FedEx Misclassification Lawsuit: Financial Risks for Employers

A newly filed FLSA misclassification lawsuit in Massachusetts could have financial implications for FedEx, as it accuses the package delivery company of neglecting its legal duty to pay drivers overtime.

The suit essentially asserts that FedEx created the independent service provider model so that it could shirk its legal responsibility under the federal Fair Labor Standards Act to pay the drivers earned overtime pay.

Overtime Suit Names 18 Drivers

Filed in a federal district court in Massachusetts, the complaint names 18 drivers who allegedly worked for intermediate entities and were denied earned overtime. In addition to Massachusetts residents, the named drivers include one resident of Rhode Island and one resident of New Hampshire.

The suit says the drivers worked for intermediary employers called independent service providers and were classified as employees of those providers. The providers are typically responsible for three or four FedEx delivery routes, it adds. FedEx requires the providers to classify the drivers as the providers’ employees, it alleges.

Before it began using independent service providers, FedEx hired drivers directly and classified them as independent contractors rather than employees. The suit says FedEx developed the independent service provider model after spending years defending litigation that claimed the drivers were employees.

Shift in Model Followed Litigation

Many courts nationwide held that FedEx wrongfully classified the drivers as independent contractors, the suit says. Important to Finance teams, a misclassification can carry substantial financial exposure.

FedEx then “shifted its method of hiring drivers in many states” to the independent service provider model, the suit alleges. But the “drivers’ responsibilities and procedures they were required to follow did not change in any material way” under the new model.

According to the complaint, the new model did not change the real relationship between FedEx and the drivers, as that relationship is one of employer and employee.

Based on the economic realities of the relationship between the parties, the drivers working for the intermediaries are also FedEx employees, the suit insists.

Relevant Factors Addressed

The suit bolsters this assertion by asserting that drivers who work under independent service providers:

• Typically work full-time and exclusively as FedEx drivers
• Wear FedEx uniforms and drive vehicles with FedEx logos
• Work out of FedEx-owned and managed terminals
• Provide a service that is integral to FedEx’s business
• Follow strict and predictable schedules
• Are “micromanaged” by FedEx
• Are required by FedEx to have specific, designated equipment
• Are required to begin each workday at a FedEx-designated terminal, and
• Are subject to termination by FedEx.

FedEx employed the drivers, the suit says, and therefore was responsible for paying them overtime. It acted “with reckless disregard” for their rights, the suit asserts.

The lawsuit presents a single count, asserting a claim for unpaid overtime under the FLSA. As relief, it seeks payment of unpaid overtime; liquidated damages and prejudgment interest; litigation costs, expenses and attorneys’ fees; and a judicial declaration that the drivers were employees of FedEx.

Independent Contractor or Employee? Getting It Right

Utilizing independent contractors instead of employees can be a cost-effective and efficient option for employers, and there certainly is nothing inherently suspect about choosing the former over the latter.

The danger for employers lies in the potential for misclassification: If a worker is classified as an independent contractor but is really an employee, the employer is likely to face some serious legal trouble.

So how is one distinguished from the other?

The key is to examine the economic realities of the relationship between the parties and to ask this question: Is the worker in business for himself, or is he economically dependent on the employer for work?

The relevant factors to consider include:

• The worker’s opportunity for profit or loss
• Relative investments by the worker and employer
• The degree of permanence of the work relationship
• The nature and degree of control exercised by the employer over the worker
• Whether the work is integral to the employer’s business, and
• The level of skill and initiative needed to do the work.

The new complaint in the FedEx case deftly addresses many of the applicable factors and asserts that they weigh strongly in favor of a finding that the drivers are FedEx employees.

Managing Financial Risk from Misclassification

The FedEx misclassification lawsuit isn’t just a legal story – it has real financial implications:

• Back pay and damages: Misclassified workers may be owed substantial unpaid wages and penalties.
• Legal costs: Litigation can quickly become expensive, from attorneys’ fees to expert testimony.
• Reputation and investor confidence: Public lawsuits can impact brand value and even affect financial markets.
• Operational alignment: Workforce models need to balance efficiency with compliance to avoid hidden liabilities.

For finance teams, staying ahead means regularly reviewing employment structures and understanding which workers are truly independent versus economically dependent on the company.

Amaral v. Federal Express Corp., No. 3:24-cv-12031-KAR (D. Mass. complaint filed 9/29/25).