Craig v. FedEx Ground Package System, Inc.

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IN THE SUPREME COURT OF THE STATE OF KANSAS

No. 108,526

CARLENE M. CRAIG, LEO RITTENHOUSE,
JEFF BRAMLAGE, LAWRENCE LIABLE, and KENT WHISTLER,
Appellants,

v.

FEDEX GROUND PACKAGE SYSTEM, INCORPORATED,
Appellee.


SYLLABUS BY THE COURT

On certified question from the United States Court of Appeals for the Seventh
Circuit, this court answers: Given the undisputed facts presented to the district court in
this case, the plaintiff drivers are employees of FedEx Ground Package System, Inc. as a
matter of law under the Kansas Wage Payment Act, K.S.A. 44-313 et seq., and a plaintiff
driver does not lose his or her employee status by acquiring another route for which that
plaintiff is not the driver.

On certification of two questions of law from the United States Court of Appeals for the Seventh
Circuit, FRANK H. EASTERBROOK, certifying judge. Opinion filed October 3, 2014. The questions
certified are determined.

Steve Six, of Stueve Siegel Hanson LLP, of Kansas City, Missouri, argued the cause, and Beth A.
Ross and Sandy N. Nathan, of Leonard Carder, LLP, of Oakland, California, Robert I. Harwood and
Matthew M. Houston, of Harwood Feffer, LLP, of New York, New York, Susan E. Ellingstad, of
Lockridge Grindal Nauen P.L.L.P., of Minneapolis, Minnesota, and George A. Barton and Stacy A.
Burrows, of The Law Offices of George A. Barton, P.C., of Kansas City, Missouri, were with him on the
briefs for appellants.

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James D. Oliver, of Foulston Siefkin LLP, of Overland Park, argued the cause, and Jonathan D.
Hacker, of O'Melveny & Myers LLP, of Washington, D.C., Robert M. Schwartz, of O'Melveny & Myers
LLP, of Los Angeles, California, and J. Timothy Eaton, of Shefsky & Froelich Ltd., of Chicago, Illinois,
were with him on the brief for appellee.

Greg L. Musil and Amy E. Morgan, of Polsinelli PC, of Overland Park, James C. Sullivan, of
Kansas City, Missouri, and Richard Pianka, of ATA Litigation Center, of Arlington, Virginia, were on
the brief for amici curiae American Trucking Associations, Inc. and Kansas Motor Carrier Association.

Justin McFarland, deputy general counsel, of Kansas Department of Labor, was on the brief for
amicus curiae Lana Gordon, State of Kansas Secretary of Labor.

The opinion of the court was delivered by

Per Curiam: The United States Court of Appeals for the Seventh Circuit requests
our answers to two certified questions regarding the proper classification of FedEx
Ground Package System, Inc. (FedEx) delivery drivers under the provisions of the
Kansas Wage Payment Act (KWPA), K.S.A. 44-313 et seq. Specifically, the Seventh
Circuit inquires:

"1. Given the undisputed facts presented to the district court in this case, are the
plaintiff drivers employees of FedEx as a matter of law under the KWPA?
"2. Drivers can acquire more than one service area from FedEx. . . . Is the answer
to the preceding question different for plaintiff drivers who have more than one service
area?" Craig v. FedEx Ground Package System, Inc., 686 F.3d 423, 431 (7th Cir. 2012).

We answer yes to the first certified question. As applied to those drivers who are
members of the certified class, i.e., those drivers who "'drive a vehicle on a full-time
basis,'" we answer no to the second question, i.e., the answer to the first question remains
the same. See 686 F.3d at 425, n.1.
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FACTS AND PROCEDURAL OVERVIEW

This case began as numerous class actions filed throughout the country against
FedEx by current and former drivers for the company. The plaintiff drivers allege they
are employees, rather than independent contractors, under both state and federal law. The
Judicial Panel on Multidistrict Litigation consolidated the class actions, transferred the
consolidated action to the United States District Court for the Northern District of Indiana
(District Court), and designated the Kansas class action as the lead case.

The District Court certified a nationwide class seeking relief under the Employee
Retirement Income Security Act (ERISA) and certified statewide classes under Federal
Rule of Civil Procedure 23(b)(3). Craig, 686 F.3d at 425. There are 479 Kansas class
plaintiffs who allege that they were improperly classified as independent contractors
under the KWPA. They seek repayment of all costs and expenses that they expended on
behalf of FedEx during their time as FedEx drivers, and they claim entitlement to unpaid
overtime wages. The Kansas class is defined as follows:

"'All persons who: 1) entered or will enter into a FXG Ground or FXG Home Delivery
form Operating Agreement . . . ; 2) drove or will drive a vehicle on a full-time basis
(meaning exclusive of time off for commonly excused employment absences) from
February 11, 1998, through October 15, 2007, to provide package pick-up and delivery
services pursuant to the Operating Agreement; and 3) were dispatched out of a terminal
in the state of Kansas.' [Citation omitted.]" Craig, 686 F.3d at 425, n.1.

Pursuant to this class definition, plaintiffs must be full-time drivers. Accordingly, we will
also refer to plaintiffs as "drivers."

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All parties filed cross-motions for summary judgment on a stipulated record that
included a form Operating Agreement (OA) entered into between FedEx and the drivers,
as well as evidence relating to certain FedEx work practices. The District Court
determined that the Kansas class plaintiffs were independent contractors under the
KWPA. Consequently, the court granted summary judgment to FedEx and denied the
Kansas class plaintiffs' summary judgment motion. 686 F.3d at 425. Subsequently, the
District Court relied on its decision in the Kansas Craig case to enter summary judgment
in favor of FedEx on the respective plaintiffs' employment status challenges in all the
other statewide class actions. See In re FedEx Ground Package System, Inc., 758 F.
Supp. 2d 638 (N.D. Ind. 2010).

All state class plaintiffs appealed, presenting substantially the same issue:
Whether the district court erred by deciding, as a matter of law, that plaintiffs were
independent contractors, rather than employees, under each respective state's substantive
law. The Seventh Circuit chose to proceed with review of the Craig appeal while
suspending briefing in the remaining appeals.

The Seventh Circuit began its analysis by noting that under Kansas law the "'right
of control' test is the most important consideration in determining whether an
employment relationship exists, but it is not the only one." Craig, 686 F.3d at 427.
Ultimately, the Seventh Circuit opined that our Kansas cases addressing the right to
control test did not clearly indicate to the Seventh Circuit how it should decide a close
case, such as the one presented by the facts of this case. The Seventh Circuit explained its
need to propound certified questions to this court as follows:

"Where some of the factors weigh in favor of finding employee status, some weigh in
favor of independent contractor status, and some 'cut both ways,' a court must weigh the
factors according to some legal principle or principles. But other than the point that the
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right of control is the primary factor, what is the underlying principle (or principles) that
guides that weighing process in close cases such as this seeking to establish an
employment relationship under the KWPA? We are unsure." 686 F.3d at 428.

A lengthy recitation of the uncontroverted facts relied upon by the federal courts is
set forth in the District Court's opinion. In re FedEx Ground Package System, Inc., 734 F.
Supp. 2d 557, 560-75 (N.D. 2010). Although we have carefully reviewed all of the
recited facts, we will not repeat the entire recitation here but rather we will refer to the
relevant facts as they become germane to our discussion.

FEDEX DELIVERY DRIVERS' STATUS UNDER THE KWPA

The simple question is whether FedEx's delivery drivers are employees for
purposes of the KWPA. The answer defies such simplicity. As FedEx's counsel
acknowledged at oral argument, the company carefully structured its drivers' operating
agreements so that it could label the drivers as independent contractors in order to gain a
competitive advantage, i.e., to avoid the additional costs associated with employees. In
other words, this is a close case by design, not happenstance. Notwithstanding the form
or labels utilized, we must determine whether the substance of the relationship between
FedEx and its delivery drivers renders the drivers employees within the meaning of the
KWPA. Ultimately, we determine that form does not trump the substantive indicia of an
employer/employee relationship.

Authority/Standard of Review

K.S.A. 60-3201, entitled "Power to answer," provides us with the authority to
respond to the Seventh Circuit's request. That statute provides, in relevant part:

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"The Kansas supreme court may answer questions of law certified to it by . . . a
court of appeals of the United States, . . . when requested by the certifying court if there
are involved in any proceeding before it questions of law of this state which may be
determinative of the cause then pending in the certifying court and as to which it appears
to the certifying court there is no controlling precedent in the decisions of the supreme
court and the court of appeals of this state." K.S.A. 60-3201.

By statutory definition, certified questions present questions of law, and we
exercise unlimited review over such questions. See Nationwide Mutual Ins. Co. v. Briggs,
298 Kan. 873, 875, 317 P.3d 770 (2014); Eastman v. Coffeyville Resources Refining &
Marketing, 295 Kan. 470, 473, 284 P.3d 1049 (2012).

Moreover, with these particular certified questions, we must interpret and apply
the KWPA, which is also a question of law subject to de novo review. See Salon
Enterprises, Inc. v. Langford, 29 Kan. App. 2d 268, 270-71, 31 P.3d 290 (2000).

Overview of the KWPA

We begin by reviewing the applicable statutory provisions. The KWPA is an
"expansive and comprehensive legislative scheme that is broad in its scope and the rights
created for Kansas workers to secure unpaid wages earned from their labors." Campbell
v. Husky Hogs, 292 Kan. 225, 233, 255 P.3d 1 (2011). It was enacted in 1973 and
primarily sought to address problems being encountered by employees of small
businesses. See An Act Providing for Wage Payment and Collection: Hearing on H.B.
1429 Before the Senate Comm. on Public Health and Welfare, 1973 Leg., 68th Sess.
(Kan. 1973) (statement of Rep. Jim Parrish, Member, House of Representatives). The
KWPA's primary concern was to protect low income workers who were shorted, docked,
or cheated out of pay for services performed. See An Act Providing for Wage Payment
and Collection: Hearing on H.B. 1429 Before the House Comm. on Labor and Industry,
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1973 Leg., 68th Sess. (Kan. 1973) (statement of T. McCune, Kansas Department of
Labor). A goal of the legislation was to protect Kansas employees who were not then
covered by the Fair Labor Standards Act (FLSA), minimum wage requirements, or the
National Labor Relations Board. (McCune Statement, p. 1).

