Lessons on Worker Classification from FedEx Drivers Case

According to a recent Workforce Management article, a U.S. District Court recently ruled that FedEx drivers in Illinois are not Independent Contractors. The details behind the decision illustrate how client companies can use the IRS’ three criteria for determining worker classification to ensure that the workers you place on contract assignments are properly classified. The three criteria are:1. Behavioral control—If a company directs and controls (or has the right to direct and control) how the worker performs the task, including providing training and instructions about when, where, and how to provide the service, the worker is more likely to be a W-2 employee.2. Financial control—Another sign a worker may be a W-2 Employee is if the company controls or has a right to control the economic aspects of the worker’s job. A company may be shown to exercise financial control if they reimburse expenses, provide tools and facilities, pay the worker by the hour rather than by the job, and if they are the person’s only source of work.3. Type of relationship—Facts showing the tie between the parties, including (1) written contracts, (2) whether the worker receives benefits, (3) the duration of the work, and (4) extent to which the services are an aspect of the company’s regular operations.The U.S. District Court decision on the Illinois FedEx drivers highlighted two of these criteria. The court determined that FedEx exercised Behavioral Control over the drivers’ work by requiring them to wear FedEx uniforms and drive trucks with FedEx logos. The company also structured the drivers’ routes to ensure trucks were in use nine to 11 hours a day and required drivers to allow FedEx managers to ride along annually.The court also ruled that the drivers’ work was an essential part of FedEx’s business, indicating that the workers met the “Type of Relationship” criteria to be W-2 Employees.This real-life example shows how important it is for companies to be familiar with the three criteria for classifying workers. If you work with companies who use Independent Contractors, you may want to alert them to this case and suggest they look at their own workers in light of this decision. And remember, FoxHire has the ability to place technical, professional, and healthcare workers across the United States and can convert your clients’ current Independent Contractors to W-2 Employees.