Dive Brief:
- FedEx Ground Package Systems has agreed to pay $2.4 million to resolve a lawsuit alleging it misclassified drivers in New Jersey as independent contractors (Carrow, et al. v. FedEx Ground Package Systems, Inc.).
- The drivers argued that they were employees under New Jersey case law and that deductions FedEx made from their pay ran afoul of state law.
- The plaintiffs' attorneys estimated that the class of 192 drivers will receive about $8,400 each under the proposed settlement. FedEx denied the allegations.
Dive Insight:
Under New Jersey's "ABC test" for classification, according to the state, a worker should be considered an employee unless all following circumstances apply:
- The individual has been and will continue to be free from control or direction over the performance of work performed, both under contract of service and in fact;
- The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed;
- The individual is customarily engaged in an independently established trade, occupation, profession or business.
Other states have similar standards. California adopted the test in 2019, under AB5, codifying a state supreme court ruling. Notably, voters approved a state ballot measure in November 2020 to classify app-based drivers as independent contractors. That measure did not affect the trucking industry's injunction.
State law isn't the only factor in determining a worker's employment status for wage and hour purposes. The U.S. Department of Labor, which enforces the Fair Labor Standards Act nationwide, considers more factors and finalized a shift to an "economic reality" test Wednesday.