The KWPA controls several aspects of wages and benefits for the Kansas worker
that are not covered by the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 (2012) et
seq. The KWPA governs when wages must be paid, the manner in which they must be
paid, and the circumstances in which wages can be withheld. See K.S.A. 2007 Supp. 44-
314; K.S.A. 2007 Supp. 44-319. The KWPA also requires employers to provide certain
notice requirements with respect to the payment of wages and the provision of benefits.
See K.S.A. 2007 Supp. 44-319a; K.S.A. 44-320. It provides for remedies and penalties
for violation of its requirements. K.S.A. 44-322; K.S.A. 2007 Supp. 44-322a. Notably,
the KWPA does not contain any express provision relating to the payment of overtime,
which is typically pursued under a FLSA claim.

Getting to the crux of the presented questions, the KWPA applies to "employees,"
defined as "any person allowed or permitted to work by an employer." K.S.A. 2007 Supp.
44-313(b). Independent contractors are specifically excluded from the definition of
employee under the KWPA: "'Allowed or permitted to work,' within the meaning of
K.S.A. 44-313(b), shall not include an independent contractor, as defined by rules,
regulations, and interpretations of the United States secretary of labor for the purposes of
the fair labor standards act." K.A.R. 49-20-1(e) (Kansas regulation promulgated for the
purpose of administering and enforcing provisions of the KWPA.).

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Test for Determining Employment Status under the KWPA

As the Seventh Circuit discovered, this court has not specifically identified a test
that will definitively determine employment status under the KWPA. In Herr v. Heiman,
75 F.3d 1509, 1512 (10th Cir. 1996), the Tenth Circuit cited to a Kansas employment
security law case—Crawford v. Kansas Dept. of Human Resources, 17 Kan. App. 2d
707, 845 P.2d 703 (1989), rev. denied 246 Kan. 766 (1990)—to discern the proper test
for determining employment status under the KWPA. The Herr panel identified 20
factors that had been used in Crawford to consider when determining whether an
employer/employee relationship exists. The panel noted that these factors were to be
considered as a whole, with "particular emphasis placed on the employer's right to control
the worker." Herr, 75 F.3d at 1512. These 20 factors were also considered in Hartford
Underwriters Ins. Co. v. Kansas Dept. of Human Resources, 272 Kan. 265, 271, 32 P.3d
1146 (2001), a workers compensation case wherein we found an employer/employee
relationship existed under the right to control test.

Neither Crawford nor Hartford identified the genesis of the 20-factor test, and
neither opinion engaged in an individual discussion of each factor, which might explain
why some of the factor descriptions appear to be inscrutably duplicative, e.g., "19)
whether the employer has the right to discharge the worker; and 20) whether the
employer has the right to terminate the worker." Hartford, 272 Kan. at 271. An earlier
source for a nearly identical 20-factor test is a 1987 Internal Revenue Service (IRS)
revenue ruling, Rev. Rul. 87-41, 1987-1 C.B. 296, which discussed how to determine
employment status under Section 530(d) of the Revenue Act of 1978. The description of
each factor set forth in that revenue ruling eliminates any suggestion of duplication and
provides clarification as to how to apply each factor. Accordingly, we will amend the
Crawford factors to eliminate the ambiguous or duplicative descriptions and will
hereafter refer to them as the 20-factor test.
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But Kansas courts have long emphasized the right to control test when
determining a worker's status.

"The primary test used by the courts in determining whether an employer-
employee relationship exists is whether the employer has the right of control and
supervision over the work of the alleged employee, and the right to direct the manner in
which the work is to be performed, as well as the result which is to be accomplished."
Jones v. City of Dodge City, 194 Kan. 777, 780, 402 P.2d 108 (1965).

We have utilized this test in cases involving the Kansas Employment Security Act,
Workers Compensation Act, and negligence based on respondeat superior. See Wallis v.
Secretary of Kans. Dept. of Human Resources, 236 Kan. 97, 102-03, 689 P.2d 787 (1984)
(unemployment taxes); Knoble v. National Carriers, Inc., 212 Kan. 331, 332-33, 510
P.2d 1274 (1973) (workers compensation); Aspelin v. Mounkes, 206 Kan. 132, 135-37,
476 P.2d 620 (1970) (respondeat superior).

In Coma Corporation v. Kansas Dept. of Labor, 283 Kan. 625, 644, 154 P.3d
1080 (2007), while determining that the KWPA applied to an undocumented worker, this
court observed that the "definition of employee in the workers compensation statute is
virtually identical to the definition of employee in the wage payment statutes." That
definitional identity would seem to counsel in favor of simply utilizing our workers
compensation cases to inform our determination of "employees" under the KWPA. But a
potential impediment to a direct correlation is found in our administrative regulations,
specifically, K.A.R. 49-20-1(e). Granted, that regulation is not binding on this court. See
In re Tax Appeal of Chief Industries, Inc., 255 Kan. 640, 650, 875 P.2d 278 (1994)
("Administrative regulations do not supplant statutory law[,] nor do they preempt judicial
statutory construction."). Nevertheless, the absence of binding effect does not entirely
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remove an administrative regulation from the de novo interpretation of a statute,
especially given that the authority to promulgate regulations emanates from a statute.

K.S.A. 44-325 authorizes the Kansas Secretary of Labor to adopt rules and
regulations necessary to administer and enforce the provisions of the KWPA. In response
to that authority, the Kansas Secretary of Labor promulgated K.A.R. 49-20-1, which
defines specific terms utilized in the KWPA. K.A.R. 49-20-1(e) pertains to the term
"'[a]llowed or permitted to work'" and, as noted above, the regulation specifies that the
term "shall not include an independent contractor, as defined by rules, regulations, and
interpretations of the United States secretary of labor for the purposes of the fair labor
standards act." (Emphasis added.) In other words, our department of labor has deferred
to the United States Department of Labor's definition of an independent contractor.

The FLSA defines an employee as "any individual employed by an employer" and
"employ" is defined as "to suffer or permit to work." 29 U.S.C. § 203(e)(1) and (g)
(2012). The principal congressional purpose in enacting the FLSA was to protect all
covered workers from substandard wages and oppressive working hours. Barrentine v.
Arkansas-Best Freight System, 450 U.S. 728, 739, 101 S. Ct. 1437, 67 L. Ed. 2d 641
(1981). The definition of employee under the FLSA was intended to make the scope of
employee coverage under the FLSA very broad. Johns v. Stewart, 57 F.3d 1544, 1557
(10th Cir. 1995). However, similar to the KWPA, independent contractors cannot
maintain a claim under the FLSA. Johnson v. Unified Government of Wyandotte, 371
F.3d 723, 727-28 (10th Cir. 2004).

Although there are no relevant federal regulations defining "independent
contractor" for purposes of the FLSA, courts have considered the economic realities of
the employment relationship when determining whether the individual is an employee or
independent contractor under the FLSA. Johnson, 371 F.3d at 729; see Lumry v. State, 49
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Kan. App. 2d 276, 286, 307 P.3d 232 (2013). "The 'economic realties' test seeks to look
past technical, common-law concepts of the master and servant relationship to determine
whether, as a matter of economic reality, a worker is dependent on a given employer."
Barlow v. C.R. England, Inc., 703 F.3d 497, 506 (10th Cir. 2012). The economic reality
test focuses on whether the worker is economically dependent on the business to which
he or she renders service or whether the worker, as a matter of economic fact, is in
business for himself or herself. Baker v. Flint Engineering & Const. Co., 137 F.3d 1436,
1440 (10th Cir. 1998); Doty v. Elias, 733 F.2d 720, 722-23 (10th Cir. 1984).

In applying the economic reality test, courts generally look at the following
factors:

"(1) the degree of control exerted by the alleged employer over the worker; (2) the
worker's opportunity for profit or loss; (3) the worker's investment in the business; (4) the
permanence of the working relationship; (5) the degree of skill required to perform the
work; and (6) the extent to which the work is an integral part of the alleged employer's
business." Barlow, 703 F.3d at 506.

The test also considers "whether the alleged employer has the power to hire and fire
employees, supervises and controls employee work schedules or conditions of
employment, determines the rate and method of payment, and maintains employment
records." Baker, 137 F.3d at 1440. None of the individual factors are dispositive; instead,
the court must employ a totality of the circumstances approach. Barlow, 703 F.3d at 506
(citing Baker, 137 F.3d at 1440).

Several of these economic reality factors are considered under the Kansas
common-law right to control test for determining a worker's status. See, e.g., McCubbin
v. Walker, 256 Kan. 276, 281, 886 P.2d 790 (1994) (length of contract, independent
nature of business, and method of payment); Wallis, 236 Kan. at 106 (right to discharge,
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furnishing equipment, and method of payment). In addition, all but one component of the
economic reality test—the degree of skill— are included within the 20-factor test, which
we restate here as follows:

(1) the employer's right to require compliance with instructions (economic reality
test's degree of control factor);
(2) the extent of any training provided by the employer;
(3) the degree of integration of the worker's services into the business of the
employer (economic reality test's integral part of employer's business factor);
(4) the requirement that the services be provided personally by the worker;
(5) the extent to which the worker hires, supervises, and pays assistants;
(6) the existence of a continuing relationship between the worker and the
employer (economic reality test's permanence of the working relationship factor);
(7) the employer's establishment of set work hours;
(8) the requirement that the worker devote full-time to the employer's business;
(9) the degree to which the work is performed on the employer's premises;
(10) the degree to which the employer sets the order and sequence of work;
(11) the requirement that the worker submit regular or written reports to the
employer;
(12) the manner of payment to the worker, e.g., by the hour, day, or job;
(13) the extent to which the employer pays the worker's business or travel
expenses;
(14) the degree to which the employer furnishes tools, equipment, and material
(economic reality test's investment in business factor);
(15) the incurrence of significant investment by the worker (economic reality
test's investment in business factor);
(16) the ability of the worker to make a profit or suffer a loss (economic reality
test's opportunity for profit or loss factor);
(17) whether the worker can work for more than one firm at a time;
(18) whether the worker makes his or her services available to the general public
on a regular and consistent basis;
(19) whether the employer has the right to discharge the worker; and
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(20) whether the worker has the right to terminate the relationship at any time
without incurring liability.

