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June 28, 2010. On June 28, 2010, the Court ruled that Plaintiffs must first exhaust their administrative remedies before pursuing their ERISA claims. Plaintiffs had asserted that, as employees of FedEx Ground, they are entitled to the same health, retirement, and insurance benefits as other FedEx Ground employees. According to the Court’s decision, the ERISA claims may be re-asserted once plaintiffs have sought administrative review of their claims for benefits. According to Lynn Faris, one of the lead attorneys for the plaintiffs, “We intend to immediately begin the administrative review process. If our administrative review is denied, we plan on refilling this claim with the Court.”
This is the second decision that Judge Miller has issued in response to motions filed by plaintiffs and by FedEx Ground to summarily resolve issues in the sixty three cases consolidated before the Court. The Court recently decided that FedEx Ground drivers in Illinois were employees, and not independent contractors, pursuant to Illinois statutes. The remaining motions for summary judgment are pending. Those motions pertain to the question of whether FedEx Ground and Home Delivery drivers are employees or independent contractors.
June, 2010. FedEx Ground and Home Delivery drivers have been found to be employees under the Illinois Wage Act. The decision was issued by U.S. District Court Judge Robert Miller in the multi-district litigation that Judge Miller has been presiding over for the past five years. (In re: FedEx Ground Package System, Inc. Employment Practices Litigation, Cause No. 3:05-MD-527 RM) This holding came in a May 28, 2010 Opinion and Order granting summary judgment to the Illinois drivers under the Wage Act. The Court did not rule on other claims made by the Illinois drivers, but indicated it will address those claims separately.
The decision is important in that it is one of a growing number of decisions in the past few years holding that the FedEx Ground drivers are employees and not, as FedEx claims, independent contractors. The essence of the cases consolidated before Judge Miller is that FedEx Ground has intentionally and consistently misclassified drivers as independent contractors, when they are in reality employees.
Judge Miller specifically found that the Illinois drivers were employees under the Wage Act because their work was an essential and a necessary part of FedEx's business. As former CEO Dan Sullivan testified, the drivers are the "centerpiece" of FedEx's "workforce" and they are an "essential component" of the company's business. The Court noted the fact that drivers must wear FedEx uniforms and maintain a personal appearance satisfactory to FedEx. Contractors supply their own vehicles, but they must bear FedEx's logos and advertising. Further, FedEx structures the routes so that the trucks are in use 9 to 11 hours a day. Contractors can hire replacement drivers, but only with FedEx's approval. Finally, the Court noted that FedEx managers were obligated to have business discussions and customer service rides each year in order to maintain FedEx's image and reputation.
Drivers' motions for Summary Judgment in 40 other states are pending. Currently, there are 63 __ lawsuits consolidated in the multi-district litigation. Motions for Summary Judgment have been filed, briefed and are awaiting decisions in almost all of these cases.
February, 2010. On July 27, 2009, the Court finished the class certification phase of this case, ruling again that some of our class cases would be certified and some would not. We currently have 28 cases certified, including the nationwide case regarding ERISA rights to benefits. As to most of the cases in which the court denied class certification, we have added many new named plaintiffs and have filed motions asking the court to change its order and certify the classes.
We have filed motions asking the court to determine that the drivers are employees and not independent contractors in every case where class certification was granted and most of the other cases as well, without the need for a trial. The motions are based on FedEx documents and admissions by FedEx executives. That process -called summary judgment -- began in the spring of 2008 and was just completed in December, 2009. The record we provided is very strong - about 10,000 pages chocked full of FedEx policies and procedures, training materials, business discussions, and admissions by FedEx executives up to and including Dan Sullivan himself!
In late December, Judge Miller issued an order requiring FedEx to provide us with a full set of IRS documents (called Notices of Proposed Assessments) which FedEx has been refusing to give us for several years. They produced those documents two weeks ago and marked them confidential so that we cannot discuss or describe them, except to the named Plaintiffs (who will receive a summary in the mail). However, yesterday we filed a motion asking the Court to add the IRS documents to the record for his consideration of the drivers' employment status, along with the most recent Addenda that FedEx has been requiring drivers to sign in the last few months. The new Addenda include far more stringent new requirements to qualify as a driver (and may disqualify many who are currently driving) and also terminate all of the Operating Agreements on May 14, 2010, unless the parties sign a "new agreement" - without any indication of what the "new agreement" consists of!
We are all hoping to get a ruling on the summary judgment motions soon and we know how anxious you all are about the outcome. As soon as we receive a decision, we will pass it along to you and let you know what the next steps are in the case. Thank you for all of your support and patience and please rest assured that the law firms representing you all are working very hard to bring the case to a successful conclusion.
