The Kansas Supreme Court on Friday issued an opinion that hundreds of truck drivers who delivered packages for FedEx Corp. FDX -1.26% in Kansas were employees of the Memphis, Tenn.-based express delivery company and not its independent contractors.
According to the Kansas court opinion, 479 Kansas drivers sued FedEx alleging they were improperly classified as independent contractors under Kansas law. The drivers are seeking to recoup retroactive costs and expenses, as well as overtime.
The state court issued the opinion in response to a request from the Seventh Circuit Court of Appeals, which is considering appeals in 20 class-action suits, including the one in Kansas. All those had been decided in FedEx’s favor.

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FedEx said in a statement that it fundamentally disagrees with the ruling. “At the time, we are considering available options in response to the court’s decision,” the company said. The company added that the driver model at the heart the dispute is no longer in use. The opinion applies to drivers in Kansas who delivered for FedEx Ground between 1998 and 2007, the company added.
The Kansas court’s opinion is a setback for FedEx in a long-running dispute between it and some delivery drivers about whether they were contractors or employees before the company changed its business model in 2011, when it started contracting with incorporated businesses that employed drivers. In August, a panel of the Ninth Circuit Court of Appeals also ruled against the company in a similar case that the company is appealing.
FedEx pays the businesses they contract with by the package and the stops, among other things, and those businesses pay the drivers. Meantime, rival United Parcel Service Inc. drivers are unionized employees of the company, which means they receive salaries and benefits.
The Kansas opinion could influence not only the decision of the Seventh Circuit court, but also other similar lawsuits against FedEx in other courts around the country. According to FedEx’s latest quarterly report, the other lawsuits before the Seventh Circuit had been stayed pending the decision by the Kansas Supreme Court. The company also said in the filing that, while it couldn’t project how much a loss could cost it, it could be material to earnings.
In a 49-page ruling, the court said that “given the undisputed facts presented to the district court in this case, the plaintiff drivers are employees of FedEx” under state law.
Factors the court considered included: how much training the delivery company provided the drivers and how the drivers’ work hours were set, FedEx’s requirements of drivers to comply with its instructions, and how integrated the drivers’ services were to FedEx’s business.