The primary distinction between the right to control test and the economic reality
test is that under the latter, the right to control is not considered the single most important
factor in determining the worker's status. Slayman v. FedEx Ground Package System,
Inc., No. 12-35525, 2014 WL 421422, at *11 (9th Cir. 2014); Herr, 75 F.3d at 1512.
Given the KWPA's purpose and plain language, the regulations promulgated to govern
the administration of the KWPA, and our long-standing adherence to the right to control
test in determining employer/employee relationships, we discern that the 20-factor test as
restated above is the tool to be used in Kansas to determine whether an
employer/employee relationship exists under the KWPA. This test includes economic
reality considerations, while maintaining the primary focus on an employer's right to
control.

The District Court in this case primarily focused on the OA's statements of
FedEx's right to control the drivers, opining that the actual control that FedEx exercised
over the drivers was not the question. In re FedEx, 734 F. Supp. 2d at 560. But we
consider the manner in which FedEx implemented the OA to be a compelling factor in
determining the substantive question of the company's right to control its drivers.

Are Plaintiff Drivers Employees Under the KWPA?

Although the Seventh Circuit expressed some uncertainty as to the underlying
principle(s) that should guide the decision in a close case regarding the applicability of
the KWPA, it actually asks this court to make that close-call decision based upon the
undisputed facts presented to the district court. Before embarking upon an analysis of the
20 factors, we pause to take a historical look at how we have previously characterized the
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employment status of truck drivers under other circumstances and to take a look at how
other jurisdictions have decided the status of FedEx drivers.

Kansas Precedent Classifying Truck Drivers

In most of the Kansas cases involving a worker who owned and operated a truck
that was used extensively in a company's business, especially in workers compensation
cases, the courts have classified the owner/operator truck driver as an employee rather
than an independent contractor. See Anderson v. Kinsley Sand & Gravel, Inc., 221 Kan.
191, 198-99, 558 P.2d 146 (1976) (workers compensation case finding
employer/employee relationship based on fact that driver's work was inherent part of
employer's business, employer often selected route for driver to take, employer
determined kind and quantity of material to be delivered as well as delivery destination);
Knoble, 212 Kan. at 334-37 (workers compensation case finding existence of
employer/employee relationship because employer told driver what materials to deliver,
employer told driver where and when to deliver materials, employer required driver to
call in two times a day, employer placed restrictions on driver's use of truck, and
employer furnished driver with company identification card); Watson v. Dickey Clay
Mfg. Co., 202 Kan. 366, 377, 450 P.2d 10 (1969) (workers compensation case finding
employer/employee relationship because employer provided materials to be delivered,
employer told driver when and where truck was to be loaded, employer required truck to
be clean, employer instructed on where materials were to be delivered, employer
instructed driver on time of destination, and employer required driver to unload materials
in accordance with client's demands); Wilbeck v. Grain Belt Transportation Co., 181
Kan. 512, 513, 313 P.2d 725 (1957) (workers compensation case finding
employer/employee relationship where driver could refuse to take a load but could not
pick or choose what loads to take, and where employer used check-out procedure before
driver could leave); Dobson v. Baxter Chat Co., 148 Kan. 750, 85 P.2d 1 (1938)
15



(respondeat superior case finding employer/employee relationship where company had
right to control manner in which work was done); Shay v. Hill, 133 Kan. 157, 160-64,
299 P. 263 (1931) (workers compensation case holding that delivery driver was employee
where driver worked full time performing integral part of company's business, driver had
no say over what hauls he picked up, and employer instructed driver on how to pick up
haul); Baker v. Petroleum Co., 111 Kan. 555, 560, 207 P. 789 (1922) (respondeat
superior case holding that driver was employee where company had "general charge of
the truck and driver, was authorized to direct generally the character and kind of work to
be done, and had full and complete control of the operations of the work it might direct to
be done by the truck and driver").

Nevertheless, we have precedent in respondeat superior cases holding that a
delivery driver was an independent contractor, rather than an employee, based on the
company's lack of control over the driver's performance. See Christensen v. Builders
Sand Co., 180 Kan. 761, 763-65, 308 P.2d 69 (1957) (drivers chose their own jobs and
routes, drivers kept no regular hours, company exercised no control over how deliveries
were to be conducted, and company and had no expectations of how many deliveries any
particular driver would make); Sims v. Dietrich, 155 Kan. 310, 313, 124 P.2d 507 (1942)
(driver performed work that was not an integral part of company's business, company
only told driver where to deliver posts, and company provided no instruction on route to
take or time of delivery); Brownrigg v. Allvine Dairy Co., 137 Kan. 209, 210-12, 19 P.2d
474 (1933) (contracting dairy company sold milk to distributor for cash on daily basis
and had no further say or control over what distributor did with milk). But it does not
appear that applying the 20-factor test will create any inconsistencies with the manner in
which this court has decided these cases in the past.

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Other Jurisdictions' Analyses of FedEx Drivers

Other jurisdictions considering the status of FedEx drivers have reached different
results. Two jurisdictions—the United States District Court for the Eastern District of
Missouri and the California State Court of Appeals—determined that the FedEx drivers
are employees. Wells v. FedEx Ground Package System, Inc., 979 F. Supp. 2d 1006, 1024
(E.D. Mo. 2013); Estrada v. FedEx Ground Package System, Inc., 154 Cal. App. 4th 1, 9,
64 Cal. Rptr. 3d 327 (2007). In both Wells and Estrada, FedEx drivers brought suit
against FedEx claiming they were misclassified as independent contractors and seeking
reimbursement for business expenses and back pay for overtime.

Both Wells and Estrada applied common-law right to control tests. Wells declared
Missouri's concept of the right to control to be "'more intricate . . . than most other states,'
[citation omitted]," and listed the factors as:

"(1) the extent of control, (2) the actual exercise of control, (3) the duration of the
employment, (4) the right to discharge, (5) the method of payment, (6) the degree to
which the alleged employer furnished equipment, (7) the extent to which the work is the
regular business of the employer, and (8) the employment contract." 979 F. Supp. 2d at
1014.

Estrada noted that because the California Labor Code does not expressly define
"employee," the common-law test of employment applies, the essence of which is the
"'control of details'—that is, whether the principal has the right to control the manner and
means by which the worker accomplishes the work." 154 Cal. App. 4th at 10. But the
court noted that there were

"a number of additional factors in the modern equation, including (1) whether the worker
is engaged in a distinct occupation or business, (2) whether, considering the kind of
17



occupation and locality, the work is usually done under the principal's direction or by a
specialist without supervision, (3) the skill required, (4) whether the principal or worker
supplies the instrumentalities, tools, and place of work, (5) the length of time for which
the services are to be performed, (6) the method of payment, whether by time or by job,
(7) whether the work is part of the principal's regular business, and (8) whether the
parties believe they are creating an employer-employee relationship." 154 Cal. App. 4th
at 10.

In Wells, the court found that FedEx had the right to control and did control the
means and manner of the drivers' work to such an extent that the drivers were employees
and not independent contractors. 979 F. Supp. 2d at 1024. The court found the following
facts supported a finding of right to control: FedEx's requirements with regard to
vehicles, uniforms, and personal appearance; FedEx's right to determine the drivers'
"Primary Service Areas"; FedEx's right to determine the services drivers must provide to
FedEx customers; FedEx's right to determine the prices charged for the services; FedEx's
right to determine the customer service standards that drivers must meet; FedEx's right to
determine some time parameters for providing services to customers; FedEx's right to
determine the days drivers must deliver packages; FedEx's right to require drivers to
deliver all packages assigned to them that day on a 9- to 11-hour work day; and FedEx's
right to conduct customer service rides to verify that the drivers were meeting standards
of customer service required in the OA. 979 F. Supp. 2d at 1024-25.

In addition to the right to control and actual control factors, the Wells court also
found the remaining six factors weighed in favor of employee status. With regard to
"duration of employment," the court found that drivers had long-term relationships with
FedEx, indicating that drivers were not hired by the job. 979 F. Supp. 2d at 1025. Next,
the court determined that the drivers could "effectively be terminated at will given that
the OA provides for nonrenewal without cause." 979 F. Supp. 2d at 1025. The court
determined the method of payment favored employee status because drivers were paid
18



weekly, based on nonnegotiable factors. 979 F. Supp. 2d at 1025. The court
acknowledged that drivers had to pay for their own equipment but found this factor still
weighed in favor of employee status because FedEx "was intricately involved in the
purchasing process, providing options for leasing and/or financing." 979 F. Supp. 2d at
1025. The court found that the drivers' work was the essence of FedEx's business and that
even though the OA evidenced an intent for drivers to be considered independent
contractors, the contractual designation was not conclusive where the evidence overcame
such a designation. 979 F. Supp. 2d at 1021-22, 1025. Lastly, the court acknowledged
that while drivers could "sell" their routes to approved drivers, they did not "own" the
routes because customer accounts were based on contracts between FedEx and its
customers. FedEx exercised complete control over any ability to solicit additional
customers, and FedEx had control to unilaterally change the size and configuration of a
driver's route at any time without the driver's approval. 979 F. Supp. 2d at 1025.