- Lynn Faris, Susan Ellingstad & Rob Harwood, Co-lead counsel
NEW YORK, NY (October 20, 2009) - New York Attorney General Andrew M. Cuomo, Montana Attorney General Steve Bullock, and New Jersey Attorney General Anne Milgram today announced their offices’ intent to sue FedEx Ground Package System, Inc. (“FedEx Ground”) for violations of state labor laws. Today’s announcement is the latest in a string of actions taken by the Attorneys General to protect their states’ workforces and enforce labor laws.
According to the letter sent today to FedEx Ground, the company unlawfully misclassifies its drivers as independent contractors. As such, drivers do not receive Workers’ Compensation coverage through FedEx Ground. Moreover, independent contractors are not protected by anti-discrimination laws, labor relations laws, and other important laws that protect New York, Montana and New Jersey workers. At the same time, drivers are required to spend thousands of dollars out-of-pocket for their trucks, repairs, fuel and uniforms while being held to strict FedEx Ground rules that control the hours they work, the way they dress, and their ability to contract with anyone else outside the company.
“By blatantly misclassifying its drivers, FedEx Ground has denied these individuals the employment rights they are guaranteed by law,” said Attorney General Cuomo. “FedEx Ground drivers have been forced to pay thousands out of pocket for work-related expenses and adhere to strict employment policies, despite being deprived of the protections of full-time employee status. Our letter today demands that these policies be reversed or this office will not hesitate to bring legal action immediately.”
“This is an issue of fairness. By classifying their drivers as independent contractors rather than employees, FedEx Ground is denying the drivers rights and protections afforded to all workers in our state. And in the process, FedEx Ground is shifting its tax obligations onto hardworking Montanans,” said Attorney General Bullock. “These drivers are the backbone of the business and they should not have to give up the protections they are guaranteed just so FedEx Ground can circumvent our laws.”
“FedEx Ground’s failure to fairly classify and adequately protect its drivers is a violation of New Jersey’s labor laws,” said Attorney General Anne Milgram. “This company denied its drivers the benefits they should be guaranteed, while forcing them to be financially and personally accountable for strict employment requirements. Today’s letter is a multi-state effort to get FedEx Ground to end its unlawful business practices and protect the hardworking men and women who tirelessly support the company.”
The investigation by the Attorneys General revealed that the level of control FedEx Ground exercises over its drivers merits, under New York, Montana and New Jersey state law, employee status and the protections inherent in that status. FedEx Ground strictly controls all aspects of the work of drivers doing pick-up and delivery. Hours are prescribed by FedEx Ground with drivers having almost no discretion as to the hours they work. Workers’ performance of their tasks - from the loading of their trucks to their hand-off to customers - is directed and supervised by FedEx Ground. Drivers’ uniforms are mandated by FedEx Ground, even down to the colors of drivers’ socks, and drivers’ opportunities to engage in non-FedEx Ground related work are also almost entirely constrained by FedEx Ground rules. Drivers are only allowed to use their own trucks for non-FedEx Ground purposes if the trucks are used outside of FedEx Ground working hours. Additionally, the work of FedEx Ground drivers is at the very core of FedEx Ground’s business activities; drivers are completely integrated into the overall business functions of the company.
FedEx Ground drivers must also undertake significant expenses to perform their jobs in the manner required by FedEx Ground. These expenses range from purchasing or leasing trucks for as much as $70,000, to paying approximately $40 per week for the use of a FedEx Ground uniform and scanner. Drivers must also purchase fuel and do required maintenance for their trucks, and must purchase their own Workers’ Compensation insurance, as required by FedEx Ground.
This matter is being handled by Deputy Labor Bureau Chief Patricia Kakalec under the supervision of Executive Deputy Attorney General for Social Justice Mylan Denerstein in New York and by Assistant Attorney General Jennifer Anders for Montana.
August 5, 2009 – Attorneys General from eight different states notified FedEx Ground that they intend to take action to protect the interests of their states and drivers from FedEx Ground’s misclassification of drivers. Those states are Montana, Iowa, New Jersey, Kentucky, Missouri, Ohio, Rhode Island and Vermont. Writing as a group, the Attorney Generals stated that they have important and unique interests and concerns that they want to bring to the forefront. Citing a broad range of interests, they note particularly workers’ compensation insurance, unemployment insurance, wage and hour protections and civil rights protections. The eight states feel it is more efficient to work together to address changes in FedEx Ground’s business model.
Leading the group of 8 Attorneys General are Steve Bullock of Montana and Richard Cordray of Ohio.
It is important to note that these states have joined a host of others which have questioned FedEx Ground’s “business model”. In addition to the over 50 state law suits that are consolidated in our litigation, the AGs join other lawsuits and state agency claims. As the chorus of voices increases to challenge FedEx Ground’s illegal misclassification plan, we will keep you apprised of developments.
