Business law and legal environment
Paper #2 – Employment Classification
FedEx Loses Appeal in Case on Classification of Kansas Drivers
by Laura Stevens
Jul 15, 2015
FedEx Corp. said Tuesday it lost a long-running legal dispute with nearly 500 drivers in Kansas over its former practice of classifying some of its U.S. delivery drivers as independent contractors.
The Seventh Circuit Court of Appeals last week issued an order and opinion concluding that members of a Kansas class-action suit are employees, not independent contractors. The court sided with the Kansas Supreme Court, which had issued a similar opinion last year.
“The application of Kansas law to FedEx’s relationship with its drivers has been authoritatively decided by the Kansas Supreme Court,” the Seventh Circuit Court said in its opinion.
The Kansas drivers sued FedEx Ground in 2003 to recoup retroactive costs and expenses, as well as overtime wages. FedEx, which disclosed the court decision in its annual filing with securities regulators, said it had already set aside an immaterial amount in case of a loss in the Kansas case.
FedEx hasn’t used the disputed independent-contractor business model since 2011, when it switched to using only incorporated businesses that employ its ground delivery drivers.
Other companies, including Uber Technologies Inc., have recently faced legal challenges due to their use of the independent-contractor model, and the FedEx decisions could influence those cases.
The decision may have a broader impact on 19 other class-action suits against FedEx currently pending before the Seventh Circuit. FedEx has asked that the other 19 cases be decided separately, due to differences in state laws. The Seventh Circuit last week referred those cases to a court representative to set up additional briefings and arguments.
Legal experts have said that the Kansas Supreme Court decision could affect rulings in the other cases, despite differences in state laws.
The decision follows a settlement by FedEx with California drivers in June (2015). The company said it would pay $228 million to settle the case after a Ninth Circuit Court of Appeals panel ruled against the company on the issue last year.
FedEx Loses Appeal in Case on Classification of Kansas Drivers, by Laura Stevens
Jul 15, 2015, Online Exclusive
Employees vs. Independent Contractors: U.S. Weighs In on Debate Over How to Classify Workers by: Melanie Trottman, Jul 16, 2015
Previous Case Study: UBER
Uber, Lyft Cases Could Set Far-Reaching Precedent, by Jacob Gershman. Mar 16, 2015
Online Exclusive: http://blogs.wsj.com/law/2015/03/16/uber-lyft-cases-could-set-far-reaching-precedent/
Uber driver is employee, not independent contractor, California Labor Commission says, Posted Jun 17, 2015 12:40 pm CDT, By Martha Neil http://www.abajournal.com/news/article/uber_drivers_are_employees_not_independent_contractors_labor_commission_say/
Drivers Win Legal Round Against Uber in California, by Lauren Weber, Jun 11, 2015
Do Uber Drivers Really Want to Be Full-Time Employees?, by Douglas MacMillan
Jul 09, 2015, Online Exclusive: http://www.theaustralian.com.au/business/technology/do-uber-drivers-really-want-to-be-full-time-employees/story-e6frgakx-1227436423675
Bosses Reclassify Workers to Cut Costs, by Lauren Weber, Jun 30, 2015
Online Exclusive: http://finance.yahoo.com/news/bosses-reclassify-workers-cut-costs-213600206.html;_ylt=A86.JyevQMVVhiEA.qInnIlQ;_ylu=X3oDMTByYnR1Zmd1BGNvbG8DZ3ExBHBvcwMyBHZ0aWQDBHNlYwNzcg–
Administrator’s Interpretation No. 2015-1, by U.S. Department of Labor, July 15, 2015
Online Exclusive: http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm
Employees vs. Independent Contractors: The DOL Weighs in on Worker Misclassification
Publication 15-A, Cat. No. 21453T, Employer’s Supplemental Tax Guide, (Supplement to Publication 15 (Circular E), Employer’s Tax Guide) For use in 2015
Read pages 5 – 9
Please address the following questions within your paper. Please keep in mind that this is NOT a Q&A paper, so please write it in an MLA paper format!
1. Write an introduction as to what the case issues are with Fed Ex and Uber. Write a brief overview as to what happened, why it happened, and why employees are suing their employers. Be sure and be specific, giving court names, state names, etc.
2. Within your paper, list some of the key differences between an independent contractor and an employee when it comes to their affiliation with a company. State the advantages and disadvantages of being an independent contractor vs. an employee.
