July/August 2010 Parking - 8

Legal Matters Michael Stevens
Federal Court Rules FedEx Drivers Are Employees, Not Independent Contractors, Under Illinois Law
Many employers struggle over whether to treat certain workers as employees or independent contractors. Misclassifying workers as independent contractors can have serious implications under federal and state tax, unemployment, workers’ compensation, benefits, wage and hour, and other employment laws. In a recent case applying Illinois law, a federal court in Indiana ruled that certain FedEx drivers were misclassified as independent contractors. In re FedEx Ground Package System, Inc. Employment Practices Litigation, 2010 WL 2243246 (N.D. IN May 28, 2010). A group of FedEx Ground (“FedEx”) drivers asserted claims against FedEx under the Illinois Wage Act. The Illinois Wage Act defines an “employee” as “any individual permitted to work by an employer in an occupation,” but excludes any person (1) who is free—both under the contract and in practice—from control and direction over the work’s performance, (2) whose work is performed either outside the employer’s usual course of business or outside the employer’s places of business, and (3) who is in an independently established business. The plaintiffs filed a motion for summary judgment on the issue of whether they were employees instead of independent contractors. In this case, the Court determined it only had to address the second prong of the exemption: whether plaintiffs performed work outside the usual course of FedEx’s business or outside FedEx’s place of business. “When considering the employer’s usual course of business, Illinois courts focus on whether the individual performs services that are necessary to the business of the employer or merely incidental. An employer’s place of business is not limited only to its own home offices, but can extend to any location where workers regularly represent an employer’s interest.” FedEx Ground provides small-package pick-up and delivery services through a network of pick-up and delivery drivers. FedEx Home Delivery provides small package delivery service primarily to residential customers, and FedEx Ground focuses on the pick-up and delivery of small packages to businesses. All three named plaintiffs were former FedEx Ground or Home Delivery drivers who worked in Illinois and signed the FedEx Operating Agreement. According to the Court, FedEx required the plaintiffs to provide pick-up and delivery services for FedEx and “to conduct his/her business so that it [could] be identified as being a part of the [FedEx] system.” The services performed by the named plaintiffs were necessary to FedEx’s business of picking up and delivering packages. FedEx Vice President of Contractor Relations Robert Ostrov testified that contractors are a cornerstone of FedEx’s business. FedEx former CEO Dan Sullivan testified that the contractor is intended to be a “centerpiece” of FedEx’s “work force” and is an “essential component of [FedEx’s] business.” Drivers had to wear the FedEx uniform when making deliveries and the Operating Agreement provides that the uniform should be “maintained in good condition” and the driver will “keep his/her personal appearance consistent with reasonable standards of good order as maintained by competitors and promulgated from time to time by [FedEx].” The uniform contains FedEx’s logo, making it readily apparent that the driver works for FedEx.

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“ If a company has the right to control the means and manner by which the work is performed, the worker generally is considered an employee, not an independent contractor. ”

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National Parking Association PARKING July/August 2010
July/August 2010 Parking

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