36 Lab. & Emp. L. 1 (2007-2008)

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                'AL 2007
VOLUME 36,, NUMBER -1
     Section of Labor and
         Emnployrsent Lain
Amnerican BrAssociation


LE L


Thirty-six cases from across the
country challenging FedEx's desig-
ation of its drivers as independent
ontractors were transferred to the
Northern District of Indiana in Au-
gust 2005 by the judicial panel on
multidistrict litigation. In re FedEx
Ground Package System, Inc., Em-
ployment Practices Litigation, No.
93:05-MD-527 RM (MDL-1700).
   On the surface, at stake are in-
dependent contractor agreements
between FedEx and its package de-
livery drivers. And the proceed-
ings so far have focused on weed-
ing out untenable claims and
defenses, defining the proper
scope of discovery, and, most re-
cently, briefing the issue of class
certification, issues that have their
own interest for litigators.
   But it is the ultimate resolution
of the litigation's merits that could
have long-range consequences be-
yond the package delivery industry
because this and other cases in-
volving FedEx challenge the ability
of employers to carve some of their
operations from the fabric of federal
and state regulations governing
employment rights.
   The FedEx operating model con-
trasts with that of its competitors,
including industry leader UPS,
whose package delivery drivers are


employees and, for the most part,
union members. In FedEx's view, its
model benefits FedEx drivers by
allowing them to run their own
businesses. In the plaintiffs' view,
labeling them as independent con-
tractors deprives them of an array
of rights. Thus, claims in the multi-
district litigation that depend on
finding employee status arise
under the Family and Medical
Leave Act, the Employee Retirement
Income Security Act, federal and
state disability laws, state wage
payment laws, and overtime laws.
  The multidistrict litigation is not
the first skirmish in the FedEx legal
battle. In fact, earlier successful
challenges to the classification of
package delivery drivers as inde-
pendent contractors have been


launched in National Labor Rela-
tions Board (NLRB) proceedings
by the Teamsters attempting to or-
ganize the drivers of FedEx and its
predecessor, Roadway Package
Systems. See, e.g., Roadway Pack-
age Sys., 292 NLRB 376 (1989),
enf'd, 902 F.2d 34 (6th Cir. 1990).
  Independent contractors are ex-
cluded from protections afforded
employees under section 7 of the
National Labor Relations Act, in-
cluding the right to organize and
engage in collective bargaining
through a union representative.
But the NLRB has determined in a
series of representation proceed-
ings that FedEx single-route drivers
are employees, not independent
contractors.
  The NLRB relied on indicia of


                AP PHOTO/JOHN RUSSELL
employee status, including evi-
dence that (1) the drivers' function
is part of FedEx's core operations,
(2) drivers do business in the
name of FedEx, wear FedEx uni-
forms, and drive trucks with FedEx
colors and logo, (3) FedEx exercis-
es substantial control over the
drivers' work performance under
take it or leave it agreements,
and (4) the drivers' pay is based
on a unilaterally established con-
tractors' rate of compensation,
with little opportunity for drivers
to influence their income through
their own efforts or ingenuity.
  In July 2007, the NLRB certified
the results of a representation elec-
tion in favor of the Teamsters at
the FedEx terminal in Wilmington,
              continued on page 12


Contacto Staus f FeEŚ GoundDriers halAnge
By Noa LoMate

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