More on FedEx Ground/HD and FMCSA
The FedEx Home Delivery application for an FMCSA hours of service exemption raises so many issues, it is hard to know where to start. First, this is a driver safety issue and a public safety issue because the hours of service regs at core are meant to prevent accidents that result from driver fatigue. So anyone who is concerned with driver safety definitely should add their comments at the Dept of Transportation site. (Remember: Docket #24231.)
Additionally, this application is a stark example of FedEx trying to extend its control over its drivers. The company cites regulations such as the FMCSA as reasons why it is obligated to broadly "control contractors" in the face of legal challenges to the misclassification scam - but at the same time the company goes to the government looking for exemptions from the regs that could alter terms in the operating agreement to the company's benefit at the expense of their drivers' safety and so-called "independence."
-- August 17
Disingenuous Nonsense Report: 8.9.06 Edition
Now this throwaway quote doesn't come out of the mouth of one of the FedEx spokes-podpeople, but it still qualifies as nonsense.
According to a real estate developer whose deal with FedEx hinges on a politician's whim, "FedEx is a great corporate citizen."
During the debate over the potential tax implications for the FedEx facility in Gilberts, residents and elected officials cite concern over potential lost tax revenue from an "industrial" development as opposed to a "commercial" development. It seems that industrial businesses only pay property taxes while commercial businesses also contribute sales taxes on transactions.
We couldn't tell from the news accounts, but if this is a FedEx Ground or Home Delivery terminal it would also mean that the company would be avoiding all the other taxes - like state income taxes, unemployment & workers compensation taxes - that the "contractor" scam passes on to drivers.
-- August 09
What Would You Do With $1.94 Billion in Cash?
The Fitch Ratings press release that was posted in the clips earlier made an interesting observation:
FedEx has a strong liquidity position, including $1.94 billion in cash on hand at May 31 and access to a $1 billion revolving credit facility. The proceeds from today's notes offering further bolster the company's liquidity. Fitch expects operating cash flow to remain robust in fiscal 2007, due to continued favorable pricing and the company's focus on improving productivity. However, heavy capital spending and acquisition expenses, along with $850 million in debt maturities and higher dividend payments mean calls on operating cash flow will be significant.
There are any number of things to do with the $1 billion in new cash that FedEx borrowed yesterday and the $1.94 billion in cash on hand that Fitch noted. FedEx can start to pay off its Watkins Motor Lines and Chinese purchases, it can pay down past debt, it can give away more cash to shareholders (like Fred Smith who'll get a dividend bonus of roughly $4.35 million this fiscal year) and it can refurbish certain barns.
Here's a thought. Those who actually make FedEx run should get their proper piece of the profits. The company could re-start the profit share programs for Express employees that were "suspended" after 9-11. Or comply with the law and make the Ground drivers employees. Or reinstate previous insurance coverage for FedEx Freight employees. Or even start a pension program for FedEx Freight East employees.
-- August 04
Second IRS Determination for FedEx Ground Driver as Employee
The hard-working legal team representing the drivers in the multi-district litigation against FedEx Ground sent out a revised press release on June 20. We now learn from the lawyers that there are two - count 'em 1 and 2 - drivers that have received final determinations from the IRS that the drivers were in fact employees and not "contractors." Here are the revised paragraphs from the later press release from Lynn Faris.
The Internal Revenue Service has reaffirmed its earlier decisions that two FedEx Ground drivers, one in Wisconsin the other in Missouri, were employees of the company and not independent contractors, as FedEx claimed. As a result, the drivers should have not been liable for Social Security and other employment taxes the government requires a true independent contractor pay, according to the final decisions in both cases the IRS issued July 12.
The cases involving former Wisconsin driver Sharon Pagels and Florissant, Missouri driver Rolando C. Thomas focus on the issue of worker status classification and the IRS Form S-88 filing. The decisions could have far reaching consequences for the company, according to Lynn Rossman Faris, Esq., the Oakland, California-based attorney who is lead counsel nationally in the 35 consolidated cases challenging FedEx's claim that its drivers are independent contractors.
We're still waiting for some reporter to ask the FedEx mouthpieces about those so-called "100 cases." Reporters need to find out what carries more weight in the ongoing litigation: two IRS determinations from 2006 or a South Carolina Human Affairs Commision decision from January 1991?
-- July 21
Can FedEx Ground Survive?
We're not the only one's asking ourselves that question.
A publication called State Tax Notes, one of the specialty online reports for tax lawyers, recently did an article on the contractor scam at FedEx titled "Tax Troubles for FedEx Ground?" The article is behind a for-fee firewall but clips from of it found their way to us.
