:: Seventh Circuit Rejects FedEx’s Request To Review Class Certification
Lawyers for FedEx Ground/Home Delivery drivers who have been misclassified as independent contractors instead of employees today are hailing the decision of the U.S. Court of Appeals for the 7th Circuit upholding the granting of class certification by the U.S. District Court in Indiana. “Lawyers for FedEx Drivers Laud Federal Appeals Court Ruling Denying Company’s Appeal of Driver Class Certification” CNN Money (January 23, 2008)
According to a CNN news report, a Seventh Circuit panel rejected FedEx’s request to review the nationwide class certification of the drivers’ claim for employee benefits under the Employee Retirement Income Security Act (ERISA) and other state claims. Central to the case is the classification of workers as independent contractors. The decision clears the way for further proceedings in the nationwide class action suit that involves thousands of workers. According to counsel I spoke with the panel’s decision was actually handed down last week.
Earlier this month, in a move sharply criticized by the Teamsters (interesting blog here), FedEx stated that it would continue classifying its workers according to existing classifications though this model is being challenged by state and federal taxing authorities. (The IRS is claiming $319 million in back taxes.)
According to the complaint filed in the class action litigation, FedEx is liable for benefit contributions under employee benefit plans it sponsors for employees.
From PACER, I excerpted the following which appears typical of the plaintiffs’ complaints on the ERISA issue:
The named Plaintiffs are adequate representatives of the Class because they were treated in the same manner as other Class Members by the Defendant and they have been damaged by this treatment in the same manner as other Class Members by their exclusion from employee compensation programs, plans and agreements and employee benefit plans and rights.
There are common questions of law and fact applicable to the entire Class including, but not limited to, the question whether Plaintiffs and Plaintiff Class Members are entitled to certain types of employee compensation and benefits because they are employees of Defendant as defined by common and statutory law, even though Defendant has misrepresentedto Plaintiffs and Plaintiff Class Members their true employment status.
The case caption is In re FEDEX GROUND PACKAGE SYSTEM, INC., EMPLOYMENT PRACTICES LITIGATION (MDL 1700) ) (Cause No. 3:05-MD-527-RM) (N.D. Ind.) (South Bend Division).
The case underscores how employment law decisions can expand to include, or even be eclipsed by, tax and ERISA issues. The issue of worker classification arises in many contexts including that of staffing and leasing operations (e.g., “co-worker” classification). The tax and benefit consequences of classification decisions, as the foregoing case illustrates, can be dramatic.
