FedEx is facing a new lawsuit alleging that the company misclassified its delivery drivers as “Independent Service Providers” (ISPs) rather than employees—denying them wages, benefits, and legal protections guaranteed under federal and state labor laws, according to Law.com.
The complaint asserts that FedEx exercises extensive control over its ISP drivers, including assigning fixed delivery routes, dictating schedules, mandating uniforms, and requiring use of company systems and branding—factors that, under the economic realities test, point to an employment relationship. Plaintiffs argue that this structure violates wage and hour laws by improperly classifying workers as contractors to avoid overtime, tax obligations, and benefits.
FedEx has long relied on its independent contractor model across its Ground and Home Delivery operations, but courts have increasingly scrutinized similar arrangements. Misclassification findings can expose employers to significant liability, including back pay, unpaid overtime, tax penalties, and employee benefit contributions. (Reuters.com)
For businesses, this case underscores the importance of regularly auditing contractor relationships to ensure legal compliance. Employers should assess whether control, integration, and economic dependence factors align more closely with an employee relationship under the Fair Labor Standards Act (FLSA) and state law equivalents.
Outside Legal Counsel LLP advises companies on independent contractor classification, employment compliance, and litigation risk management. Contact us for guidance.
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