Employment-Ninth Circuit Rules That Fed Ex Drivers Are Employees (And Not Independent Contractors)

In Alexander v. Fed Ex Ground Package System, Inc., Nos. 12-17458, 12-17509 (9th Cir. 2014), as a central part of its business, FedEx Ground Package System, Inc. (“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. The question for the Ninth Circuit Court of Appeals (the “Court”): under California Law, are the drivers employees or independent contractors? At stake were unpaid employment expenses and unpaid wages that would be due employees under state law.

In analyzing the case, the Court noted that California law controls this dispute. Further, determinations of employment status under California law are governed by the right-to-control test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (Cal. 1989). The Court found that Fed Ex policy grants FedEx a broad right to control the manner in which its drivers’ perform their work. This is the most important factor of the right-to-control test, and it strongly favors employee status. The other factors of the test, i.e., the right to terminate at will, integration of the work into the business, performing work under the principal’s supervision, the required skills, provision of tools and equipment, length of time working for the principal, method of payment, and the parties’ beliefs, do not strongly favor either employee status or independent contractor status. Accordingly, the Court held that the drivers are employees as a matter of law under California’s right-to-control test.

The Court came to basically the same conclusion as to the Fed Ex drivers under Oregon law in Slayman v. Fed Ex Ground Package System, Inc., Nos. 12-35525, 12-35559 (9th Cir. 2014).