The Ninth Circuit has recently ruled against FedEx Ground in a case challenging the independent contractor status of its drivers. Tax attorney Rob Wood discusses the ruling in this report, also discussed in his Forbes article “FedEx Misclassified Drivers As Independent Contractors, Rules Ninth Circuit.”
The FedEx ruling could potentially affect many other companies who have similar arrangements with people who do work for them. As Wood notes, FedEx is a huge company with a number of subsidiary companies, and FedEx Ground is one of those companies. It has always used drivers who were treated as independent contractors, at least in the company’s point of view.
Wood points out that long haul trucking companies and transportation companies such as Uber (the ride sharing company) and many taxi companies might find themselves affected by this ruling should it stand up against possible further appellate proceedings. And it should be noted that the Ninth Circuit based its ruling on California law as to what distinguishes an independent contractor from an employee.
There are a number of factors the court considered in making the ruling. Wood believes the court decided the case correctly. Wood also says that FedEx seems to have made a real effort to work through the rules and meet the test of having independent contractors driving its trucks. The concurring opinion points out (quoting Abraham Lincoln) that “Calling a dog's tail a leg does not make it a leg." The concurrence also cites Estrada v. FedEx Ground Package System Inc., an earlier case that considered some of the same issues.
As Wood says, sometimes stepping back from the details and viewing the big picture gives an answer like the one arrived at by the Ninth Circuit.
For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.