FedEx Settles $240M Employee Misclassification Wage and Hour Class Action

In a recent settlement, FedEx has agreed to pay $240 million in a wage and hour class action lawsuit focusing on employees who were allegedly misclassified as independent contractors.

According to the wage and hour class action lawsuits, plaintiffs were FedEx drivers who were incorrectly and deceptively categorized as independent contractors rather than employees, which denied them appropriate benefits for the work they did with FedEx.

The settlement agreement as not yet been approved, but once an agreement has been reached and approved, it will be divided among around 12,000 individual drivers.

The amount each plaintiff receives from the settlement will vary widely, and depends on how much they worked and how long they worked. Some plaintiffs could be awarded tens of thousands of dollars.

Until 2011, FedEx used independent contractors and worked with them directly. This allowed the company to avoid paying the same kinds of taxes, fringe benefits and health care costs that they would have to pay employees.

The lawsuits were consolidated into a multidistrict litigation under a federal judge in Indiana who has not yet approved the settlement.

FedEx wage and hour class action lawsuits claim that drivers were employees rather than independent contractors because they were required to use company trucks, uniforms and equipment.

Because of this, lawsuits say that FedEx should be considered their employer under both state and federal law.

Because of this misclassification, plaintiffs say, they are actually owed overtime pay, expense reimbursement and other benefits owed to them as employees.

“If the litigation were to continue . . . a final resolution would be several years away, and would require significant time and expense to resolve the complex liability and damages issues presented,” the drivers wrote in a court document.

FedEx announced its plans to settle in March and said recently that it was pleased to reach a settlement to bring this longstanding litigation to an end.

Since 2011, FedEx has changed its policies. FedEx now works with businesses that employ drivers, so that the drivers are classified as employees with benefits rather than independent contractors.

This pending settlement agreement comes after a settlement was approved in a similar case in California last year. The California wage and hour class action, also against FedEx over misclassification, was settled for $226 million.

Wage and Hour Class Action Lawsuits

Misclassification lawsuits have grown increasingly widespread in the last few years. Several high-profile cases have surfaced, including some filed by exotic dancers, nail salon workers and Uber drivers.

Uber, a popular ride-hailing service, has faced numerous lawsuits over misclassification of its drivers. One Uber wage and hour class action lawsuit was settled for $100 million and distributed among a class of around 385,000.

These plaintiffs claimed that their misclassification led to lack of overtime pay, tips and expense reimbursement.

If you or someone you know has worked for a company you believe misclassified you as an independent contractor, such as FedEx or Uber, you may be able to file an individual lawsuit or join a wage and hour class action lawsuit.

The FedEx Wage and Hour Class Action Lawsuit is In re FedEx Ground Package System Inc Employment Practices Litigation, Case No. 3:05-MD-00527 in the U.S. District Court for the Northern District of Indiana.

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