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Jun
2014
30

FedEx Settles Million-Dollar Misclassification Case, a Dozen Similar Suits Pending Nationwide

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In a settlement of a federal court lawsuit in Maine, FedEx Ground has agreed to pay $5.8 million in back pay and legal fees to 141 drivers it misclassified as independent contractors.  The lawsuit claimed that FedEx denied overtime pay and made improper deductions in addition to requiring drivers to pay for their expenses.  While there were seven named plaintiffs in the case, only two signed the settlement.  The others felt the amount being paid out by FedEx was too low.  

The federal court judge noted that if the case had gone to trial, damages could have topped $10 million. Nonetheless, the court found the settlement fair and adequate

In approving the settlement last week, the court acknowledged that “the proposed settlement…is clearly a compromise that discounts to some degree…the drivers’ total claims” but is a “fair trade-off for the uncertainties of trial and appeal and a prolonged delay in receiving any money. In that regard, the court noted that FedEx Ground has won some independent contractor misclassification cases and lost others.  The court also found that the amount (one-third of the $5.8 million settlement) sought by the lawyers for the class for counsels’ legal fees, costs, and expenses was reasonable.

FedEx Ground has lost misclassification cases in California, Illinois, and Massachusetts, but has won cases under Kansas state law and before the IRS.  They have settled cases in Montana and Massachusetts and currently have more than a dozen such cases pending across the country.  

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