crossposted from unbossed
Nine years is a long time for employees to wait for justice. But that's the way it is when an employer decides it wants to crush them. FedEx "independent contractors" won an important victory last week, but they will have to wait a little longer before the justice system delivers.
Last week, the California Court of Appeals handed the employees in Estrada v. FedEx Ground Package System, Inc., Case No.B189031 (CA Ct. App. Aug. 13, 2007) [pdf of decision] a huge victory.
The case was originally filed in Los Angeles County Superior Court in 1999 under the case name Estrada vs Roadway Package System. [pdf of complaint here.]
At the heart of the legal issues is whether the delivery workers FedEx calls independent contractors are actually employees. This is a multimillion dollar case, including costs, attorneys fees, and liquidated damages. The appellate court docket and links to documents may be found here.
The decision as to whether a worker is an employee is highy fact-based. Below, I will include some of the facts examined and found by the Court of Appeals. But first, to jump ahead to the conclusion about employee statuts. Both the Court of Appeals and trial court were almost scathing in their description of FedEx's claims.
The court of appeals says:
In practice, therefore, the work performed by the drivers is wholly integrated into FedEx’s operation. The drivers look like FedEx employees, act like FedEx employees, are paid like FedEx employees, and receive many employee benefits. . . . FedEx’s control over every exquisite detail of the drivers’ performance, including the color of their socks and the style of their hair, supports the trial court’s conclusion that the drivers are employees, not independent contractors.
The court of appeals confirms these findings of fact by the trial court, saying:
that the drivers were FedEx employees, not independent contractors, and that they had not been indemnified for any of the expenses at issue. The court described the Operating Agreement as "a brilliantly drafted contract creating the constraints of an employment relationship with [the drivers] in the guise of an independent contractor model" -- because FedEx "not only has the right to control, but has close to absolute actual control over [the drivers] based upon interpretation and obfuscation." . . .[T]hey must wear uniforms and conform absolutely to FedEx’s standards and that, in the end, each driver has a "job" with "little or no entrepreneurial opportunities."
The basic test as to who is an employee is the right to control. Independent contractors are free to offer their services to any customer they choose and can choose the method by which they achieve the product the customer desires. Usually, independent contractors have special skills that they can market to potential customers. Employees, in contrast, must use the methods prescribed by the employer to achieve the ends desired by the employer. They may be skilled, but not have the sorts of skills that can be used to entice multiple customers to hire them.
A true independent contractor relationship tends to be for a term and is often short-term. An employee relationship is usually open-ended and may extend for years and even decades.
As with many employers, FedEx has tried to set up the appearance of an independent contractor relationship in order to rid itself of legal responsibilities and shift costs to the workers.
Here are examples of some of the facts discussed by the court of appeals:
Men and women who apply to FedEx for positions as drivers must complete applications, submit to background checks and strength tests, and satisfy appearance standards. The only required skill is driving and no commercial driving experience is needed. Upon acceptance, a driver must execute a nonnegotiable "Pick-up and Delivery Contractor Operating Agreement" that obligates him to "provide daily pick-up and delivery service, and to conduct his . . . business so that it can be identified as being a part of the [FedEx] system." The Operating Agreement identifies the driver as an "independent contractor, and not as an employee . . . for any purpose," . . .
Under the terms of the Operating Agreement, the driver must provide his own truck meeting FedEx’s specifications, mark the truck with the FedEx logo, pay all costs of operating and maintaining the truck (including repairs, cleaning, fuel, tires, taxes, licenses and insurance), and use the truck exclusively in the service of FedEx (or mask the logo if the truck is used for any other purpose). The driver must provide "fully competitive" service to a "primary service area" assigned by FedEx, and the Operating Agreement acknowledges the driver’s "proprietary interest" in his primary service area’s customer accounts -- but gives FedEx the right to reconfigure primary service areas (and to reassign packages to another driver) if the volume of packages in the driver’s primary service area exceeds the amount the driver could reasonably be expected to handle on any given day. In the event of reconfiguration, the driver has a right "to receive payment" from FedEx or the benefited driver.
The Operating Agreement obligates the driver to try to "retain and increase" business within his primary service area, to "cooperate" with FedEx’s employees, customers, and other drivers for the common goal of efficient pickup and delivery, to load, handle, and transport packages using methods designed to avoid theft, loss and damage, and to foster FedEx’s professional image" and "good reputation." The driver agrees to drive safely, to prepare driver logs, inspection reports, fuel receipts, and shipping documents, and (on a daily basis) to return these items and any collected charges and undeliverable packages to FedEx. He agrees to wear a FedEx-approved uniform and to maintain his appearance "consistent with reasonable standards of good order," his uniform "in good condition," and his truck in a "clean and presentable fashion."
For its part, FedEx reserves the right to have its management employees travel with the driver four times each year to verify that the driver is meeting FedEx’s standards, and agrees to train or "familiarize [the driver] with [its] quality service procedures."
A new driver leases a scanner and purchases or leases a truck (usually obtained from FedEx preferred vendors) that meets FedEx’s size, model and condition specifications, paints the truck "FedEx White," and applies the FedEx logo to the truck.
Terminal managers, in turn, supervise and train drivers. Drivers work full time and exclusively for FedEx, and must work every day FedEx provides service unless they have preapproved replacements.
FedEx sets the drivers’ work hours (9.5 to 11 hours a day), and the average driver has worked for FedEx for eight years, with an annual income of $35,000 to $50,000 after expenses. The drivers and their trucks are subject to inspection every day (the trucks must be clean, the drivers in uniform and well groomed), and if either fails inspection, the driver may be barred from service.
Trucks must be parked in assigned spots and loaded by FedEx employees with the packages assigned to the driver by management (the drivers may not refuse an assignment).
fn 5 Because the drivers must park their trucks in assigned spaces at their terminals, and because the logos on most of the trucks are difficult if not impossible to conceal, FedEx’s assertion that the drivers may use their trucks for other purposes during off hours is more imagined than real. As a practical matter, most drivers rarely use their trucks for personal matters.
What this means to all of us
Regular workers who work for companies that also use a lot of independent contractors to do the same job need to be very concerned.
These FedEx faux independent contractors are chained to these jobs, chained by the cost of their trucks they can't very well use elsewhere. They will be willing to take harsh treatment as a result.
Gear of losing their jobs then drags down the regular employees' working conditions.
This case is not over yet.
You can follow the case at FedEx Watch, a site maintained by the Teamsters.