FedEx recently settled a lawsuit with the state of New York for misclassifying package delivery drivers as “independent contractors” rather than “employees.” The lawsuit alleges that classification as independent contractors meant that FedEx did not pay overtime and improperly withdrew certain deductions. The lawsuit will result in $2.1 million in payments by FedEx to the affected employees.
Classifying a worker as an independent contractor as opposed to an employee is a fact-intensive analysis that should be taken seriously by all employers. Important factors include, but are not limited to, whether the employer can control/direct the worker, controls their schedule, and provides them with training. Employers should make the determination of whether a worker is an independent contractor or employee as soon as they are hired so that issues do not come up (i.e.: lawsuits) that could result in back pay and other penalties. Vetting worker-status issues at an early stage with the assistance of counsel can result in less headaches in the long term.
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