In a concluding section called "Can FedEx Ground Survive", the authors write:
One reason FedEx Ground has been so successful in its competition with UPS is that it cut costs by classifying many of its drivers as independent contractors. Because a ruling from the California Unemployment Insurance Appeals Board will likely require FedEx Ground to change that classification, there is a question about whether the delivery company can survive. If it does, will the cost of payroll taxes, insurance, and benefits be passed on to consumers in the form of higher prices? Only time will tell. One attorney involved in the California class-action suit believes the judgment in the suit could cost FedEx Ground more than $200 million a year. Although that would be unfortunate for FedEx Ground, there are some upsides for the rest of us. First, FedEx Ground's massive profits appear to have been greatly enhanced through the company's improper use of so-called contractors. Second, from a tax standpoint, income tax compliance for contractors and other "sole proprietors" is considerably lower than that for regular employees. Classifying employees as contractors exacerbates that problem.
That is not to say that using contract employees is not a legitimate business model. However, what FedEx has been doing appears to be illegitimate because it combines the benefits of having employees with the benefits of using independent contractors. In sum, FedEx Ground likely has a decision to make. It can either continue to operate as is and pay payroll taxes, unemployment taxes, expenses, and benefits for its employees, or it can loosen up on the control it has over its drivers. Because the latter would likely include ending its delivery scheduling practice, that might not be feasible. Regardless of what the company decides, the California action is almost certain to hurt FedEx Ground's bottom line.
This article from State Tax Notes will not only be read by tax professionals, but also by state tax revenue agencies around the country. Perhaps the tax man elsewhere will be visiting FedEx Ground. Soon.
-- July 18
ANNOUNCEMENT TO ALL FEDEXWATCHERS
The FedExWatch.com web site recently had a major malfunction that caused registered user information to be erased from our system. The registration information was erased so no personal data has fallen into the wrong hands. There was simply a computer coding issue.
Users who registered on FedExWatch Version 2.0 since May 15 are asked to register again. Registration allows us to keep in touch with you and keep you informed about the growing movement of FedEx workers and Teamsters.
Thanks for taking the time to fill out the registration form.
-- July 14
Another CA Ground Driver fights and wins
All of the propaganda that FedEx can afford can't erase the fact that when a driver says "Enough!" and stands up for his rights, the driver wins and FedEx loses.
FedEx can cite the "100 cases" from their cherry-picked list and gullible reporters will quote them. But a April 1990 decision by the Virginia Industrial Commission doesn't hold much weight with anyone - certainly not with anyone with a brain and some authority.
FedEx Ground and Home Delivery drivers around the country should no longer fear that they don't have the power to stand up to FedEx. The facts and the law are on the side of the drivers. The only plan FedEx seems to have is to try and exhaust the drivers through the appeal process. Stay strong, guys and gals at G/HD, and you'll get the justice you deserve.
-- July 13
Teamsters Convention Highlights
The proceedings at the International Brotherhood of Teamsters 27th Convention have included a number of issues that directly impact FedEx workers and all workers in the transportation industry.
The 1,800 delegates unanimously approved a resolution that commits the full power of the IBT to bringing FedEx workers into the Teamsters union. The delegation committed the strength of the IBT and the Teamster membership to help solve problems FedEx workers face today - like ending the phony independent contractor classification scheme for Ground and Home Delivery drivers - and drive towards the ultimate goal of organizing FedEx workers.
There were two big announcements of developments with UPS that show how Teamsters representation brings real benefits to UPS workers.
The Teamsters and UPS agreed to enter into early negotiations to move towards a new national bargaining agreement that will insure further success for UPS Teamster members and Big Brown. FedEx salespeople should see clearly that they willl not be able to put any doubt into UPS customers' minds while the two sides are at the negotiating table.
Also, the Teamsters and UPS entered into an historic agreement to allow for card check recognition in organizing UPS Freight/Overnite. The convention floor erupted into cheers when Teamsters General President Jim Hoffa announced the agreement. Essentially, UPS management will not interfere with or intimidate its workers in joining the Teamsters and they will allow UPS Freight workers to join the Teamsters under a stream-lined process. Teamsters all around the country will join together to bring UPS Freight workers into the union under this card check and neutrality agreement. And UPS Freight workers will finally get the good wages, benefits and security of a Teamsters contract.
Rolf Buttner, the Postal Division Director at Ver.di - the German United Service Union and the largest union at DHL's corporate parent Duetsche Post WorldNet - brought a clear message of solidarity and strength to the delegation. Ver.di members make up 90% of the Duetsch Post WorldNet workforce in Germany. Buttner pledged to work hand in hand with the Teamsters and said "We want Teamster members to get collective bargaining agreements from coast to coast at DHL in the United States."
