Last week, the 9th Circuit held in two related cases from California and Oregon that FedEx misclassified approximately 2,600 delivery truck drivers as independent contractors, rather than as employees. The cases—Alexander v. FedEx and Slayman v. FedEx—are an important reminder for employers that reality matters more than labels when it comes to classifying workers.
On that note, the most succinct (and most memorable) summary of the rulings appears in Judge Trott’s short concurrence in Alexander:
“Abraham Lincoln reportedly asked, ‘If you call a dog’s tail a leg, how many legs does a dog have?’ His answer was, ‘Four. Calling a dog’s tail a leg does not make it a leg.’ . . . Labeling the drivers ‘independent contractors’ in FedEx’s Operating Agreement does not conclusively make them so . . . .”
The two cases dealt with virtually identical facts. FedEx’s Operating Agreement (“OA”), which principally governed its business relationships with the 2,300 California drivers and 363 Oregon drivers in each class, contained several generalized clauses that suggested the drivers were independent contractors. For example, the OAs provided that “the manner and means of reaching [the parties’ “mutual business objectives”] are within the discretion of the [driver], and no officer or employee of FedEx . . . shall have the authority to impose any term or condition on the driver . . . which is contrary to this understanding.” The two opinions noted, however, that neither California nor Oregon law views a contract’s description of a worker as an independent contractor as dispositive of the worker’s true status.