A recent DC Appellate Circuit Court decision may create a new twist on the factors used to determine whether or not an individual is an employee or an independent contractor. The DC Circuit Court of Appeals recently focused on the degree to which FedEx delivery drivers had the “opportunity and functioned as an entrepreneur”, instead of the traditional focus on the “right to control.”
Although this decision involved classification of individuals for purposes of determining their rights to bargain as a Union with FedEx, the test and factors discussed are the common law factors used by courts to determine the employment status of an individual.
The new standard resulted in FedEx delivery drivers being classified as independent contractors. The DC court also focused on the following: 1) the drivers had their own vehicles; 2) the drivers could use the vehicles for personal or other commercial purposes; 3) the drivers were not subject to disciplinary actions; 4) the drivers signed independent contractor agreements; and 5) the drivers were responsible for the costs of operating and maintaining their vehicles.
Of course, it is not clear if IL courts will follow this line of reasoning, but it does provide another way for business owners, entrepreneurs and companies to structure relationships with individuals and justify the classification. Also, individuals need to be aware of the ruling to recognize the potential for greater enforceability of such an independent contractor agreement; otherwise, individuals may be unable to get out of such an arrangement.
See. FedEx Home Delivery v. NLRB, 07-1931 (D.C. Cir. Apr. 21, 2009).