We report below on four key legal developments last month involving independent contractor (IC) misclassification, the most important of which was a decision involving the joint employment doctrine. Class action lawyers alleging IC misclassification have filed multiple Fair Labor Standards Act (FLSA) lawsuits against FedEx’s Ground and Home divisions. The core issues that plaintiffs in those cases asserted centered on the contention that driver/owners making deliveries on a single route were not ICs but rather employees misclassified as ICs. FedEx changed its business model a number of years ago when it launched its Independent Service Provider (ISP) program, where it no longer contracts with ICs that own and operate single routes. Instead, it contracts only with ICs operating companies with multiple routes. Driver/owners that become ISPs then hire a number of employee drivers and helpers to assist them in operating the routes. This tends to undermine any claims that ISP owners were themselves misclassified and should be deemed FedEx employees. As a result, plaintiffs’ class action lawyers tried to advance a new argument: that the ISPs and FedEx were joint employers of all the drivers and helpers working for an ISP on its multiple routes. That argument was soundly rejected last month by a Massachusetts federal district court, which granted FedEx’s motion to dismiss. While there is some overlap between the test for IC status and the test for joint employer status, there are key differences, and FedEx successfully demonstrated to the court that the plaintiff in the Massachusetts case had not sufficiently alleged that FedEx was an employer of the drivers. This favorable result for FedEx may signal an end to FLSA lawsuits against it by drivers hired by ISPs. Prudent companies that seek to restructure and implement ISP arrangements can use a process such as IC Diagnostics (TM) to minimize exposure to both IC misclassification and joint employer claims.

In the Courts (4 cases)

FEDEX SUCCEEDS IN DISMISSING JOINT EMPLOYER CLASS ACTION BY DRIVERS. A Massachusetts federal district court has granted FedEx’s motion to dismiss claims by drivers under the FLSA that FedEx is a joint employer along with ISPs that own and operate multiple routes. The drivers alleged that both FedEx and the ISPs violated the FLSA by failing to pay them overtime pay for hours worked in excess of 40 hours a week. Following the dismissal of two prior FLSA collective actions, 183 drivers filed two separate actions (consolidated for pretrial proceedings) against FedEx, which filed a motion to dismiss. In its motion, FedEx argued that the allegations by the drivers failed to sufficiently allege the existence of an employment relationship between the drivers and FedEx under the joint employment standard applied under the FLSA by the U.S. Court of Appeals for the First Circuit. The court agreed with FedEx, concluding that the drivers’ complaint allegations did not support an inference that FedEx had the power to hire or fire the drivers, determine the drivers’ rate of pay and method of payment, or maintain their employment records — three of the four factors examined by the First Circuit in determining if a company is an employer under the FLSA. The district court concluded that, on balance, the drivers failed to create a plausible inference that FedEx was the drivers’ joint employer. Although not required to proceed further, the court also addressed the remaining elements of the drivers’ FLSA claims “for the sake of completeness.” The court held that the drivers also failed to sufficiently allege unpaid overtime and actual or constructive knowledge by FedEx that the drivers worked overtime and were not compensated properly. An appeal by the plaintiffs is anticipated, unless they try to amend their complaint to address the inadequacies found by the court. Doyle v. Federal Express Corp., No. 24 -cv-12030 (D. Mass. Jan. 26, 2026), and Aleyne v. Federal Express Corp., No. 24 -cv-12031 (D. Mass. Jan. 26, 2026).

GIG STAFFING COMPANY TO PAY $4.5 MILLION TO SETTLE IC MISCLASSIFICATION LAWSUIT BY CITY ATTORNEY. San Francisco City Attorney David Chiu has reached a $4.5 million settlement with a gig staffing company, WorkWhile, resolving IC misclassification claims asserted by the city on behalf of thousands of California delivery drivers providing services to the company. Through its app, the company provides client businesses with workers, hired and paid directly by the company, to fill empty shifts in industries such as delivery, warehouse, hospitality, and food services. As reported in a news release issued by the City Attorney’s Office on January 21, 2026, the city claimed that the company misclassified the drivers as ICs instead of employees, resulting in the denial of state and local employee rights including overtime compensation, workers’ compensation, and paid sick and family leaves. The settlement requires the company to pay $4.1 million in restitution to the delivery drivers and $400,000 in civil penalties to the City Attorney’s Office. People of the State of California v. WorkWhile, No. CGC-24-615401(San Fran. Super. Ct. Cal. Jan. 21, 2026).  

ILLINOIS LOGISTICS COMPANY SETTLES IC MISCLASSIFICATION CLASS ACTION WITH DELIVERY DRIVERS. An Illinois logistics company has agreed to settle an IC misclassification case under the Illinois Wage Payment and Collection Act by delivery drivers for just under $1 million. The drivers claimed that the company, HomeDeliveryLink, Inc., violated state law by misclassifying them as ICs and not employees and making deductions from their pay. According to the complaint, the drivers are required to make deliveries for the company six days a week; receive daily manifests listing their assigned deliveries for the day and the order in which the deliveries must be made; are mandated to attend meetings where they receive instructions such as how to interact with customers and assemble merchandise they deliver; are required to wear company uniforms; are bound by a one-year nonsolicitation clause; and are subject to termination by the company without cause. The drivers also asserted that the company deducted thousands of dollars from their pay for certain expenses such as fuel, insurance, and the cost of damaged goods. Vera v. HomeDeliveryLink Inc., No. 1:23-cv-14278 (N.D. Ill. Jan. 20, 2026).             

FLORIDA COMPANY TRANSPORTING RADIOACTIVE MEDICAL MATERIALS SUED BY DRIVERS FOR IC MISCLASSIFICATION. Drivers for a national transportation company that specializes in the secure transportation of radioactive medical materials have sued the company alleging misclassification as ICs instead of employees. The drivers’ proposed collective and class action lawsuit asserts claims under the FLSA and Virginia’s Minimum Wage Act, Overtime Wage Act, and Misclassification Law. The drivers seek to recover unpaid wages, compensation for lost benefits, and liquidated damages, plus attorney fees and costs. The complaint alleges that the company failed to pay overtime compensation for hours worked over 40 in a workweek, and failed to pay drivers the minimum wage by requiring them to pay for gas, vehicle maintenance, depreciation, and insurance, thereby reducing their pay below the minimum wage. The complaint further contends that the company instructs drivers how to handle the medicines, supervises drivers, prohibits them from resequencing assigned routes and from subcontracting their work, subjects them to discipline for not following company guidelines and protocols, continuously tracks their locations, and requires them to undergo drug testing and background checks. It is anticipated that the company will move to compel arbitration if their agreements with the drivers include an arbitration provision. Cline v. MCBC Medical Delivery Services LLC, No. 8:26-cv-00303 (M.D. Fla. Jan. 31, 2026).