In the latest decision regarding FedEx's embattled contractor business model, the plaintiffs successfully challenged FedEx's practice of classifying single route drivers as "contractors" and sought reimbursement for their work-related expenses. In Estrada v. FedEx, following several decisions related to class certification and equitable relief, a California court of appeal finally considered the ultimate question: whether the contract drivers were actually employees for purposes of expense reimbursements. The court responded with a resounding "yes," and based its decision on the fact that FedEx provided benefits; imposed work schedules and routes; dictated dress and appearance; actively supervised the drivers; and paid them on a weekly, not project basis. The court also noted that the drivers were not engaged in an independent business.

The court concluded that "FedEx's control over every exquisite detail of the driver's performance…supported the trial court's conclusion that the drivers are employees, not independent contractors." The court ignored the express "contractor" label in the parties' agreement where their actual practice established otherwise.

This case underscores the fact that independent contractor labels carry little weight, and it confirms that the risks associated with worker misclassification can be very significant.