In Estrada, the court rejected FedEx's argument that the OA language giving
drivers the sole authority to determine the "manner and means" of performing their job
indicated that FedEx did not have the right to control, finding that "the evidence shows
unequivocally that FedEx's conduct spoke louder than its words." 154 Cal. App. 4th at
11. Similarly, the court rejected FedEx's argument that it could not terminate drivers at
will. "Although the Operating Agreement provides for termination with cause, it also
provides for nonrenewal without any cause at all—and substantial evidence established
that FedEx discharges drivers at will." 154 Cal. App. 4th at 11. Lastly, the court found
that substantial competent evidence supported the trial court's findings with regard to
FedEx's right to control the drivers. Specifically, the court determined the following facts
established that drivers were employees based on FedEx's right to control:

"The drivers must wear uniforms and use specific scanners and forms, all obtained from
FedEx and marked with FedEx's logo. The larger items—trucks and scanners—are
19



obtained from FedEx-approved providers, usually financed through FedEx, and repaid
through deductions from the drivers' weekly checks. Many standard employee benefits
are provided, and the drivers work full time, with regular schedules and regular routes.
The terminal managers are the drivers' immediate supervisors and can unilaterally
reconfigure the drivers' routes without regard to the drivers' resulting loss of income. The
customers are FedEx's customers, not the drivers' customers. FedEx has discretion to
reject a driver's helper, temporary replacement, or proposed assignee." 154 Cal. App. 4th
at 12.

The court also determined the following driver characteristics indicated an
employer/employee relationship: drivers were not required to possess any special skills,
they were required to report to FedEx terminals at certain times for sorting and packing
and could not leave the terminal until the process was complete, they did not engage in a
separate profession, they had to work exclusively for FedEx, they had limited opportunity
for profit that could be lost at the discretion of FedEx managers through "flexing" and
withholding approval for additional drivers, and most drivers had worked for FedEx for a
long time. 154 Cal. App. 4th at 12. In sum, the court found the drivers "look like FedEx
employees, act like FedEx employees, are paid like FedEx employees, and receive many
employee benefits. . . . [I]f it looks like a duck, walks like a duck, swims like a duck, and
quacks like a duck, it is a duck." 154 Cal. App. 4th at 9.

On the flip side of the coin, two jurisdictions have determined that FedEx drivers
are independent contractors, albeit one of those determinations was reversed on appeal. In
FedEx Home Delivery v. N.L.R.B., 563 F.3d 492 (D.C. Cir. 2009), FedEx appealed the
National Labor Relations Board's (NLRB) determination that FedEx committed an unfair
labor practice in violation of the National Labor Relations Act (NLRA) by refusing to
recognize a union organized by drivers. The appeals court held that the NLRA was not
applicable because FedEx drivers were independent contractors pursuant to a common-
law test of agency. 563 F.3d at 504.
20




The FedEx Home Delivery court opined that when factors cut both ways, the
governing principle was whether the position presented opportunities and risks inherent
in entrepreneurialism. 563 F.3d at 497. The court concluded that the following indicia of
entrepreneurial opportunity indicated that the drivers were independent contractors:
driver's ability to operate multiple routes, driver's right to hire additional driver and
helpers and sell routes without permission, and the parties' intent as expressed in the
contract. 563 F.3d at 498-99. In addition to the factual disparity regarding the need for
permission to sell a route, FedEx Home Delivery found significance with other facts not
present here, e.g., some drivers used their FedEx vehicle for other purposes, including a
home delivery service, and one driver was able to negotiate for higher fees. 563 F.3d at
498-99. The court discounted FedEx's requirements with regard to uniform, personal
appearance, and customer service rides, finding that those factors did not indicate control
over drivers but rather they were designed to appease customer safety concerns and
ensure that "once a driver wears FedEx's logo, FedEx has an interest in making sure her
conduct reflects favorably on that logo." 563 F.3d at 501.

In Anfinson v. FedEx Ground, 174 Wash. 2d 851, 281 P.3d 289 (2012), FedEx
drivers brought suit under state law claiming a right to overtime pay. The trial court held
that the drivers were independent contractors under a right to control test. The
Washington Court of Appeals rejected the trial court's use of the right to control test in
favor of an "economic dependence" test, whereby the court determines, as a matter of
economic reality, whether the alleged employee is dependent upon the business to which
he or she renders service. 174 Wash. 2d at 866-71. The Washington Supreme Court
agreed, reversing and remanding the matter for retrial utilizing the correct test. 174 Wash.
2d at 867. It would seem that one would be hard pressed to say that the FedEx delivery
drivers were not, as a matter of economic reality, dependent upon FedEx's delivery
business.
21




Given that Wells and Estrada utilized a version of the right to control test, they are
most persuasive for our purposes. Our 250% expansion of the number of enumerated
factors considered in testing for the employer/employee relationship does not lead us to a
different result. To the contrary, the expanded analysis serves to corroborate and
reinforce the California trial court's observation that FedEx's OA is a "'brilliantly drafted
contract creating the constraints of an employment relationship with [the drivers] in the
guise of an independent contractor model'—because FedEx 'not only has the right to
control, but has close to absolute actual control over [the drivers] based upon
interpretation and obfuscation.'" Estrada, 154 Cal. App. 4th at 9.

We pause to briefly note that, while this opinion was being finalized, the Ninth
Circuit Court of Appeals issued opinions on cases arising out of class actions from
California and Oregon dealing with the same subject matter as our certified questions.
See Alexander v. FedEx Ground Packages System, Inc., Nos. 12-17458 and 12-17509,
2014 WL 4211107 (9th Cir. 2014) (California) and Slayman, 2014 WL 4211422
(Oregon). Focusing on the extent to which FedEx exercised its right to control the
drivers, the Ninth Circuit held that, as a matter of law, the FedEx drivers were employees,
not independent contractors. Alexander, 2014 WL 4211107, at *6-11, 14; Slayman, 2014
WL 4211422, at *5-11. Those recent decisions do not alter our answers to the certified
questions presented to us from the Seventh Circuit.

20-Factor Test Indicates Employer/Employee Relationship

Next, we proceed to consider each of the individual factors, keeping in mind that
the goal is not to simply compare the number of factors favoring one result against the
number of factors favoring the other result. To the contrary, we are tasked with viewing
the factors as a whole. But where FedEx Home Delivery emphasized entrepreneurialism
22



when considering factors cutting both ways, we place the particular emphasis on the
company's right to control the worker to tip the scales.

The Seventh Circuit indicated that it was looking for overarching principles to
guide the weighing process. If there are such principles, one would be that the KWPA is
broadly construed to effect its purpose of protecting workers against the overreaching of
employers, such as artificially designating an employee as an independent contractor to
permit the withholding of wages for business expenses. On the other hand, the KWPA
should not be construed in such a manner that it prevents a worker from having the
opportunity to enter into a mutually advantageous business arrangement that provides the
worker with a legitimate opportunity to generate a profit over and above what a pure
wage earner could expect to earn. But perhaps the most fundamental principle is that
form should not be elevated over substance, e.g., if a worker is hired like an employee,
dressed like an employee, supervised like an employee, compensated like an employee,
and terminated like an employee, words in an operating agreement cannot transform that
worker's status into that of an independent contractor. With those principles in mind, we
proceed to the factors.

1. FedEx's Right to Require Compliance with Its Instructions

FedEx does not refute that it requires all newly hired drivers to execute a standard
agreement, i.e., the OA. See In re FedEx Ground Package System, Inc., 734 F. Supp. 2d
557, 560 (N.D. Ind. 2010). Likewise, it is undisputed that a driver's failure to comply
with the instructions in the OA is a ground for termination. Accordingly, FedEx can
require compliance with its instructions by threatening termination.

But FedEx argues that the provisions of the OA specifically refute that it has the
right to require the drivers to comply with its instructions, pointing to certain OA
23



declarations, including that the driver's services are provided "'strictly as an independent
contractor, and not as an employee'" for any purpose; that the agreement sets forth the
parties' "'mutual business objectives'"; that the multiple contractual requirements placed
upon the driver are merely intended to achieve FedEx's desired results; that "'the manner
and means of reaching these results are within the discretion of the [driver]'"; and that
"'no officer or employee of [FedEx] shall have the authority to impose any term or
condition . . . contrary to this understanding.'" 734 F. Supp. 2d at 560.

However, as the California court found in Estrada, "FedEx's conduct spoke louder
than its words." 154 Cal. App. 4th at 11. Moreover, a closer look at the OA's
requirements for drivers negates the notion that the drivers have any room for discretion
in the manner and means of performing their jobs. Those requirements direct such things
as the delivery days and times; delivery methods; reporting requirements; vehicle
identification, specifications, and maintenance; and driver appearance. As noted in
Estrada, FedEx endeavors to control "every exquisite detail of the drivers' performance,
including the color of their socks and the style of their hair." 154 Cal. App. 4th at 11-12.

We first note that there is no indication that any particular "driver" can exercise his
or her independence by modifying the OA to the driver's advantage. In other words, the
document more closely resembles a unilaterally proffered, take-it-or-leave-it employment
contract. Moreover, in conjunction with having to sign the standard OA, prospective
drivers must pass background checks and then undergo training. In addition, the OA is
not the sole source defining a driver's relationship with the company; there are manuals,
handbooks, memoranda, training videos, and other means of communication that direct
the manner and means of delivering packages. In short, the procedure by which a driver
becomes qualified to deliver packages for FedEx more closely resembles the process by
which employees are hired than the process by which independent contractor agreements
are negotiated.
24




With respect to the driver's appearance, the OA requires them to wear a FedEx
uniform that is maintained in good condition and requires them to maintain a personal
appearance that is "'consistent with reasonable standards of good order as maintained by
competitors and promulgated from time to time by [FedEx].'" In re FedEx, 734 F. Supp.
2d at 564. The notion that such requirements are merely unenforceable suggestions is
negated by the fact that FedEx reserves the right to refuse to allow a driver to perform his
or her deliveries if the driver is not properly dressed or groomed. 734 F. Supp. 2d at 565.

