Attacking FedEx Ground from the Right

Here's a criticism of FedEx Ground's contractor scam that comes from the right/libtertarian point of view.

But first, we should mention the other companies which use "contractors" that Fred Smith has cited positively. FredEx is trying to muddy the waters with apples:oranges comparisons with some of these but is also playing with fire by id'ing other companies that could draw the IRS stink eye.

Fred Smith in Jan 10, 2008 conference call: "There are many many major corporations in this country who use independent contractors - here are just a few of them: AllState, DirectTV, Dynamex, NASCAR, Publishers Circulation Fulfilment, Raymond James, State Farm, Velocity Express, Yellow Cab, Mary Kay, Avon, Lowes Home Depot, Mac Tools and so on down the line."

FedEx-cess: Inviting In the Big, Bad Government Wolf

By Chuck Muth CNSNews.com Commentary
March 17, 2008

We all know a few bad apples can spoil the whole barrel. And never is this saying truer than when it comes to a rogue company or industry abusing its privileges, thereby inviting the government to stick its nose even further into the business of business. Think Enron, and the resulting compliance nightmare known as Sarbanes-Oxley. Or just ponder the red-tape regulation-palooza headed the mortgage industry's way this year.

Which is why the nation's self-employed independent contractors need to be aware of the dangerous line FedEx is walking these days. The regulatory wolf rabidly believes that when it comes to imposing new controls on American businesses, it absolutely, positively has to be there overnight. And FedEx is inviting the hairy one with big fangs in.

At issue is the difference between being a self-employed independent contractor and a company employee. Generally speaking, independent contractors perform various services for various people. Employees work directly for one company. Independent contractors pay their own taxes and provide for their own benefits, such as health insurance and retirement. Employees have taxes deducted from their paychecks and receive unemployment benefits and workers comp.

Employees cost a company more money because of this, which is why many companies choose to outsource certain services to independent contractors. For example, a business might contract out grounds-keeping to an independent lawn care service rather than hire a full-time gardener. The independent lawn care owner, providing his services to various businesses, is self-employed; the full-time gardener is an employee.

The government, especially the IRS, doesn't much like independent contractors. If they had their way, every worker would be designated an "employee," thus falling under more of their direct control and scrutiny.

For their part, independent contractors don't much like government. They prefer to be, um, independent. Which is why an abuse of the independent contractor option by FedEx should be of grave concern to all true independent contractors.

At the heart of this matter is FedEx's claim that its delivery drivers are independent contractors and not employees. This claim seems laughable on its face, even for those who aren't familiar with the "official" definition of independent contractors. Let's face it, the drivers drive FedEx trucks, wear FedEx uniforms and identify themselves as FedEx representatives. I mean, come on. If it walks like a duck and quacks like a duck, it's not a gorilla, right?

<snip>

Or putting it even more plainly, the Appeals court stated flatly, "We affirm the finding that the drivers are employees." Period. And if FedEx continues trying to call a duck a gorilla, it will endanger the rights and prerogatives of all legitimate independent contractors.

This is not to say I agree with the government's position on this issue. In my opinion, every worker should have the right to freely enter into whatever kind of employment relationship the worker and the employer deem acceptable to both parties with no government intrusion whatsoever. But the reality is that Big Brother already has its hooks in the employment market and there are those in Congress who would like to further put the squeeze on independent contractors.

FedEx's abuse of the independent contractor provision will only add fuel to the regulatory fire. They should cut their losses and change their employment practices before the big, bad wolf comes for the rest of us.

-- March 17

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