Alexander v. Fedex Ground Package System, Inc.
2014 WL 4211107, 765 F.3d 981 (2014)
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Rule of Law:
Under California law, a worker is considered an employee if the hiring entity retains the right to control the manner and means by which the work is performed. This primary factor of control outweighs contractual labels, the parties' beliefs, or the existence of limited entrepreneurial opportunities that are subject to the company's discretion.
Facts:
- FedEx Ground Package System, Inc. ('FedEx') required its delivery drivers to sign an Operating Agreement ('OA') that labeled them as independent contractors.
- The OA and company policies mandated that drivers wear specific FedEx uniforms, adhere to grooming standards such as being 'clean shaven, hair neat and trimmed,' and conduct themselves with 'proper decorum'.
- Drivers were required to use their own vehicles, but these vehicles had to be painted a specific 'FedEx white,' display the FedEx logo, and be built with internal shelving of specific dimensions and materials.
- FedEx assigned each driver a specific service area, dictated which packages to deliver and the time windows for delivery, and structured workloads to ensure drivers worked 9.5 to 11 hours per day.
- FedEx managers conducted periodic ride-along performance evaluations to observe and correct drivers' work methods on details down to how a driver should hold their keys.
- While drivers could operate multiple routes or hire helpers, they could only do so with FedEx's consent, and any replacement driver had to be 'acceptable to FedEx'.
- While in service, drivers' vehicles had to be used 'exclusively for the carriage of the goods of FedEx,' and all company logos had to be covered for any personal use.
- The work performed by the drivers—the pickup and delivery of packages—is the core and essential function of FedEx's business.
Procedural Posture:
- A class of FedEx drivers sued FedEx in California Superior Court, a state trial court, for claims under the California Labor Code.
- FedEx removed the case to the U.S. District Court for the Northern District of California.
- The case was consolidated into a multi-district litigation (MDL) proceeding before the U.S. District Court for the Northern District of Indiana ('the MDL Court').
- The MDL Court certified a class for plaintiffs' claims under California law.
- The MDL Court denied the plaintiffs' motion for partial summary judgment and granted FedEx's cross-motion for summary judgment, ruling as a matter of law that the drivers were independent contractors.
- After the case was remanded and final judgment was entered, the plaintiffs (appellants) appealed the MDL Court's summary judgment decision to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does FedEx's comprehensive control over its drivers' appearance, vehicles, and daily work procedures classify them as employees rather than independent contractors under California's right-to-control test?
Opinions:
Majority - Judge W. Fletcher
Yes. FedEx's comprehensive control over its drivers classifies them as employees as a matter of law. Applying California's multi-factor 'Borello' test, the right to control the 'manner and means' of accomplishing the work is the principal consideration. FedEx controls nearly every aspect of the drivers' jobs, including their appearance, their vehicles' specifications down to the shelf dimensions, their work hours, and the customers they serve. This level of control goes far beyond merely dictating the 'result' (a delivered package) and constitutes control over the means of performance. The contractual label of 'independent contractor' is not dispositive, and the purported entrepreneurial opportunities are illusory, as they are entirely subject to FedEx's discretionary approval. An analysis of the secondary 'Borello' factors further supports employee status, as the work is unskilled, integral to FedEx's business, and performed for an indefinite duration. Therefore, the drivers are employees.
Concurring - Judge Trott
Yes. The majority's analysis is correct; the drivers are employees. The court must look to the 'underlying reality rather than the form or label,' and a contract's designation of a worker as an 'independent contractor' is not controlling. As Abraham Lincoln reportedly said, 'Calling a dog’s tail a leg does not make it a leg.' FedEx's Operating Agreement was a 'brilliantly drafted contract' designed to create the constraints of an employment relationship under the guise of an independent contractor model. The reality of FedEx's pervasive control over the drivers solidifies their status as employees under California law, and the D.C. Circuit's 'entrepreneurial opportunities' test is not the law in California.
Analysis:
This decision significantly reinforces the primacy of the 'right-to-control' test in California for classifying workers, diminishing the weight of contractual labels and purported entrepreneurial opportunities. It serves as a strong precedent against the misclassification of workers, particularly in industries like logistics and the gig economy where companies exert substantial control over individuals they label as independent contractors. The court's explicit rejection of the D.C. Circuit's 'entrepreneurial opportunities' test for California law highlights a key jurisdictional split in how federal courts analyze employment status, making the choice of venue critical in such disputes. This case makes it more difficult for companies operating in California to avoid employment obligations by drafting contracts that grant workers theoretical freedoms that are practically constrained by the company's overriding control.
