Workers Comp for Truck Drivers – Misclassification of FedEx Ground Truck Drivers

If FedEx had classified these drivers as employees, they would have been responsible for paying federal and state taxes, fringe benefits, healthcare, pensions, unemployment insurance and workers compensation insurance.

It is very important for business owners to correctly determine whether a person providing services for them is an independent contractor or employee. When a business has employees, they are required to withhold income tax, Social Security and Medicare taxes, and pay unemployment tax. In addition, Missouri law requires all employers with 5 or more employees to carry workers compensation insurance. However, taxes are not withheld for payments made to independent contractors.

The reason why it is so important for a company to determine this, was made clear in recent months when Fed Ex Corp. agreed to settle a suit for $228 million due to the misclassification of it’s FedEx Ground drivers. This settlement comes in the aftermath of a 2014 Ninth Circuit ruling that FedEx misclassified their drivers as independent contractors.

Employee vs Independent Contractor

FedEx had maintained that these workers were not misclassified. Yet, there were some 2,300 FedEx Ground drivers that were part of a class action lawsuit over their pay as independent contractors and not as employees.

If FedEx had classified these workers as employees, the employer would have had to pay federal and state taxes, fringe benefits, healthcare, pensions, unemployment insurance and workers compensation insurance. However, simply saying that these drivers were independent contractors was not sufficient. Where there is a distinction lies in how much control the employer exerts over the worker.

There are 3 categories which provide evidence of the degree of control, thus determining how a worker is classified. First, does the company have control over how and when the worker does his/her job? Second, are the business aspects of the job controlled by the payer? Third, have there been written contracts or employee benefits established?

In relation to the misclassification of the FedEx Ground drivers, FedEx only left small decisions up to its workers but maintained all necessary control in when and how the drivers operated. Based on the criteria of the 3 categories mentioned above, this would have classified the drivers as employees, not independent contractors.

Workers Compensation for FedEx Ground Workers

For employees who are injured on the job, work comp pays for medical treatment, future medical care, tax free lost time benefits at about 2/3’s of your average weekly earnings, and either permanent partial disability or permanent total disability. The law requires prompt payment of benefits at no cost to you if you sustain a work-related injury covered under the law. The work comp carrier can be sanctioned at trial if any part of your claim is defended without reasonable grounds.

These drivers were misclassified but are employees not independent contractors. They should file their workers compensation claims against FedEx.

Workers & Industry

photo credit: Tobyotter