FedEx counters that its appearance standards do not connote the exertion of
control over its drivers; rather, those standards are designed and intended to assure its
customers that they may feel safe in opening their homes and businesses to drivers
displaying the FedEx brand. Of course, the irony of that argument is that FedEx's
customers would not feel safe in the presence of the FedEx logo if they did not believe
that FedEx's branding of its drivers meant that the company had taken responsibility to
conform the drivers' actions to replicate the integrity of the company. Certainly, holding
out its drivers to the public as being personal representatives of the FedEx company is
inconsistent with the argument that the drivers are merely independent contractors who
happen to be doing business with FedEx.

FedEx also requires that drivers comply with strict vehicle appearance,
specification, and maintenance requirements. For example, each vehicle must be painted
"FedEx White" and bear FedEx logos and advertising. 734 F. Supp. 2d at 565. The trucks
must be maintained in a clean and presentable fashion free of body damage and
extraneous markings. FedEx reserves the right to inspect trucks to ensure they comply
with FedEx appearance standards. The vehicles must meet FedEx's minimum
specifications for height, width, length, bumper height, interior shelving requirements,
and, in some cases, age restrictions. FedEx decides what size and configuration of truck
25



is appropriate for a particular route. FedEx managers may remove a vehicle from service
if it does not meet appearance standards or a driver fails to timely submit maintenance
reports. 734 F. Supp. 2d at 565-66. And, again, the failure to comply with the vehicle
appearance standards constitutes a breach of the OA, which can result in termination.

The Wells court opined that "[t]he right to determine and enforce driver and
vehicle appearance and vehicle suitability standards also favors employee status." 979 F.
Supp. 2d at 1019; accord In re Corporate Express Delivery Systems and Teamsters Local
886, 332 NLRB 1522, 1523 (2000) (finding truck owner/operators were employees for
purposes of National Labor Relations Act because, inter alia, they were required to
display company's logo on their vehicles.); cf. C.C. Eastern, Inc. v. N.L.R.B., 60 F.3d
855, 858 (D.C. Cir. 1995) (finding that owner/operators were not employees for purpose
of National Labor Relations Act because, inter alia, company did not require tractors to
be of any specific type, size, or color).

FedEx argues that vehicle appearance standards merely relate to the results for
which the company is contracting. For support, FedEx points to Martin v. Wichita Cab
Co., 161 Kan. 510, 517, 170 P.2d 147 (1946), which it argues stands for the proposition
that a company may require a worker to utilize its brand without creating an
employer/employee relationship. But the factual distinctions in that case render it
unpersuasive here. Martin involved a company's liability for federal withholding taxes on
fares collected by cabdrivers. The company owned multiple cabs that were painted black
and white and bore the company's logo. Drivers paid a daily rental for the cabs and did
not wear a uniform. The cabdrivers were not paid by the company; they kept their own
fares. The company had no control over what area a driver worked or how many fares the
driver collected. The holding most germane for our purposes is found in the following
statement:

26



"In our opinion the fact that the company put conditions on the use of its cars and service
was just as consistent with a contract of bailment as with a master and servant
relationship. There is no evidence that the company directed the drivers in the
performance of their work." 161 Kan. at 518.

Here, there is plenty of evidence that FedEx directed the drivers in the performance of
their work.

Similarly, FedEx's citation to Brownrigg v. Allvine Dairy Co., 137 Kan. 209, 19
P.2d 474 (1933), is unavailing. In Brownrigg, milk distributors were permitted, but not
required, to paint the dairy company's name on their delivery trucks. But the
determination that the distributors were not employees for respondeat superior purposes
hinged on the fact that the dairy company maintained no control over the distributors,
e.g., the company did not direct the distributors where to deliver milk or assign them
fixed routes or districts. 137 Kan. at 210-12. The facts here are pointedly different; FedEx
does assign routes and tell the drivers where to deliver the packages.

The OA provides strict requirements with regard to the handling and delivery of
packages. Drivers are required to "[h]andle, load, unload and transport packages using
methods that are designed to avoid theft, loss and damage." In re FedEx, 734 F. Supp. 2d
at 561. In addition, the OA provides that drivers agree to "[c]ooperate with [FedEx's]
employees, customers and other contractors, to achieve the goal of efficient pick-up,
delivery, handling, loading and unloading of packages and equipment, and provide such
electronic and/or manual data pertaining to package handling as is reasonably necessary
to achieve this goal." 734 F. Supp. 2d at 561. FedEx also requires drivers to record
information on all package deliveries. 734 F. Supp. 2d at 568 ("FedEx drivers must
record information about all package deliveries."). Again, violation of the OA is a ground
27



for termination; therefore, FedEx retains the right to ensure compliance with these
requirements.

FedEx also utilizes multiple oversight methods with regard to the OA's handling
and delivery requirements. In other words, the company supervises the drivers to assure
that the designated manner and means of delivering packages are being followed.
Specifically, FedEx managers are to conduct daily van service audits of every driver to
ensure compliance with FedEx's procedures for undelivered packages. Failure to follow
FedEx's procedures for proper release of packages may constitute a breach of the OA and
serve as a ground for termination. 734 F. Supp. 2d at 561, 571 (OA requires drivers to
handle packages using methods that are designed to avoid theft, loss, and damage).
FedEx also hires experts to perform random security reviews in order to ensure that
drivers are securing their vehicles properly when delivering packages. Failure to properly
secure a vehicle is also considered a violation of the OA. 734 F. Supp. 2d at 571.

Further, FedEx requires at least two, but not more than four, customer service
rides (CSR) each year. The CSRs provide FedEx managers with the opportunity to see if
drivers are complying with FedEx's customer service standards and ensure that drivers
are operating their vehicles safely. FedEx managers are trained to observe certain things
during a CSR, such as the driver's check-in and check-out procedures; how the driver
operates, parks, and enters and exits his or her vehicle; the driver's delivery and pickup
methods; and whether the driver experiences any delay time in performing his or her
work. In addition, the FedEx manager is supposed to make multiple specific written
observations regarding the driver's performance in the areas of package quality at
delivery, quality assurance, driver release, professional appearance, customer courtesy,
and service. 734 F. Supp. 2d at 572-73. During some of the CSRs, a FedEx manager
analyzes the driver's primary service area by documenting such things as the time the
driver arrives and departs from each stop, the number of minutes at each stop, the number
28



of minutes between stops, the last three digits of the driver's odometer reading at each
stop, and the approximate distance a driver must walk to pick up or deliver a package.
734 F. Supp. 2d at 573.

FedEx managers are expected to conduct at least two "business discussions" with
drivers each year. 734 F. Supp. 2d at 570. The business discussions are considered
procedures and not mandatory policies. The business discussions are designed to allow
FedEx managers to provide recommendations and counseling to drivers in performing
their contracted work. A FedEx manager may request a business discussion for multiple
reasons, including problems with the driver's performance related to undelivered
packages, missed pickups, and improper documentation. Although FedEx may not force a
driver to participate in a business discussion, failure to participate may reflect poorly on
the driver's opportunity to renew his or her OA. Moreover, documentation from business
discussions can be used to support contract termination. 734 F. Supp. 2d at 571.

Further, FedEx managers are encouraged to conduct a "business plan" discussion
with drivers each year. 734 F. Supp. 2d at 573. During the documented discussion, FedEx
managers go over problem areas, agreed-upon solutions, delivery areas, and driver
expectations. A business plan discussion form provides spaces for the manager to
document the following information: the driver's total number of stops, packages, miles,
and DOT hours of work; anticipated changes in the driver's primary service area; the
condition and appearance of the driver's equipment; any deficiencies and expected
correction dates; the number and types of complaints the driver has received in the last 12
months; the driver's contingency plan in the event of a vehicle breakdown; and any
comments or questions the driver may have. 734 F. Supp. 2d at 573.

FedEx maintains that the audits, CSRs, and business discussions result in
recommendations, not mandatory requirements that drivers must follow. Nevertheless,
29



FedEx acknowledges that the audits, CSRs, and discussions are at times used to instruct
drivers that have violated the OA by failing to deliver packages, improperly scanning or
recording packages, missing set times for the pickup of packages, having customer
complaints, or other "service failures." 734 F. Supp. 2d at 573. Given that the oversight
procedures can eventually lead to a driver's termination, the "advisory" nature of the
procedures appears to be suspect, at best. But more importantly, one would expect to find
such close supervision of the means and manner by which the driver effects deliveries in
an employer/employee relationship. If there is an independent contract to deliver a
package to a specific location in a timely manner, the place that the independent
contractor parks or the number of steps the contractor must walk to fulfill the contract
should not be a concern for the company, so long as the package is delivered when and
where the customer expected.

In that vein, FedEx fashions an argument that characterizes the control it exercises
over the drivers as affecting the results of the work to be completed rather than the means
and methods the driver must employ to reach those results. Of course, FedEx must utilize
that characterization to comport with our caselaw.

In Falls v. Scott, 249 Kan. 54, 64, 815 P.2d 1104 (1991), we defined an
independent contractor as one who, in exercising an "independent employment, contracts
to do certain work according to his [or her] own methods, without being subject to the
control of his [or her] employer, except as to the results or product of his [or her] work."
(Emphasis added.) In contrast, in an employer/employee relationship, the employer has
the right to direct the manner in which the work is to be performed, in addition to the
result to be accomplished. 249 Kan. at 64. Some 60 years earlier, in Shay v. Hill, 133
Kan. 157, 159, 299 P. 263 (1931), we obtained a definition of an independent contractor
from the American Law Institute Restatement on Agency:

30



"'Sec. 6. An independent contractor is a person who undertakes to execute certain
work or to accomplish a stipulated result for another, under such circumstances that the
right of control of the doing of the work, and of the forces and agencies employed in
doing it, is in the contractor.

