By Maria Armental
FedEx Corp. (FDX) on Wednesday said it intends to appeal a
federal court decision that drivers the company had classified as
independent contractors were employees.
The three-judge panel's decision, which would be appealed to the
full U.S. Court of Appeals for the Ninth Circuit, would make FedEx
responsible for work-related expenses and unpaid wages to those
workers.
"We fundamentally disagree with these rulings, which run counter
to more than 100 state and federal findings, including the U.S.
Court of Appeals for the D.C. Circuit, upholding our contractual
relationships with thousands of independent businesses," FedEx
Ground Senior Vice President and General Counsel Cary Blancett
said.
FedEx Ground, Judge William A. Fletcher wrote in the decision,
contracts with drivers who must wear FedEx uniforms, drive
FedEx-approved vehicles and groom themselves according to FedEx's
appearance standards to deliver packages to its customers. "FedEx
tells its drivers what packages to deliver, on what days and at
what times," he said. "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."
"Nationally, thousands of FedEx Ground drivers must pay for the
privilege of working for FedEx 55 hours a week, 52 weeks a year,"
Beth Ross, one of the lawyers for the drivers, said.
While United Parcel Service Inc.'s (UPS) workers are unionized,
FedEx Ground has skirted the higher labor costs associated with a
unionized workforce by using independent contractors to deliver
packages. FedEx has since changed its business model from directly
employing these independent contractors as drivers to contracting
out deliveries to independent companies that employ drivers.
The case stems from three class action lawsuits originally filed
in California involving about 2,300 full-time delivery drivers for
FedEx in that state between 2000 and 2007 and in Oregon involving
363 individuals who were full-time delivery drivers between 1999
and 2009.
About 40 similar cases were filed against FedEx between 2003 and
2009 in approximately forty states, according to court documents.
The cases were consolidated in so-called multidistrict litigation,
and class certification was granted in 28 cases, according to
FedEx's Form 10-K filed in July with the Securities and Exchange
Commission.
"We remain committed to maintaining a business model that has
been proven successful for our customers, service providers, and
shareowners," Sean O'Connor, FedEx Ground vice president of
contractor relations, said.
--Laura Stevens contributed to this story.
Write to Maria Armental at maria.armental@wsj.com
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