FedEx has settled a series of lawsuits brought against it by disgruntled drivers to the tune of $224 million.
The litigation, initiated by FedEx drivers from 19 states, claims the company had under-compensated its over-the-road employees by misclassifying them as independent contractors rather than full-time workers.
According to the Indianapolis Business Journal, the payments made to individual plaintiffs will range from $250 to upward of $116,000. FedEx’s settlements “reflect rates of payment each week a driver worked in excess of 35 hours, plus a separate, lower payment for each week a driver worked fewer hours.”
The litigation had been ongoing for over a decade, with fairness hearings held in March. FedEx had previously announced settlement amount proposals in June.
Judge Robert L. Miller, Jr., of the Northern District of Indiana, also awarded the plaintiffs money for legal fees and costs. The IBJ notes not every driver had their legal fees fully covered, but that fees accounted for up to 30% of the total award in some settlements.
The $240 million, while not split equally, is to be distributed among 12,000 drivers who had participated in the litigation.
Up until 2011, Reuters reports FedEx had “contracted directly with independent contractors, allowing the Memphis, Tennessee-based company to save on taxes, fringe benefits, health care costs, pensions and other workers’ costs.”
Similar to other disputes involving the misclassification of workers as independent contractors, the drivers and their attorneys argued that over-the-road FedEx haulers were full-time workers given the restrictions enacted by the company. The litigation claimed FedEx’s drivers were technically full-time employees under federal law because they were “made to use company-branded trucks, uniforms, and scanners, and because FedEx was their employer under state and federal laws.”
Reuters notes Uber and Lyft were both forced to settle for $100 million and $27m, respectively, following separate lawsuits stemming from employees being misclassified as independent contractors.
In June, FedEx issued a statement saying, “We are pleased to put this matter behind us as it relates to a contract that has not been in use for a number of years.”
It continued to say, “FedEx Ground has made enhancements to its business in anticipation of rapidly changing competitive, legal, and regulatory conditions. We continue to strength our contractual relationships with service providers to delivery industry-leading service to our customers.”
FedEx also settled with 2,300 California workers in July 2015, which resulted in the creation of a $228m fund. The company had also been penalized by the Attorney General of Massachusetts for misclassifying drivers.
The May announcement signified the approval of the settlement proposed in June 2016.