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American ShipperShippingTrade and Compliance

FedEx loses appeal in Kansas driver misclassification case

U.S. Circuit Court of Appeals upheld a 2014 Kansas Supreme Court ruling that said the express carrier violated the Kansas Wage Payment Act in not treating drivers as employees.

   The domestic parcel unit of FedEx Corporation lost an appeal earlier this week in a lengthy legal battle with over 500 FedEx Ground drivers in Kansas. The 7th U.S. Circuit Court of Appeals upheld a 2014 Kansas Supreme Court ruling that said the express carrier violated the Kansas Wage Payment Act by classifying drivers independent contractors and not employees.
   The decision comes just a few weeks after the company agreed to settle a similar driver misclassification case in California for a reported $228 million. Like the California case, this lawsuit applied to FedEx actions dating back to before 2000 as drivers in the suit worked for the company between 1998 and 2007.
   In its decision, the three-judge panel of the appellate court said the previous Kansas Supreme Court ruling “authoritatively decided” that FedEx Ground drivers were by definition employees under state law.
   Truck drivers across the transportation industry have long argued that their employers have committed wage theft and deprived them of benefits and legal protections by misclassifying them as independent contractors rather than employees, a battle that has been playing out in courts across the country for over a decade.
   In many cases, drivers have been successful in recouping lost wages and forcing companies to change their policies with regard to independent driver classification, but a U.S. District Court earlier this week ruled that federal law precludes the state of Massachusetts from regulating transportation rates, routes and services by requiring express delivery drivers to be company employees.
   Just a few weeks ago, for example, port truck drivers from Eco Flow Transportation, LLC, voted unanimously in an election conducted by Region 21 of the National Labor Relations Board to form a union and selected Teamsters Local 848 as their exclusive bargaining agent. Eco Flow agreed to remain neutral with respect to the drivers’ efforts to unionize, and the Teamsters agreed to refrain from using protests in their collective bargaining efforts as drivers negotiate their first union contract with the company.
   According to a statement from the Teamsters, the NLRB election and neutral stance on the part of Eco Flow represented a “dramatic turn of events in an industry plagued with misclassification of workers as ‘independent contractors,’” a classification that bars drivers from joining a union altogether.
   Eco Flow driver Mario Marquez said of the vote, “I’ve been a port truck driver for over 17 years and I’ve seen all sorts of injustices at the ports: no help when we get injured, massive deductions from our paychecks, no health insurance, and no retirement security. Eco Flow is leading the way toward justice and we are going to help grow the company by working with them to provide the best service possible to the company’s customers – while working hard to provide for our families.”
   “The $12 billion drayage industry has been plagued for decades by low levels of capitalization, inefficient operations, high rates of pollution, exploitation of workers through misclassification, harassment, and retaliation, and labor unrest,” said Fred Potter, port division director and international VP, International Brotherhood of Teamsters. “We believe that fixing the industry nationally starts with fixing it at our nation’s largest port complex, and we look forward to working with Eco Flow to assure that the company and its most valuable assets – its drivers – thrive.”
   As a result of these and other cases, the FedEx unilaterally stopped its independent contractor driver classification and began treating drivers at FedEx Ground as employees in 2011.
   “The [Kansas] decision applies to those contractors operating in Kansas from 1998 to 2007 under a model that no longer is in use,” Meredith Miller, a spokesperson for FedEx Ground, said of the ruling. “We fundamentally disagree with this ruling and are exploring our legal options.”
   “We remain committed to protecting a business model that has consistently provided customers with outstanding service while enabling thousands of independent business owners, in Florida and across the country, to own their own business,” added Miller.
   The Kansas case will now go to the Kansas District Court to determine damages for the more than 500 plaintiffs, according to the 7th Circuit court’s ruling.

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