Kansas Court Ruling on Drivers Applies to Old Practice, FedEx Says

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FedEx Corp. said a ruling by the Kansas Supreme Court that, under state law, its drivers are employees rather than independent contractors applies to a business practice it hasn’t been using since 2011.

The company said in a statement posted on its website that it has switched to contracting with businesses that treat the drivers as their employees. The ruling by the Kansas court comes in a more than 10-year-old battle with former and current drivers who seek compensation for overtime and expenses they incurred on the job.

“We fundamentally disagree with this ruling and are committed to protecting the rights of thousands of independent business owners to continue owning and operating their own businesses,” the Memphis-based company said in the statement.

The Kansas top court issued its decision Oct. 3 in response to a request by the U.S. Court of Appeals in Chicago, which had sought clarification as it reviews a 2010 ruling by a federal judge in Indiana who had agreed with FedEx that the drivers aren’t employees. The Kansas drivers are the lead case in 21 consolidated class-action lawsuits.

The appellate court can use the decision by the Kansas Supreme Court to overturn the 2010 ruling in FedEx’s favor. The judge in Indiana, who was presiding over the class-action lawsuits by drivers from across the U.S., had applied his decision in the case of the Kansas drivers to those from other states as well.

“The company carefully structured its drivers’ operating agreements so that it could label the drivers as independent contractors in order to gain a competitive advantage, i.e., to avoid the additional costs associated with employees,” according to the ruling.

Those efforts don’t trump the substance of the drivers’ relationship with the company, which is that of employees under Kansas law, the court said.

The Kansas decision follows an August ruling by the U.S. Court of Appeals in San Francisco. That court overturned the 2010 ruling by the Indiana judge and found that FedEx’s drivers in California and Oregon are employees.

The case is Craig v. FedEx Ground Package System Corp., 108,526, Kansas Supreme Court.