CHICAGO (CN) – The 7th Circuit has asked the Kansas Supreme Court to determine whether FedEx drivers are employees or independent contractors in a case that will likely have far-reaching implications for shipping carriers nationwide.
In 2005, the Judicial Panel on Multidistrict Litigation consolidated more than 70 class actions brought by FedEx drivers before U.S. District Judge Robert Miller in Indiana.
The plaintiffs, current and former drivers, claimed that they were employees rather than independent contractors under the laws of the states in which they worked and under federal law.
Craig v. Fedex, a 479-member class seeking relief under ERISA and the Kansas Wage Payment Act, became the “lead” case. Drivers sought repayment of all costs and expenses they paid during their FedEx employment, as well as overtime wages.
Though Miller sided with FedEx in finding that the drivers were independent contractors, the judge remanded the remaining cases for further proceedings.
FedEx fought to have Miller conclude the remaining claims himself, but the 7th Circuit affirmed.
Meanwhile the drivers appealed Miller’s ruling on the merits, arguing that he misapplied Kansas and federal law.
Here, the 7th Circuit declined to intervene and said that the ruling turns on application of Kansas law.
“Perhaps the Kansas public policy tips the scales in favor of finding employee status for purposes of the KWPA in close cases such as this,” the unsigned opinion states. “We cannot be sure, and the Kansas Supreme Court is in a far better position to provide a definitive answer on this controlling question of state law than are we.”
The court noted that there are an increasing number of independent contractors in the United States.
“This case will have far-reaching effects on how FedEx runs its business, not only in Kansas but also throughout the United States,” the decision states. “And it seems likely that employers in other industries may have similar arrangements with workers, whether delivery drivers or other types of workers.”
“There are several economic incentives for employers to use independent contractors and there is a potential for abuse in misclassifying employees as independent contractors.”
The 7th Circuit certified several questions to the state high court on Thursday.
“Given the undisputed facts presented to the district court in this case, are the plaintiff drivers employees of FedEx as a matter of law under the KWPA,” the court asked.
Noting precedent from the Northern District of Indiana that said drivers can acquire more than one service area, the court also asked “is the answer to the preceding question different for plaintiff drivers who have more than one service area?”
The 7th Circuit has asked state supreme courts to weigh in on cases with some frequency in the past two years.
In American Federation of Teachers v. Board of Education of the City of Chicago, the Illinois Supreme Court weighed in on whether tenured teachers laid off for economic reasons had the right to be rehired when openings arose.
And in George v. National Collegiate Athletic Association, the Indiana Supreme Court found that the ticket-distribution plan for the Men’s Final Four did not constitute a “lottery” under state law.
The 7th Circuit subsequently adopted both courts’ opinions.