contractor independent of the company that they are working for.
However, there were so many factors that could go either way that the 8th Circuit court decided there is indeed an issue of fact. Due to this the court decided that this kind of situation should be decided by a jury, not the court.
Although there is no universal test to determine if a worker is indeed an employee or an independent contractor, tests such as Personal Service Income (PSI) test in Australia, use very similar factors to those investigated in the FedEx case. This case definitely provides a prime example of the factors employers must consider when classifying their relationships with their workers.