The convention clearly shows that Teamsters will put the power of the entire union behind the drive to organize workers in the delivery industry - at UPS, at DHL and at FedEx.
-- June 29
New resources: FedEx Ground Sues state of Oregon
FedEx Ground has sued the Oregon Employment Department to overturn an administrative order that ruled a FedEx Home Delivery multi-route "contractor" was an employee and eligible for unemployment insurance. The Administrative Law Judge found the driver was an employee and was fired "but not for misconduct."
FedEx appealed this order to the Oregon Court of Appeals in May 2006. We'll be tracking closely the court filings at the Resource page we've created for this case.
-- June 19
Don’t Sit Out the Fight at FedEx Ground Actions
In a series of actions by Teamsters local unions, Teamster members fanned out around the country during June to distribute educational leaflets to FedEx Ground and Home Delivery drivers. Their message was simple: Don't Sit Out the Fight at FedEx Ground - Drivers are Employees, Not Contractors - Employees Have Rights to Form Unions
FedEx Ground and Home Delivery drivers are fighting against the illegal misclassification as "contractors" and the cost shifting of taxes and operating expenses that should rightly be paid by FedEx. The courts are repeatedly ruling for the drivers and against FedEx. When drivers and the Teamsters are fighting for union rights before the National Labor Relations Board, the Board is repeatedly ruling for the drivers and against FedEx.
If the Teamsters were at your station but you didn't get a chance to talk to someone, send us a note and we'll put you in touch with a person to answer your questions. If the Teamsters weren't around this time, send us a note and we'll get someone to contact you about your station. Send any email to fedexwatch AT teamster DOT org.
-- June 16
Loyalty Only Goes One Way at FedEx
The conversation over at FedExaminer.com is really worth the free subscription for anyone who is concerned about what's going on at FedEx. Some folks over there have the gift of gab and others are Internet sleuths, so the time spent there is time well spent.
The article posted there titled FedEx Strategy Backfires in Punitive Stage at Law.com is a gem. The article analyzes FedEx's arrogance going into the Lebanese-American drivers' trial. And further comments on the way the company threw the accused manager overboard the instant it served their purpose. One trial participant said the company "treated the manager like a leper" after the compensatory award was announced. So much for loyalty to a supposedly well-regarded manager.
But we've also heard that Paul Callahan had a very rough time that day the jury came back with the punitive damages award. Callahan made a last minute appeal to the jury himself. We heard it was as close to begging as one can get in a cramped witness box that is too small to kneel in. The jury promptly came back with the shocking $50 million award. Wonder how long Callahan's losing streak in court will go before he gets tossed overboard too.
-- June 14
Is FedEx Ground a “National Package Delivery Company”?
And if FedEx Ground is a national package delivery company, is it the national package delivery company that "routinely misclassifies drivers as independent contractors" in New Jersey? The New Jersey Department of Labor went out of its way to avoid identifying exactly what company was audited, found to be wrongly classifying its drivers, contested the audit, then settled and paid back taxes.
-- June 07
Disingenuous Nonsense Report: 6.06.06 Edition
The level of arrogance at FedEx headquarters is truly amazing. FedEx is stiffing the EEOC on an administrative subpoena that requests "basic information on the type of computerized or machine readable files that it maintains." According to court filings, the EEOC is "currently investigating a charge alleging a pattern and practice of race and national origin discrimination" against FedEx Express. The filings so far from the EEOC vs FedEx Corporation case in Arizona are now at our Resource page.
The Arizona press is digging more into the story. And looking for more comment from FedEx. FedEx spokeswoman Sandra Munoz replies, "This company does not tolerate discrimination of any kind." This type of throw-away line is just more disingenuous nonsense with news of $61 million awards so fresh in everyone's mind. The "no tolerance" broken promise must be on a three-by-five card given to all FedEx mouthpieces.
The charge and EEOC investigation are directly related to the Express employees' allegations in the Satchell vs FedEx Express class action lawsuit.
-- June 06
$50 Million Award to Arab-American FedEx Ground Drivers
The two Arab-American drivers were harassed by supervisors with taunts of "sand nigger" and other slurs. The jury awarded the two men $11 million in compensatory damages and then an additional $50 MILLION in punitive damages.
Something is seriously wrong in the management ranks at FedEx Ground & Home Delivery. What kind of people are being promoted? What policies are being enforced and what other policies are being ignored? "Guaranteed fair treatment" is just more disingenuous nonsense.