"'Comment: (a) The characteristics of the independent contractor are that he is a
person (usually carrying on a distinct occupation) who for a stipulated compensation
(usually a lump sum) undertakes to do a piece of work (usually of some magnitude) by
his own forces and instrumentalities (usually supplying labor and materials), being
responsible to his employer for the stipulated results, but (essential characteristic) being
left in control of the operation of the forces and instrumentalities by which the stipulated
result is to be accomplished.' [American Law Institute, Agency: Restatement No. 1 § 6
(Tentative Draft 1926)]."

FedEx would have us blur the distinction between what work is to be done and
how the work is to be done. There is some precedent for such obfuscation. In Lorenz
Schneider Co., Inc. v. N.L.R.B., 517 F.2d 445, 451 (2d Cir. 1975), the court found
difficulty in making the distinction between controlling the means and controlling the
result:

"Yet the test as thus stated is almost impossible to apply, since the 'result' is a function of
the 'manner and means.' . . . All that can be meaningfully said is that the more detailed
the supervision and the stricter the enforcement standards, the greater the likelihood of
an employer-employee relationship, and conversely." (Emphasis added.)

FedEx provides package pickup and delivery services to residential and business
clients. We do not discern a great deal of difficulty in distinguishing between the results
to be accomplished in that business and the manner and means by which those results are
accomplished. For instance, requiring a driver to wear clothes of a certain type or to exit
the delivery vehicle in a certain manner is clearly exercising control over the manner and
31



means by which packages are picked up or delivered. But even if we apply the Lorenz
standard above, the extensive detail of FedEx's supervision of its drivers and the strict
enforcement of the OA requirements under penalty of termination point to an
employer/employee relationship. Cf. North American Van Lines, Inc. v. N.L.R.B., 869
F.2d 596, 599 (D.C. Cir. 1989) (global oversight is compatible with independent
contractor relationship, whereas control over details of a performance is indicative of
employer/employee relationship).

2. The Extent of Training Provided by FedEx

Whether FedEx trains its drivers is a factor because ordinarily one does not hire an
independent contractor that requires training. Cf. Wallis v. Secretary of Kans. Dept. of
Human Resources, 236 Kan. 97, 106-07, 689 P.2d 787 (1984) (finding that vacuum
cleaner dealers were employees based, in part, on fact that distributor maintained
direction and control with respect to dealers' training). The undisputed facts in this case
do not clearly favor either status.

FedEx requires all new drivers to undergo an orientation program during their first
30 days to familiarize them with various service quality procedures. In re FedEx, 734 F.
Supp. 2d at 564. As of 2005, new FedEx drivers with 6 months' verified experience as a
commercial motor vehicle operator within the previous 5 years are not required to
participate in a FedEx program entitled "Quality P & D Learning" (QPDL). 734 F. Supp.
2d at 563. QDPL is a multiday course consisting of classroom and on-the-road instruction
designed to ensure compliance with federal safety regulations. The QDPL manual also
contains instruction regarding a number of topics, including customer service skills,
vehicle entrance and exit routines, route planning, delivery techniques, package handling
techniques, proper scanning, and documentation. 734 F. Supp. 2d at 564.

32



FedEx claims that QDPL is not training but is rather a precondition to becoming a
driver. Moreover, in November 2007 FedEx began accepting training from an "approved"
FedEx vendor in lieu of the prior experience exemption or completion of the QDPL
course. 734 F. Supp. 2d at 563. In other words, some of the FedEx drivers are not trained
by FedEx.

FedEx also offers a "CARE" training program for drivers seeking to expunge a
verified customer complaint from their FedEx record. The CARE program instructs
drivers on ways to achieve customer satisfaction and practices to follow in order to avoid
further customer complaints. 734 F. Supp. 2d at 564.

At one time, FedEx provided a handbook entitled the "Contractor's Companion" to
drivers, which provided information concerning customer service tips, scanner
troubleshooting, daily supply checklists, vehicle pretrip inspections, C.O.D. handling,
driver release guidelines and tips, pickup tips, and FAQs for different types of situations
the driver might encounter. 734 F. Supp. 2d at 564. FedEx no longer provides the
handbook to its drivers, although the record does not indicate when this practice stopped.
734 F. Supp. 2d at 564.

3. The Degree of Integration of the Drivers' Services into FedEx's Business

Where the services that a worker performs for a principal are an integral part of
the principal's business, the scale tips in favor of that worker being an employee.
Businesses do not ordinarily trust their core functions to independent contractors, over
which the business has minimal control.

FedEx argues that the drivers' services are complementary to, but distinct from,
FedEx's business. To the contrary, the Estrada court looked at the FedEx scenario and
33



determined that "[i]n practice, . . . the work performed by the drivers is wholly integrated
into FedEx's operation." Estrada v. FedEx Ground Package System, Inc., 154 Cal. App.
4th 1, 9, 64 Cal. Rptr. 3d 327 (2007). We agree.

FedEx's business is to take a package from one person or entity and deliver it to
another person or entity; it does not manufacture or sell any product or perform any other
service. A driver delivering hamburger to a fast-food restaurant is performing a service
that complements the business of selling sandwiches. A driver leaving a Frito-Lay plant
with a semitrailer full of potato chips is performing a service that complements the
business of manufacturing and selling snack foods. To the contrary, when a FedEx driver
delivers a package, he or she has performed the sole service that FedEx offers. There is
nothing complementary about that because without the delivery drivers there is no FedEx
business. Indeed, a former chief executive officer of FedEx testified that the drivers are
the "'centerpiece' of FedEx's 'work force,'" and are "an 'essential component of [FedEx's]
business.'" In re FedEx Ground Package System, Inc., 734 F. Supp. 2d 557, 562 (N.D.
Ind. 2010).

In short, the plaintiff drivers are integrated into FedEx's business to the highest
degree possible, and this factor weighs heavily in favor of an employer/employee
relationship. Cf. Olds-Carter v. Lakeshore Farms, Inc., 45 Kan. App. 2d 390, 403, 250
P.3d 825 (2011) (holding that plaintiff truck driver was employee for workers
compensation purposes based, in part, on finding that employee's duties were integral
part of employer's commercial trucking operation).

4. The Requirement that the Services be Provided Personally by the Drivers

If the principal is only controlling the result—not the manner and means by which
the result is accomplished—the principal would ordinarily not be concerned whether the
34



actual work was personally performed by the worker. Consequently, a requirement that
the worker personally perform the job suggests that the principal is interested in the
methods used to accomplish the work, not just the results, which is indicative of an
employer/employee relationship.

First, we note that because the certified class is defined as including full-time
drivers, all of the plaintiffs in this action are personally providing services to FedEx.
FedEx acknowledges that the class is limited to full-time drivers who signed the OA, but
it contends that the issue is whether "class members possess the right to hire others, not
the extent to which individual contractors exercise those rights."

FedEx's point is well taken. The efficacy of this factor hinges on whether the
principal requires personal service, rather than depending on whether the worker chooses
to personally perform the agreed-upon tasks. In that regard, FedEx does allow its drivers
to hire others to drive their trucks in the drivers' assigned service areas, subject to FedEx's
approval and supervision. Although FedEx maintains considerable control over the
replacement drivers, this factor nevertheless tilts toward finding an independent
contractor relationship.

5. The Hiring, Supervision, and Compensation of Assistants

Closely related to the preceding factor is the consideration of whether drivers are
responsible for hiring, supervising, and paying any assistants they might require. Under
the OA, FedEx drivers are allowed to run their own routes, hire helpers, or hire
replacement drivers. But as noted above, FedEx makes a number of requirements in that
area. For instance, it requires that nondriver helpers must be 18 years old and pass a
background check. Replacement drivers must be approved by FedEx and are subject to
several conditions, such as completing a road test; submitting a driver information sheet;
35



and, depending on experience, completing a FedEx-approved training course. In re
FedEx, 734 F. Supp. 2d at 562-63.

But most importantly for our purposes, drivers are responsible, at their own
expense, for training their assistants to operate the equipment, for ensuring that any
replacement driver conforms to a driver's obligations under the OA, and for
compensating replacement drivers. Again, notwithstanding the tighter than usual control
exerted by FedEx over a driver's assistants, this factor shades in favor of an independent
contractor relationship.

6. The Existence of a Continuing Relationship between Drivers and FedEx

Next, we consider the continuity and duration of the relationship between FedEx
and its individual drivers. A short-term or intermittent relationship is more typical with
respect to independent contractors. See Baker v. Flint Engineering & Const. Co., 137
F.3d 1436, 1442 (10th Cir. 1998) (short duration relationship indicative of independent
contractor status). On the other hand, in an employer/employee relationship, a worker
expects to be engaged for an indefinite period of time. See Dole v. Snell, 875 F.2d 802,
811 (10th Cir. 1989) (expectation to work for employer indefinitely is indicative of
employer/employee relationship).

FedEx contends that this factor favors its position because the OAs are for a fixed
term, between 1 and 3 years, with no guarantee of renewal. For support, FedEx cites to
Home Design, Inc. v. Kansas Dept. of Human Resources, 27 Kan. App. 2d 242, 2 P.3d
789, rev. denied 269 Kan. 932 (2000), claiming that it stands for the proposition that
choosing to renew a fixed-term contract is not inconsistent with an independent
contractor relationship. But that case did not revolve around the renewal of continuing
contracts but rather it involved the letting of serial contracts. Siding installers that did a
36



good job for Home Design could expect repeat business, i.e., could expect to be hired
again to side other homes. The critical factor in Home Design was "that there was no
continuity in the relationship between Home Design and the siding installers." 27 Kan.
App. 2d at 247.

