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Are Drivers Independent Contractors or Employees?

Our New York Misclassification Attorney discusses a recent court decision that addresses that question.

Independent Contractor Misclassification

A group of FedEx Ground drivers (“Plaintiffs”) alleged that they were misclassified as independent contractors instead of employees in Padovano v. FedEx Ground Package System, Inc. (the “Company”). The Plaintiffs argued that appellate courts throughout the country previously ruled that the drivers at issue have been found to be employees. Nonetheless, the Company filed a Motion to Dismiss the claims based, in part, on the fact that the Company and the Plantiffs signed independent contractor agreements. The Court denied the Company’s motion last week.

The Workers’ Claims

The five plaintiffs worked full-time for the Company and argued that they alleged sufficient facts to show the meet the definition of “employee” under the New York’s common law test, which focuses on, among other things, the amount of control exercised by the Company, and the “ABC test” under the New York Labor Law. The Plaintiffs alleged the following information inter alia:

  1. The drivers were supervised and managed by a Company manager. This is a critical factor may show that the Company exercised control over the worker. In general, the greater the control exercised, the more likely a misclassification finding will be made.
  2. The workers provided services that are central to the Company’s business. They are drivers who provide delivery services for a delivery company. This is a critical prong in the analysis.
  3. The Company provided the drivers with detailed instructions regarding its specific policies and procedures. Again, this issue goes to the amount of control.
  4. The Company provided training to the drivers. In general, training is a good argument for workers to show misclassification because it goes toward control.
  5. The Company required that the workers use their signage and logos on their uniforms and trucks. This factor supports an argument that the image conveyed to the public was the workers were employees and it also prevented the workers from using their vehicles to provide services to the general public.
  6. The Company set the price. Typically, contractors and companies will negotiate a fee.
  7. The Company monitored the worker’s performance and addressed any performance issues with them. Monitoring work performance and counseling is more likely to be found in an employee-employer relationship.
  8. The Company required the workers attend meetings with its managers.

This is an incomplete list of the factors that the Courts consider.  Each misclassification case will be analyzed on a fact specific basis.

The Court’s Decision

On a Motion to Dismiss, the Court must accept all of the factual allegations in the Complaint as true. The standard of review can change as the case progresses. The court found that the Plaintiffs had plausibly alleged that they were employees under New York law. The parties will conduct discovery to challenge the facts on both sides and another motion may be filed in the future or a trial may be held on the merits. Another possibility is that the parties may reach a settlement. Settlements in these cases can be difficult because the plaintiffs filed the lawsuit on behalf of all other similarly situated workers and the amount of damages can be significant if liability can be shown.   In addition, a finding of employment status can trigger serious consequences in different forums (e.g., IRS, overtime and minimum wage requirements, etc.).

Learn Your Rights and Become Empowered

If you believe you were misclassified as a worker or you are a company that is facing a misclassification inquiry, contact our Award Winning New York Employment Lawyer to learn your rights and options. Proactive steps can be critical in these cases.

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