Ninth Circuit Upholds 'Right To Control' As Primary Test Of Independent Contractor Or Employee Status

On August 27, 2014, the U.S. Court of Appeals for the Ninth Circuit upheld California's long-standing reliance on the "right to control" test as the primary factor determining whether workers are properly classified as independent contractors or employees and rejected the District of Columbia Circuit's "entrepreneurial opportunities" test.

The Court's Decision in Alexander v. FedEx Ground Package System, Inc.

In Alexander v. FedEx Ground Package System, Inc., full-time California delivery drivers engaged by FedEx Ground Package System, Inc. ("FedEx Ground") sued for unpaid wages and employment expenses under California law, alleging they were misclassified as independent contractors. The drivers were engaged pursuant to an Operating Agreement that they signed with FedEx Ground. Under the agreement, workers were required to purchase uniforms from FedEx and to use certain equipment typically available only through FedEx; were subject to numerous standards of conduct, appearance, and behavior; and were forced to follow a strict schedule for loading/unloading trucks and delivering packages. Although drivers purchased their own delivery vehicles, FedEx Ground specified in detail even the configuration, shelf dimensions, and materials to be used to construct the inside of the vehicles. FedEx Ground determined the service areas for each route, set the prices with customers, resolved all issues with customers, and collected all funds from the customers. While drivers could seek to expand to additional routes (using helpers), FedEx Ground retained all rights to determine whether a driver was performing sufficiently in accordance with FedEx Ground's policies and requirements before being granted an opportunity to expand. Further, FedEx Ground retained all rights to approve or reject the helpers and required that all helpers abide by the same standards to which the drivers were held under the Operating Agreement (for example, the same grooming, appearance, attire, and delivery-vehicle requirements).

The trial court entered summary judgment for FedEx Ground on the drivers' employment-related claims, finding that the workers were properly classified as independent contractors. On appeal, the Ninth Circuit overturned the grant of summary judgment to FedEx Ground and directed the trial court to enter summary judgment in favor of the drivers, finding them conclusively to be employees and not independent contractors. In rendering its decision, the Ninth...