The U.S. District Court for the Northern District of Indiana, responsible for handling the multi-district FedEx Ground independent contractor litigation, has issued a 164-page opinion on class certification. The Class Action Defense Blog has a good summary as well as a copy of the decision here. The main issue in the various cases is whether the drivers are independent contractors or employees under state law.
The Florida Employment Law Letter reports that the IRS has tentatively concluded for 2002 that FedEx ground drivers were employees and not independent contractors. Click here for the article.
The Alaska Employment Law Blog has a post today on a Wall Street Journal article about Blackwater’s independent contractor squabble with the House Oversight Committee. CNN also reports on Rep. Henry Waxman’s demand for information from Blackwater and his allegation that the company had avoided millions of dollars in taxes by misclassifying workers. The stakes continue to rise in the worker classification debate.
Kiplinger.com reports in More Companies Struggle to Find Workers (Nov. 14, 2007) that the shortage of workers will become acute in less than a decade. They advise employers to start planning now. CNNMoney.com reported at the beginning of the year that the shortage of skilled labor was holding back job growth. (Click here for a contrary view: The Great Labor Shortage Lie). What is the solution? Should companies use more temporary or seasonal workers? Are independent contractors the answer?
In future posts (and podcasts) we will discuss the legal issues involved in using temporary workers and independent contractors. As noted in previous posts, the consequences of misclassifying workers can be severe.
On October 15, 2007, the U.S. District Court for the Northern District of Indiana certified a class of pickup and delivery drivers as to claims that the plaintiffs were misclassified as “independent contractors” under the Kansas Wage Payment Act and to common law claims for rescission, unjust enrichment and quantum meruit. The class includes 102 current drivers and an unknown number of former drivers. The plaintiffs seek rescission of their independent contractor agreements, repayment of costs and expenses, and payment of unpaid overtime.
The court also certified a national class with respect to the plaintiffs’ claims for a determination of participant status and entitlement to benefits under ERISA. According to the Court, FedEx Ground employs approximately 12,000 pickup and delivery drivers.
Here is the court’s opinion: In re FedEx Ground Package System, Inc. Employment Practices Litigation, No. 3:05-cv-00390-RLM-CAN (N.D.Ind. Oct. 15, 2007).
The case also contains a lengthy Daubert analysis with respect to FedEx’s motions. The Daubert challenge was overruled, but the court decided to disregard the experts’ testimony.
This case highlights the serious consequences for misclassifying workers as “independent contractors.” FedEx also recently lost an appeal before the California Court of Appeals (Estrada v. FedEx Ground Package System, Inc., B189031 (Cal. Ct. App. June 13 2007) involving the issue of whether their single work zone drivers were employees or independent contractors under California law with respect to their right to entitlement to reimbursement for work-related expenses. FedEx’s decision not to renew the contracts of all of the single work zone drivers in California after that decision has sparked additional litigation.
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