3. In the case of Fed Ex, the corporation “lost a long-running legal dispute with nearly 500 drivers in Kansas over its former practice of classifying some of its U.S. delivery drivers as independent contractors.” In your paper, specify to what advantage it would be for Fed Ex to have done this in the first place? To what disadvantage was it for their workers? (Please elaborate and be specific.)
4. According to the article, Employees vs. Independent Contractors: U.S. Weighs In on Debate Over How to Classify Workers, “In April, the Labor Department announced that a nearly five-year investigation of business practices by 16 defendants in Utah and Arizona resulted in $700,000 in back wages, damages, penalties and other guarantees for more than 1,000 construction industry workers misclassified in the Southwest. The defendants made the construction workers become “member/owners” of limited liability companies, which deprived them of the benefits of employee status, the Department said.” In this case, the company found other ways to classify workers, other than “employees”. Should businesses simply classify ALL workers as employees when trying to avoid being sued? Why or why not? Are there legitimate reasons for using independent contractors? What industries are more likely to use them?
5. As a business owner, or future owner, conclude your paper by stating what you will do to ensure that the people working for you continue to be classified correctly. Make a list of those things that you will take into consideration in order to keep this from happening to your company.
The papers for this course will be posted under the Paper’s Link. You are to do the assignment and then submit your completed paper under the Submissions Link. For example, Paper #1 will be the first submissions link.
• SUBMITTING YOUR PAPER: Use the ‘Submissions’ link in Blackboard. Once you have submitted your paper, you will receive a receipt via e-mail that the paper was submitted correctly.
• COVER SHEET: EVERYTHING THAT YOU SUBMIT MUST HAVE A COVER SHEET! Cover sheets must have your full name, course name, (BA 18 – ONLINE – FALL 2015), Case Name or Name of paper. Points will be taken off for papers without a cover sheet!
• MLA FORMAT ONLY, (UNLESS OTHERWISE INSTRUCTED): Your papers are research in nature and scope. You will be expected to write a paper worthy of a college level status. On Blackboard, please familiarize yourself with the format. There are also several examples of student papers done in MLA style. Please review them as well.
• SPECIFICS: 1.5 Spaced; Normal indentions as produced by Microsoft Word; Arial, Trebuchet MS or Times New Roman, 12 pt. font.
• NEATLY ORGANIZED: Papers should address all questions asked. Do not use a Q & A format, strictly a paper format.
• CONTENT: The content of the Paper must answer ALL the questions thoroughly. Every question is important and every question needs to be addressed within the paper. Single answers such as “Yes” or “No” are not considered adequate for college level material. Please note, this is not a creative writing class and you need to cite and reference all your work. Without it, your paper will receive a failing grade. Please review examples of MLA papers via the Links provided to you through Blackboard.
• SPELLING, GRAMMAR AND SENTENCE STRUCTURE: As this is a college level course, you are EXPECTED to write at that level of education. Papers that are not proofed prior to submission will suffer grade wise if this is not followed.
• WORKS CITED PAGE: In law, you cannot simply make a statement without backing it up with either a source that you’re directly stating or a statistic of fact. If you make a blanket statement without reference to either how you came to that conclusion or any evidence to support your conclusion, than you will be marked down. Because this is a law class, this is critical! Opinions are better left on the shelf without supporting evidence to back it up!
• ON-TIME: Papers will not be accepted after the submissions link has closed.
THE COMPLETE PAPER WILL BE GRADED ON THE FOLLOWING CRITERIA:
? SUBMITTED VIA BLACKBOARD – MS WORD (ONLY)
o A CHANGE IN THIS REQUIREMENT MUST BE APPROVED BY THE INSTRUCTOR
? REFERENCED-FOOT NOTED – MLA STYLE
? MLA FORMAT – I.E., REPORT FORMAT
? NEATNESS (SEE ABOVE)
? COVERSHEET (SEE ABOVE)
? CONTENT AND THOROUGHNESS (SEE ABOVE)
? GRAMMAR, SPELLING AND PUNCTUATION(SEE ABOVE)
? COMPLETE ANSWERS
? WORKS CITED PAGE
Please note: If you do not submit your Paper as instructed above, points will be deducted for every infraction. Consistent Grammar and spelling errors will cause more points to be deducted. It is possible to submit your Paper and not receive any points due to point deductions, so please, be forewarned that you must check your work and follow the above directions.