The ninth circuit appeals court judge in Oakland CA has ruled some 2300 Fed Ex Ground workers from 2000 to 2007 were "mis-classified" as contractors according to California law. The laws determining the distinction between employee and contractor are based largely on the degree to which the employer has control over the circumstances under which the contactor achieves the duties for which he or she was hired to perform. Employees are required to work specific hours, dress and conduct themselves according to company policy, etc in the completion of their assigned responsibilities.
In return, the company accepts the employer responsibilities inherent in the relationship providing health care, vacation time, etc. Contractors on the other hand can be hired to achieve the same tasks within the same timeline but cannot be directed by the employer in terms of hours, dress or virtually anything but getting the job done on time.
In the Fed Ex case drivers were forced to brand their trucks with the Fed Ex logo, wear Fed Ex uniforms and purchase related equipment. The branding of the truck is quite common in the transportation industry and in some cases even the uniforms. These requirements however test the very edge of contractor/employee classification. In the Fed Ex case the court ruled that it was the additional contractor requirements like hiring additional staff to stand in for sick time and assist with holiday volumes that clearly determined that Fed Ex had exercised a measurable level of control over the contractors actions in the completion of their tasks as to consider them employees.
This ruling may cost Fed Ex hundreds of millions of dollars in employee related pay due these plaintiffs, as well as additional, contracted employees such as health care, break time and equipment purchases. This ruling will most certainly be the basis of many more tests of the employee / contractor classification in all industries in the U.S.