Remember, this is the company that allows even high level managers like Senior Vice President Paul Callahan to say things like, "If we had selected the right people, we wouldn't be seeing these lawsuits." In that quote, Callahan is talking about the drivers who are beating the pants off FedEx on the driver classification issue in the MDL. But it shows the mindset at FedEx Ground where it is never their fault. Apparently in the case of the two Arab-American drivers, the jury decided it was FedEx's fault - to the tune of $61 million.
-- June 03
We’re FedEx Ground, We Don’t Pay Taxes, Governor
So another governor - this time Haley Barbour in Mississippi - attended another groundbreaking at another FedEx Ground facility. Seeing life slowly get back to normal in Gulfport and the Gulf Region is tremendously good news. We can appreciate Gov. Barbour's appearance in that context.
But what excuse did Gov. Ehrlich or Gov. Perdue have?
We'd really like to see some effort by these governors to press FedEx Ground to account for the lost tax revenue and workplace insurance funds that the "independent contractor" scam costs these states.
-- June 02
NY Times Article is Spreading Thru the Internet
The New York Times article is certainly spreading thru cyberspace. After the piece spent a good part of the day among the "Top 10" Emailed articles at NYTimes.com.
The good, long blog post at Firedoglake puts the FedEx Ground retaliation against the Northboro drivers into the proper context as a standard operating procedure for many anti-union employers these days. The writer of that post, Justin Barab of Confined Space, is a strong, clear voice for worker issues in the blogosphere.
But the blog that will have a special place in the FedEx Ground fight lore is WorkersCompInsider for warning FedEx managers in April 2005 to read the Massachusetts attorney general's directives on that state's independent contractor law. We never doubted that FedEx didn't read the Massachusetts laws. They are just too heavily invested in the independent contractor scam to change their ways.
-- May 31
Disingenuous Nonsense Report: 5.31.06 Edition
The New York Times did a good job in speaking to all sides of the driver insurgency at FedEx Ground & Home Delivery. However, some critical facts need to be clarified.
Most importantly, there is no "Teamsters said, FedEx said" argument. The drivers and the Teamsters have repeatedly taken their case that the drivers are employees and not "contractors" to numerous courts, agencies or government bodies. And a string of recent decisions - whether in the courts in the Estrada ruling or in the Tumulty ruling or at the NLRB in the Northboro ruling or the Barrington ruling or the Fairfield ruling - have all ruled in favor of the drivers and against the company. The reality is the drivers are fighting and winning while the company is losing and whining.
Second, FedEx flak Perry Colosimo must have been an awful student - because he gets both his math and his history wrong. When the Northboro drivers petitioned for the election, the Teamsters had secured 21 out of 23 eligible voters in support of unionization. If the election were held promptly and if the company had not tampered with a fair election by firing union supporters, then the Teamsters would have won the election easily. FedEx fired the union supporters to intimidate the workforce because FedEx KNEW THEY WOULD LOSE THE ELECTION. The Teamsters only moved later to block the election in light of the FedEx tampering. That double talk is just more FedEx disingenuous nonsense.
In Northboro, the men and women deliberately joined with the Teamsters to try to form a union and take control of their work conditions. No one in Northboro was "lured" into anything. FedEx employees are working with the Teamsters because we are committed to banding together with all FedEx employees who are sick of the broken Purple Promises and want to secure the respect and the just earnings they deserve.
-- May 31
What Would FedEx Freight - Watkins Merger Mean for Workers?
The financial coverage of the rumored FedEx purchase of Watkins Motor Lines has seemed to accencuate the positive. We've heard another viewpoint from analysts that may be more worrisome to investors - and certainly to both FedEx Freight and Watkins employees. The analysts we've talked have raised the question of duplication of facilities and coverage in parts of the the US from the investor perspective. Surely, as with most mergers in corporate America, the merger would have a deep impact on the existing workforce at both FedEx Freight and Watkins.
-- May 25
New resources: Tumulty case, FedEx Ground as “joint employer”
We've added the Tumulty vs FedEx Ground case to our Resources . The plaintiff drivers were temp drivers at FedEx Ground and the judge ruled that FedEx was the joint employer under the Fair Labor Standards Act and Washington state law. After having lost the argument that the drivers were employees of the contractors and not employees of FedEx Ground, the company quickly settled the case. But knowing the danger of a ruling that FedEx Ground was the joint employer of temp drivers, FedEx immediately appealed to the Ninth Circuit. FedEx doesn't want the summary judgment to stand in face of the driver insurgency and the multi-district litigation .
-- May 23
Welcome to FedExWatch Version 2
Come on in, open the hood, kick the tires. Surf around the Insider Resources. Check back often for new stuff. Send a note to FedExWatch at Teamster dot org with your thoughts.
-- May 16
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