FedEx Workers Ruled Employees, Not Independent Contractors – and the IRS Weighs In
Developments continue to come almost daily about misclassification of employees as independent contractors. Wage and hour cases, tax rulings, and discrimination charges all are part of the mix.
We have blogged about worker misclassification extensively, covering the DOL guidance from July of 2015, the treatment of Uber and Lyft drivers, and, um, “entertainers” and “cheerleaders.” Now there are two more recent items of interest.
FedEx Drivers as Employees
FedEx has been in the news a lot lately. FedEx had a business model for about 10 years in which its drivers were classified as independent contractors. However, FedEx assigned the routes. The drivers reported to FedEx managers. FedEx regulated uniforms. You get the picture. Recently, the Ninth Circuit in California ruled that FedEx drivers were improperly classified and were actually employees. Also, the Seventh Circuit, for Indiana, ruled similarly right after that. There are many more cases in 40 or so other states, and hundreds of millions of dollars are at stake for FedEx in those cases.
IRS Guidance on Independent Contractors
The IRS just issued an important guidance on August 19, 2015, cautioning employers to correctly classify independent contractors. The guidance notes that the facts regarding employee classification fall into three categories: Behavioral, financial, and type of relationship. The factors emphasized include whether the company has right of control and whether the work performed is integral to the company’s business. Links to the relevant tests and forms are included in the guidance.
Finally, I will be participating in a webinar along with two of my Bradley Arant colleagues, Bruce P. Ely and Summer Davis, discussing worker misclassification on October 7 at 11:30 a.m. central time. I will share the registration link on this blog in the next couple of weeks. We hope that you can join us!