FedEx Corporation (NYSE:FDX) might be due for some employee-associated costs for their fleet of drivers as the drivers have won a ruling in Kansas stating them as employees rather than independent contractors.
This is an important legal victory for the drivers as the consolidated lead case has over 21 different lawsuits concerning overtime and unpaid expenses. The decision came out after the U.S. Court of Appeals in Chicago asked for guidance from the top Kansas court. It all started with the 2010 ruling by an Indiana federal judge who agreed with FedEx Corporation (NYSE:FDX) that the drivers are independent contractors instead of employees.
However, the Kansas court didn’t agree with Indiana ruling stating that the company is using a strategic drivers’ agreement which tags them as independent contracts and helps the company save extra cost. The ruling said,
“The company carefully structured its drivers’ operating agreements so that it could label the drivers as independent contractors in order to gain a competitive advantage, i.e., to avoid the additional costs associated with employees.”
The court further added that the drivers’ agreement is not enough to keep the company away from paying associated costs. Earlier, the U.S. Court of Appeals in San Francisco overturned the Indiana 2012 ruling in August stating that both Oregon and California drivers are employees of the company.
Good news for the drivers is that this ruling might prompt the Chicago court to reverse the 2010 Indiana ruling and in case the court agrees to apply the same ruling to the appeals from other states, this would be a gigantic victory for FedEx drivers. There was no official statement released by the company.
The case stands between Craig vs. FedEx Group Package System Corp., 108,526 at Kansas Supreme Court.
FedEx Corporation (NYSE:FDX) earlier announced that it is likely to add up to 50,000 seasonal workers to handle extra packages during the holiday season. It is considerably higher (10,000 more) manpower than the company hired last year during the holiday season when it had to delay shipments because of manpower shortage. The company is likely to coordinate with major retailers and chalk out a plan ahead of the Thanksgiving and Cyber Monday deliveries start piling up.
Deloitte LLP has estimated an increase of 4.5% in U.S. Retail between November and January this year and the U.S. consumers are likely to spend up to $986 billion in shopping. These estimates are likely to put more pressure on major courier delivery companies including FedEx Corporation (NYSE:FDX) and United Parcel Service, Inc. (NYSE:UPS).
This article has been written by Prakash Pandey.