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FedEx to Pay $2.5 Million to Settle Drivers’ Classification Suit

April 28, 2021, 1:32 PM

Fedex Ground Package System Inc. will pay $2.47 million to settle a class action alleging it made unlawful deductions from drivers’ wages by misclassifying them as independent contractors, under a settlement approved by a federal court in New Jersey.

After payment of attorneys’ fees and incentive payments, the settlement will distribute $1,619,627.00 to the class claimants, with an average payout for class members of more than $15,700, under the agreement approved Tuesday by the U.S. District Court for the District of New Jersey.

The agreement also calls for $796,575 in attorneys’ fees and costs and $15,000 incentive payments to each of the three named plaintiffs, Michael Carrow, Michael Fennel, and Nicholas Stefanou.

As of the filing of the agreement on April 21, 101 of the 192 class members had filed claims and no class members had submitted objections, the parties told the court in their joint motion for approval of the settlement.

The suit is one of many filed by FedEx Ground drivers in at least 40 states alleging the company wrongly classified them as independent contractors rather than employees.

Here, they allege FedEx considered them employees of separate incorporated businesses with which it contracted to provide delivery services. But these “contracted service providers” were a sham, according to the plaintiffs, who each allegedly incorporated their own businesses to work for FedEx.

The drivers allege the misclassification resulted in unlawful deductions for workers’ compensation, employment taxes, and business expenses from their wages under the New Jersey Wage Payment Law.

Judge Robert B. Kugler approved the order.

Marchetti Law PC represents the class.

O’Melveny & Myers LLP represents FedEx.

The case is Carrow v. FedEx Ground Package Sys. Inc., D.N.J., No. 16-cv-03026, 4/27/21.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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