Estrada v. FedEx Ground Package System, Inc

In Estrada v. FedEx Ground Package Systems, Inc. (2007) 154 Cal.App.4th 1, the Court reversed a $ 12 million award of attorney's fees, reversed a finding that the drivers could not recover on their claims for reimbursement of certain out-of-pocket expenses, reversed a finding that that the drivers are not entitled to reimbursement for their work accident insurance premiums, and remanded the cause to the trial court for new hearings to determine the amounts to which the drivers are entitled for their out-of-pocket expenses and their work accident insurance premiums, and to thereafter determine the reasonable amount of fees and costs to be awarded. In that case, truck drivers had to provide vehicles that met the specifications and standards of FedEx; mark the trucks with the FedEx logo; pay all costs of operating and maintaining the trucks; use the trucks exclusively in the service of FedEx; service a particular area; follow FedEx methods designed to avoid theft, loss and damage; foster FedEx's " 'professional image' " and " 'good reputation' "; drive safely; wear a FedEx uniform; and maintain a physical appearance that met FedEx standards as detailed in various corporate manuals. The drivers worked exclusively for FedEx, which could terminate the contract on written notice. The drivers and trucks were subject to daily inspection, and if found lacking, the driver could be barred from service. Drivers met twice a year with a FedEx manager and received annual progress reviews. (Estrada, supra, 154 Cal.App.4th at pp. 5-8.) The trial court in Estrada found that the FedEx drivers are employees, not independent contractors. The contractual agreement had all the constraints of an employment relationship under the guise of the independent contractor model. The drivers' work "is wholly integrated into FedEx's operation"; the work is "essential to FedEx's core business"; they "work exclusively and full time for FedEx"; their customers are "assigned to them by FedEx"; and they "must wear uniforms and conform absolutely to FedEx's standards." (Estrada, supra, 154 Cal.App.4th at p. 9.) The appellate court wrote that although the manner and means to satisfy the contract are within the discretion of the drivers, FedEx could effectively terminate the drivers at will. Most significantly, "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair" showed that the drivers are employees. The uniforms and trucks are marked with the FedEx logo, the drivers receive employee benefits, have regular schedules, and are supervised by FedEx managers. "The customers are FedEx's customers, not the drivers' customers." The drivers work exclusively for FedEx and generally do so for a long time. (Id. at pp. 11-12.)