FedEx Corp. agreed to settle 19 outstanding multi-district class action cases where FedEx Ground drivers claimed they were misclassified as independent contractors. The cases are part of long-running series of independent contractor litigation suits that began in 2004. At one point, 28 cases were certified as class actions across multiple states.
The settlement for the 19 class actions must still receive court approval.
Matthew Houston, a lead attorney for the plaintiffs, said in an email to Staffing Industry Analysts the settlement amount for the 19 cases was 227.1 million. However, an additional case from Kansas had also been settled, bringing the total amount settled for cases on appeal to the Seventh Circuit Court of Appeals to almost $243 million.
Related cases in California, Florida and elsewhere were also settled, but the settlement amounts are in addition to 20 on appeal to the Seventh Circuit. In the California case, FedEx agreed in June to settle with drivers there for $228 million. The California settlement [1] must also still be approved by the court, and a hearing for approval of that deal is coming up next month.
Under the most recent settlement, FedEx Ground will still use independent contractors but under a different model than that which gave rise to the litigation, Houston said in the email.
The deal came to light publicly last week when FedEx recognized a liability of $204 million for the expected loss from these and other independent contractor-related cases in its fiscal third ended Feb. 29.
“These disputes involve a contractor model which FedEx Ground has not operated since 2011,” FedEx CFO Alan Graf said in a conference call with financial analysts on Wednesday. “This is good news because assuming the necessary court approvals are obtained, it resolves all of the remaining multi-district litigation cases.”
FedEx continues to litigate other contractor models that are not part of the multi-district litigation, but the company does not expect a material loss in the other cases.
DCVelocity reports [2] the settlements in the 19-district cases were mediated in January and February.