On July 3, 2013, a federal judge in Massachusetts determined that former FedEx pick-up and delivery drivers were misclassified as independent contractors.
This decision was rendered under a Massachusetts law that is highly favorable to employees. Commonly referred to as the "independent contractor statute," Mass. Gen. Laws Ch. 149, Section 148B does something that is unique: it requires a potential employer to prove that its workers are properly classified as independent contractors--even when the employer is the defendant in a lawsuit. Generally in litigation, the plaintiff has the burden of proof. So, in other states, including New York, the employee who is suing has to prove that he or she has been misclassified and should actually be an employee. By shifting the burden of proof, Massachusetts has made it easier for a plaintiff to establish that he or she has been misclassified as an independent contractor.
Under the independent contractor statute, a worker is an employee unless the putative employer can prove that (1) the worker is free from control and direction; (2) the worker's service is performed outside the usual course of business of the employer; and (3) the worker is engaged in an independently established trade or business of the same nature as the service performed.
The independent contractor statute is "conjunctive," which means that, in order to meet its burden, the employer must satisfy all three requirements. If any one requirement is not satisfied, then the workers are considered employees.
In this decision, the court focused on whether the drivers' work was performed outside the usual course of FedEx's business (element 2 of the independent contractor statute). FedEx didn't have a leg to stand on: its business is picking up and delivering packages. And that is precisely what FedEx's pick-up and delivery drivers do. In a far-fetched attempt to get around the law, FedEx argued that it is not in the pick-up and delivery business, but rather that it is in the logistics business. The judge rejected this argument and noted that FedEx's website says “FedEx Ground specializes in cost-effective, small-package shipping, offering dependable business-to-business delivery or convenient residential service."
FedEx also made an argument that even a first year law student would see through: it argued that none of its employees pickup or deliver packages. The judge called this a "tautology," noting that no FedEx employee picks up or delivers packages because FedEx has decided not to call its drivers "employees."
Because FedEx did not prove that its drivers' work was outside the usual course of its business, the judge ruled that the drivers are employees.
The judge ordered the parties to submit a statement of agreed upon damages, and if the parties could not agree on the plaintiffs' damages, a hearing will be held to determine how much FedEx owes the plaintiffs. At this hearing, the judge will likely be presented with any time records of the employees' work, and where the time records are not clear (or if there are none), the employees may testify about their work schedules.
To read the full decision, click here.