From the Employment Law Spotlight – “The driver-as-independent-contractor model has been under attack for years, with federal and state governments and putative class litigants alleging that drivers, in many instances, are misclassified and should be considered employees under applicable law. The challenge for all parties in these disputes is that the standards for determining whether someone is a contractor or an employee is different under federal tax law, federal wage and hour law, federal benefits law, and federal anti-discrimination law, and varies even more greatly from state to state, with individual states often applying multiple tests within the same state, depending on whether the analysis is for purposes of unemployment law, workers compensation law, wage and hour law, or other state employment statutes. Because of the matrix of tests, the same relationship can be classified in different ways under different laws and in different states.
In the mid-2000s, FedEx drivers filed a rash of class and collective actions around the country, alleging that FedEx had misclassified them as independent contractors, and that they should instead have been deemed employees. The lawsuits alleged a hodgepodge of mostly state law claims, including under state wage and hour laws, wage payment laws, leave laws, and various other claims.
Many of these lawsuits were consolidated into multi-district litigation in the Northern District of Indiana (the “MDL Court”). In December 2010, the MDL Court issued the mother of all summary judgment opinions, evaluating the standards for independent contractor misclassification under multiple laws across 26 states. In a 95-page opinion, the company came out mostly ahead, with the MDL Court ruling that drivers were independent contractors in 23 of the states, and employees in three.
But then came the appeals, and the tide now turns….”