Here, in contrast, drivers work continuously for FedEx until terminated. The OAs
are automatically renewed for 1-year terms in the absence of a notice of nonrenewal or a
breach of the agreement. In re FedEx, 734 F. Supp. 2d at 574. Ironically, FedEx argues
elsewhere that the OAs are not arbitrarily terminated for any "perceived breach" but
rather FedEx is obliged to act reasonably and in good faith. Moreover, there is no
evidence that the OAs are not automatically renewed where drivers are performing
satisfactorily. To the contrary, FedEx encourages a long and continuous relationship by
providing bonuses based upon a driver's longevity, and providing a time-off program that
is tied to a driver's seniority.

In short, the duration and continuity of the relationship between FedEx and its
delivery drivers point directly to an employer/employee relationship.

7. The Degree to Which FedEx Establishes Set Work Hours for Drivers

Obviously, telling a worker what hours he or she must work is the type of control
over manner and means that is typical in an employer/employee relationship. As anyone
who has contracted for the replacement of a roof during a Kansas August knows, an
independent contractor will expect to set working hours to suit the contractor. But FedEx
drivers do not have the unfettered discretion to set their own hours, as for example to
only work during the coolest part of a summer day.

37



FedEx argues that it does not set the work hours for its drivers and, in fact, it does
not even require a driver to personally drive the truck. But, as noted, the members of the
certified class in this case all personally drive for the company. And while FedEx does
not set a time certain that a driver must appear at the terminal or a time certain that a
driver quits for the day, it sets other rules and conditions that effectively outline the hours
of work.

First, drivers are required to provide service on the days that FedEx is open for
business, and FedEx retains the authority to change the days of service. There is no set
time that a driver must report to the terminal, but packages can only be picked up during
the hours that a terminal is open, and all packages are expected to be delivered the same
day. Further, FedEx can require that certain packages be delivered or picked up within a
specified time frame when so requested by customers. For instance, the company offers
its home delivery customers the option to have packages delivered between 5 p.m. and 8
p.m., and drivers must honor that time frame or have another driver make the delivery.
Drivers who only deliver packages are not required to return to a FedEx terminal at the
end of the day unless they have collected C.O.D. charges or have undelivered packages.
Drivers who pick up packages from customers must return to the terminal by a certain
time and perform a "check-in" process. In re FedEx, 734 F. Supp. 2d at 569.

In sum, this factor cuts both ways. While FedEx's control over the work hours of a
delivery driver is not as strictly defined as that of a typical employee, neither does the
company afford the driver complete discretion on when to perform his or her work. To
meet FedEx's requirements and stay in compliance with the OA, a driver must work long
hours that can include a time frame that is dictated by the company.

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8. A Requirement that Drivers Devote Full Time to FedEx's Business

Overlapping with the foregoing factor is the consideration of whether the principal
requires the worker to be engaged full time. It would not be unusual for an independent
contractor to be concurrently working on several projects at a given time, whereas
working full time, all the time, for one entity connotes an employment scenario.

Again, FedEx asserts that it does not specifically require its drivers to be engaged
in full-time work. But that assertion cannot withstand a reality check. The OA directs that
a driver must "[m]ake reasonable efforts to retain and increase the base of shippers and
consignees served and the number of packages per shipper within Contractor's Primary
Service Area." 734 F. Supp. 2d at 561. Of course, FedEx establishes the service area, the
customer base, the packages to be delivered, etc., and directs that it all must be done the
same day. The goal of FedEx managers is to establish a workload that will require 9 to 11
hours to complete. 734 F. Supp. 2d at 590. While FedEx claims that the policy of
establishing long work days was intended to benefit the drivers, it nevertheless results in
the drivers working full time for the company. Moreover, as will be discussed later, those
long days are a logistical impediment to the drivers being able to work for anyone else.

9. The Degree to Which Work is Performed on FedEx's Premises

If the work is performed on the principal's premises, it can suggest that the
principal has more control over the worker, especially if the work could have been
performed elsewhere. But under the facts of this case, this factor is not separately
compelling beyond our previous discussion of the control that FedEx exerts over the
drivers. The services that FedEx provides are, for the most part, performed off of its
premises, regardless of whether the driver is an employee or an independent contractor.

39



The only work performed by drivers on FedEx's premises is the daily pickup and
loading of packages, as well as any required end-of-the-day return of packages,
documentation, or money. On the other hand, none of the work is performed on the
driver's own premises. Nevertheless, this factor is essentially neutral.

10. The Degree to Which FedEx Sets the Order and Sequence of the Driver's Work

FedEx does not directly mandate the order in which packages must be delivered,
except in those instances where a customer has requested a specific time for the pickup or
delivery of a package. But there is at least implicit oversight of such matters, as
evidenced by the manager's analysis of a driver's primary service area during a CSR. The
manager will observe and document such things as the number of minutes at each stop,
the number of minutes between stops, the odometer reading at each stop, and the distance
a driver must walk to pick up or deliver a package. Presumably, that data is utilized to
improve the driver's order and sequence of work. As with other aspects of the OA, FedEx
has cleverly disguised its control over a driver's ordering and sequencing of his or her
workload. Nevertheless, FedEx does not explicitly retain the right to set the order or
sequence of deliveries.

11. Required Oral or Written Reports

Requiring a worker to submit regular or written reports is a form of control. The
OA provides that drivers must record information about all package deliveries. Drivers
are required to record on-duty time, dispatch and return times, package tracking
information, and odometer readings. 734 F. Supp. 2d at 568. Federal regulations require
FedEx to monitor drivers' on-duty and driving times, as well as some information related
to shipping. 734 F. Supp. 2d at 568.

40



FedEx does not directly address this factor in its briefing, but presumably the
company would claim that the reporting requirements are necessary to comply with the
company's regulatory responsibilities and to meet customer demands for information.
Nevertheless, FedEx does have control over reporting requirements, and a driver's failure
to comply puts the driver's job in jeopardy.

12. The Manner of Payment to the Drivers, e.g., by the Hour, Day, or Job

The manner of determining compensation is a factor because, typically, an hourly
or daily rate of pay is more common for an employee, while a flat-rate, per-job
arrangement is used more often for independent contractor relationships. McDonnell v.
The Music Stand, Inc., 20 Kan. App. 2d 287, 291, 886 P.2d 895 (1994), rev. denied 256
Kan. 995 (1995).

The weekly compensation for FedEx drivers combines both daily rates and piece
rates. Plus, there are various bonuses, including bonuses for years of service and
performance. Although some drivers receive additional payment for delivering packages
in "low density, low package volume areas," generally drivers are compensated based on
the number of packages delivered, as well as the quality of service they provide. In re
FedEx, 734 F. Supp. 2d at 567. Perhaps most telling, the compensation rates are not
negotiable by an individual driver. 734 F. Supp. 2d at 567.

Likewise, FedEx offers additional forms of compensation that seem to be
inconsistent with an independent contractor scenario. For instance, the company matches
contributions to the "Service Guarantee Account," which is an interest-bearing fund that
allows a driver to save for unexpected expenses and may be withdrawn at the driver's
discretion; it offers a college scholarship for drivers with children; and it maintains a
time-off program based on seniority. 734 F. Supp. 2d at 567-68.
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13. The Extent to Which FedEx Pays Drivers' Expenses

Drivers are responsible for all costs and expenses associated with their vehicles,
including maintenance, fuel, taxes, and insurance. 734 F. Supp. 2d at 565. Fed Ex does
not pay any expenses related to health insurance, welfare, pension, income taxes,
unemployment insurance premiums, or Social Security taxes. 734 F. Supp. 2d at 568.
This factor weighs heavily against a finding of an employer/employee relationship.

14. The Degree to Which FedEx Furnishes Tools, Equipment, and Material

Ordinarily, one expects an independent contractor to possess the tools, equipment,
and materials necessary to fulfill its obligations under the contract. Often, the principal
would not, as a matter of course, have occasion to possess the tools, equipment, and
materials necessary for the contracted job.

Here, FedEx requires the plaintiff drivers to purchase all of the tools, equipment,
and materials necessary to perform their services under the OA. Specifically, drivers are
required to purchase trucks, uniforms, scanners, printers, and communications-related
equipment. 734 F. Supp. 2d at 566. Pointedly, most of the items that the drivers are
required to purchase are unique to FedEx's everyday operations rather than being
necessary items for generic delivery drivers. For instance, the drivers, as independent
contractors, could not use FedEx's uniforms or scanners to move furniture after hours. In
other words, the fact that the worker owns his or her own tools and equipment is not as
compelling a factor when that ownership is not for the benefit of the worker.

Likewise, FedEx has again injected its control into the process. The company
provides a mechanism for drivers to purchase their tools and equipment directly from
42



FedEx and then to pay for them through weekly payroll deductions. 734 F. Supp. 2d at
566. Granted, the drivers are not required to purchase their tools and equipment from
FedEx, but as a practical matter, that is what happens; 99 percent of the drivers exercise
the payroll deduction purchase option. 734 F. Supp. 2d at 566.

In short, this factor superficially supports an independent contractor relationship,
albeit the context must be considered in reviewing the totality of the circumstances.

15. Whether Drivers Must Make a Significant Investment

Obviously, from the preceding factor, it is evident that drivers must make a
significant personal investment in order to have the privilege of driving for FedEx. The
only mitigating circumstance is that FedEx softens the financial hit by carrying the paper
on that investment.

16. The Ability of Drivers to Make a Profit or Suffer a Loss

The concept of profit and loss, i.e., the ability to generate an unlimited amount of
revenue in excess of expenses while risking that expenses might exceed revenues, is
generally associated with the operation of an independent business. But the fact that a
worker's income can vary according to the effort expended by the worker does not
necessarily negate the existence of an employment relationship. See S.G. Borello & Sons,
Inc. v. Department of Industrial Relations, 48 Cal. 3d 341, 357-58, 256 Cal. Rptr. 543,
769 P.2d 399 (1989) (fact that sharefarmers can earn more money by picking more and
better quality cucumbers is not indicative of ability to incur a loss or profit); Quality
Medical Transcription v. Woods, 91 S.W.3d 181, 189-90 (Mo. App. 2002) (fact that
transcriptionist can earn more money by completing more transcriptions is not indicative
of ability to incur a profit or loss). The Tenth Circuit has declared that "toiling for money
43



on a piecework basis is more like wages than an opportunity for 'profit.'" Dole v. Snell,
875 F.2d 802, 809 (10th Cir. 1989).

