A federal court has ruled that FedEx Corp. improperly classified about 2,300 drivers in California as independent contractors instead of employees.
The decision by a three-judge panel of the Ninth U.S. Circuit Court of Appeals on Wednesday covered drivers who worked for FedEx between 2000 and 2007. Similar lawsuits were filed in about 40 states before 2009.
A lawyer for the drivers estimated that they could receive at least $250 million in back pay and damages if the ruling stands up.
The judges said that under California law, the drivers were employees because FedEx controlled how they did their work. They had to wear company uniforms, drive approved trucks, and follow other company procedures.
FedEx said it will appeal to the full appeals court in San Francisco. FedEx general counsel Cary Blancett said that other courts had upheld contract language with "thousands" of independent contractors.
The Memphis, Tennessee-based company said that since 2011, it has only contracted with incorporated businesses that treat drivers as their employees. It also said it will shift to new service agreements in California, Oregon, Washington and Nevada.
In their lawsuit, the drivers sought back pay for overtime, expenses, punitive damages and attorney costs. That would total more than $75,000 for each of the drivers in the original lawsuit, according to filings.