FedEx to Pay $15.4 Million to Settle Drivers’ Class Action

The Oregon Federal District Court approved a $15.4 million settlement in which FedEx will pay $500 to over $100,000 to approximately 400 delivery drivers.  FedEx drivers filed suit in 2005 alleging that the company misclassified them as independent contractors and failed to pay overtime and other wages.  The case is part of a larger series of lawsuits filed by FedEx drivers in about 40 states that were consolidated for MDL proceedings in the Northern District of Indiana.

The settlement comes on the heels of the Ninth Circuit’s reversal of the District Court’s finding that the drivers were independent contractors.  The Ninth Circuit held that the drivers were in fact employees because of the extensive control FedEx exerted over them.  The Court also found that FedEx’s operating agreement gave the Company broad authority to dictate the work performed by the drivers.  The Court stated that the Company requires all drivers to wear FedEx uniforms; drive FedEx-approved vehicles; and conduct themselves according to FedEx appearance standards.  Also, FedEx directs its drivers regarding their scheduled delivery of packages; days of delivery; and delivery times.  Accordingly, the Ninth Circuit found that the FedEx drivers are employees as a matter of law under Oregon’s “right-to-control” and “economic-realities” tests and ordered that the District Court enter summary judgment for the drivers on the question of their employment status.

Both parties agree that the settlement was reached after arm’s-length negotiations and over a decade of hard-fought litigation, and provides for an “excellent recovery” for the FedEx drivers.