To truly have the ability to make a profit, a business owner must have control over
the amount of revenues generated and control over the amount of expenses incurred.
Under FedEx's compensation formula for a class member—one who drives his or her
vehicle full time—the only practical way to increase "profits" is to increase the number of
packages the driver delivers in a day. FedEx's required specifications for the vehicles,
tools, equipment, materials, and clothing a driver must use makes any significant
reduction on the expense side impracticable. Interestingly, FedEx even attempts to
insulate its drivers from suffering losses by paying additional compensation when the
number of customers or accounts is reduced because of the company's route
reassignment. In re FedEx, 734 F. Supp. 2d at 574.

Even on the revenue side of the equation, FedEx restricts a driver's control over
the "profits" that can be earned. For example, if FedEx determines a driver is unable to
deliver all the packages in his or her service area for the day, FedEx may reassign those
packages to another driver. 734 F. Supp. 2d at 570. Likewise, FedEx used to employ a
"Service Flex Range" that determined the "'minimum and maximum number of stops that
can be delivered by a trained contractor working at "industry standard" time.'" (Emphasis
added.) 734 F. Supp. 2d at 570. In 2005, FedEx eliminated the minimum number of
stops, but it still sets the maximum number of stops it believes a driver, "while utilizing
his vehicle fully, reasonably can handle on any given day." 734 F. Supp. 2d at 570.
FedEx also reserves the right to reconfigure a driver's route unless the driver establishes,
during a set period of time, that he or she can "continue to provide in such Primary
Service Area the level of service called for in this Agreement." 734 F. Supp. 2d at 574.

44



Granted, some provisions are consistent with the drivers being business owners.
For instance, drivers are allowed to sell excess stops as an alternative to reconfiguration,
and they can even sell their routes upon 30 days' written notice to FedEx, albeit the
company must approve the buyer. Conversely, a driver whose contract is terminated for
cause may not sell or assign his or her route to another. In re FedEx Ground Package
System, Inc., 734 F. Supp. 2d 557, 574 (N.D. Ind. 2010).

Ultimately, a driver's ability to make a profit is constrained by FedEx's control
over the route assignments and the number of deliveries a driver can make, while the
company's policies also serve to reduce a driver's risk of suffering a loss. While FedEx
has been creative in structuring the "business arrangement" to look like an independent
contract, the drivers' business opportunities are tightly controlled.

17. Whether Drivers Can Work for More than One Company at a Time

Technically, FedEx does not prohibit its drivers from working for another
company, but it makes some stringent requirements. For instance, even though a driver
must own and maintain the delivery truck, the driver cannot use that truck to do other
work without masking or removing all markings that identify FedEx.

More importantly, however, the plaintiffs, by class certification definition, "drive a
vehicle on a full-time basis" for FedEx. Craig v. FedEx Ground Package System, Inc.,
686 F.3d 423, 425 n.1 (7th Cir. 2012). If a worker is employed full time by one entity, he
or she can only work for another company during the worker's free time, i.e., after hours,
weekends, days off. The fact that a full-time worker is not prohibited from pursuing other
jobs during the worker's free time is not a compelling factor. See Dole, 875 F.2d at 808
(allowing worker to pursue other jobs not compelling where job could have been done
"by any employee on his or her own time after hours, on weekends, or days off").
45




Moreover, it would be impracticable, if not illegal, for the drivers to deliver for
another company on days the drivers work for FedEx. FedEx endeavors to provide
drivers with 9 to 11 hours of work each day. That leaves scant time to mask all the
required markings on the vehicle to commence another job. Further, DOT places
limitations on how many hours a driver can operate each day, thus limiting the drivers'
ability for after-work jobs. See 49 C.F.R. § 395.3 (2013) (maximum driving time for
property-carrying vehicles).

Thus, outwardly this factor supports the notion of an independent contractor. As a
matter of reality and practicality, the full-time drivers are unable to work for more than
one company at a time. Cf. Dole, 875 F.2d at 808 ("'[I]t is not what the [workers] could
have done that counts, but as a matter of economic reality what they actually do that is
dispositive.'" [quoting Brock v. Mr. W. Fireworks, Inc., 814 F.2d 1042, 1047 (5th Cir.
1987)]).

18. Whether Drivers' Services Are Regularly and Consistently Made Available to
the General Public

Obviously, an employee regularly serves the employer, not the general public,
whereas an independent contractor would be expected to advertise the availability of the
contractor's services. Here, there was no evidence that any of the drivers regularly offered
to serve the general public. Given our discussion in the foregoing factor about the lack of
time available to work for others, it is difficult to perceive how a driver could regularly
make his or her services available to the general public. This factor does not favor an
independent contractor relationship.

46



19. Whether FedEx Has the Right to Discharge Drivers

Neither Crawford nor Hartford explained the significance of the right to discharge
a worker. But the IRS, in Revenue Ruling 87-41, provided the following explanation:

"19. RIGHT TO DISCHARGE. The right to discharge a worker is a factor indicating that
the worker is an employee and the person possessing the right is an employer. An
employer exercises control through the threat of dismissal, which causes the worker to
obey the employer's instructions. An independent contractor, on the other hand, cannot be
fired so long as the independent contractor produces a result that meets the contract
specifications. Rev. Rul. 75-41, 1975-1 C.B. 323." Rev. Rul. 87-41, 1987-1 C.B. 296.

While FedEx can exercise control over the drivers through the threat of dismissal
for violating the OA, the company does not possess the right to discharge drivers without
cause. To the contrary, if a FedEx manager seeks to terminate the OA for a "'contractor
who has breached or failed to perform . . . contractual obligations, as evidenced by
repeated customer complaints, failure to service his/her work area, integrity issues, unsafe
driving, D.O.T. and/or maintenance violations, or other such problems,'" the manager is
to compile documentation establishing such violations and advise whether steps were
taken to counsel, train, and otherwise help the driver to overcome the violations. In re
FedEx, 734 F. Supp. 2d at 575. After an internal review process is complete and the
recommended termination is found to be warranted, a driver may request arbitration in
order to pursue a claim of wrongful termination. If the arbiter determines termination was
not within the terms of the OA, FedEx may either reinstate the driver with damages from
the date of termination through the date of reinstatement or maintain the termination and
pay damages from the date of termination through the expiration of the contract term.

In short, FedEx does not possess the right to discharge a driver without cause.

47



20. Whether Drivers Have the Right to Terminate the Relationship

The revenue ruling describes the significance of this factor as follows:

"20. RIGHT TO TERMINATE. If the worker has the right to end his or her relationship
with the person for whom the services are performed at any time he or she wishes without
incurring liability, that factor indicates an employer-employee relationship. See Rev. Rul.
70-309." Rev. Rul. 87-41, 1987-1 C.B. 296.

The OA provides that a driver can unilaterally end the relationship upon giving 30
days' written notice. Notwithstanding the notice requirement, the fact that a driver can
quit before the end of the OA term without financial consequences supports the existence
of an employment relationship. Ordinarily, independent contractors are expected to
complete all of the work contemplated by the contract.

Conclusion

Viewing the factors as a whole leads to the conclusion that FedEx has established
an employment relationship with its delivery drivers but dressed that relationship in
independent contractor clothing. Even where the factors should point us toward finding
that the drivers are independent businesspersons, FedEx's control and micromanaging
undermine the benefit that a driver should be able to reap from that arrangement. For
instance, the ability to make more money than a delivery driver who is an employee is
diminished, if not destroyed, by FedEx's control over the number of deliveries a driver
can make, as well as essentially dictating the driver's required expenditures for vehicles,
tools, equipment, and clothing. Moreover, one would reasonably expect that independent
businesspersons could decide for themselves the amount of work they "reasonably can
handle on any given day," In re FedEx Ground Package System, Inc., 869 F. Supp. 2d
48



942, 958 (N.D. Ind. 2012), yet FedEx makes that decision for them and sets a maximum
number of stops for each driver.

Consequently, we hold that under the undisputed facts presented, the FedEx
delivery drivers are employees for purposes of the KWPA.

QUESTION 2: MULTIPLE ROUTE DRIVERS

In its second question, the Seventh Circuit refers us back to our answer to the first
question. Our answer to the first question was predicated on the definition of the class
members as being full-time drivers. Accordingly, we interpret the second question as
asking whether a full-time FedEx driver, who we have determined to be an employee of
FedEx, loses that status with respect to the driver's personal route when the driver
acquires one or more other routes for which he or she is not the driver. We answer "no" to
our reformulated question. In other words, the employer/employee relationship between
FedEx and a full-time delivery driver with respect to the assigned service area is not
terminated or altered when the driver acquires an additional route for which he or she is
not the driver.

Our statutory authority for entertaining certified questions, K.S.A. 60-3201,
specifies that we may answer such questions "when requested by the certifying court if
there are involved in any proceeding before it questions of law of this state which may be
determinative of the cause then pending in the certifying court." (Emphasis added.) See
Pfeifer v. Federal Express Corporation, 297 Kan. 547, 548, 304 P.3d 1226 (2013). Given
that the certified class only includes full-time drivers, we decline to opine on a driver's
status with respect to any assigned service area for which he or she is not a full-time
driver.

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MORITZ, J., not participating.
DANIEL D. CREITZ, District Judge, assigned.1



1 REPORTER'S NOTE: District Judge Creitz was appointed to hear case No. 108,526
vice Justice Moritz pursuant to the authority vested in the Supreme Court by art. 3, § 6(f)
of the Kansas Constitution.