Designating a worker as an independent contractor, rather than an employee, can save a company a substantial amount of money. The Department of Labor has increased efforts to punish companies who use this designation improperly. The Internal Revenue Service, too, has sought to punish employers who misclassify workers as independent contractors. The practice has continued because the financial temptation to misclassify is simply too great.
A recent decision by the Kansas Supreme Court means employment rights for hundreds of drivers doing work for FedEx. FedEx has been sued in several class action suits around the country by drivers who contend they are employees, but are classified as independent contractors by the shipping company. The lawsuits come from current and former drivers hired between 1998 and 2007.
The question of whether a worker is properly classified as an employee or an independent contractor is highly fact specific. It requires an analysis of the day-to-day working responsibilities of the worker and on the conduct of the worker and the employer. Generally speaking, the distinction may come to rest on the level of control exercised by the employer and the worker. The Kansas Supreme Court cited the high level of control exercised by FedEx in dictating the appearance and behavior of the drivers in ruling them employees.
Like many employers that misclassify workers, FedEx attempted to dictate the status of independent contractor through contract language. Signing an agreement to be an independent contractor does not make a worker an independent contractor. In fact, the language of the agreement doesn’t matter at all. If the relationship is that of employee-employer, the worker has rights that cannot be signed away.
Source: Courthouse News Service, “Big Win for Kansas FedEx Drivers on Designation” by Ted Wheeler, 7 October 2014