Straight Answers About FedEx Contractors
Question: I heard a group of FedEx Ground drivers in California sued the company for misclassifying them. What is the status?
Answer: On December 19, 2005, the Los Angeles Superior Court ruled in Estrada v. FedEx Ground Package Systems that FedEx Ground unlawfully misclassified single work area drivers as independent contractors. The judge found that despite the misleading language of the company referring to these drivers as independent contractors, the actual conditions and intent of the operating agreement is to hold "close to absolute control" over the single van drivers. The judge awarded the more than 200 drivers in the class $5.3 million in reimbursement of expenses based on each driver's personal situation.
The court said FedEx unlawfully required drivers to pay for business expenses such as fuel, oil, tires repairs and routine maintenance. The court also ordered FedEx to reclassify all single-route drivers in California as employees. FedEx has been ordered to cease this practice.
The company has said it would seek a stay of the order and may possibly appeal.
Q: What's the difference between being an independent contractor and an employee?
A: If a worker is an independent contractor, FedEx Ground and FedEx Home Delivery should have little say on how the job is completed. However, FedEx has been found to exercise excessive control over these workers, including creating policies for customer interaction, setting specific delivery schedules and requiring the driver to hold his key in a specific manner.
Q: Don't some workers like the freedom of being independent contractors?
A: FedEx Ground markets the contractor model as a sure path for entrepreneurs to achieve the American Dream, earning their way to success. However, many drivers find that the independence they wanted by being their own boss is merely a mirage, as FedEx exerts excessive control over them.
"We had no say so," a former FedEx Ground independent contractor recently told the Los Angeles Times. "They told us what to do. What they did was take advantage of the workers."
Q: What do independent contractors face?
A: They face long hours with no overtime pay due to schedules that FedEx creates. FedEx is also guilty of subjecting independent contractors to a laundry list of corporate policies that range from the inexplicable to the inane. FedEx does not have the legal right to place these demands on independent contractors.
When FedEx crosses that line, the independent contractor is being treated like a direct employee, and as such, should have the rights any employee should inherently enjoy.
Q: Why would a worker want to be classified as a direct employee?
A: It's a simple question of what employees deserve for working under the conditions FedEx Ground has imposed on them as so-called independent contractors. FedEx has created a business model that saddles the independent contractors with a myriad of operations costs that most companies would absorb.
If you were a direct employee of FedEx, the company would be required to provide your vehicle, maintenance and gas. It would be required to pay Social Security, unemployment insurance and workers' compensation. Like other employers, FedEx would be pressured to provide health care benefits and a retirement plan. FedEx avoids these responsibilities – and as much as 40 percent of the labor costs it should be paying—by hiding behind its illegal contractor model.
Q: Won't workers make less money as a direct employee?
A: Workers' total compensation package – including wages, benefits, overtime, vacation, federally mandated leave and other benefits rightfully due to employees – would increase the overall financial payoff for nearly all drivers.
Under the National Labor Relations Act (NLRA), independent contractors cannot form a union and elect a bargaining representative. As a direct employee, workers could join their FedEx coworkers to form a union and bargain for a number of improvements, including wages, vacation, medical insurance and retirement benefits.
In that way, job conditions for FedEx Ground and Home Delivery drivers would be closer to the UPS drivers they pass on the roads every day. On top of their industry leading wages, UPS workers also have the protection of a strong union contract that ensures that they receive generous vacation time, overtime pay, strong health and welfare benefits and a pension plan.
Q: What can FedEx workers do to become direct employees?
A: Many current and former FedEx Ground drivers across the country are participating in class-action lawsuits challenging the misclassification. The victory in California is only the first step. FedEx knows that the days of boosting its bottom line by shrinking its workers' share are over.
"Companies have found a way to pass on the cost of having employees down to the drivers," Walter Branam, head of California's task force investigating the misclassifications, recently told the Los Angeles Times. "They call them independent contractors."
Q: Do workers have legal standing to challenge their independent contractor status?
A: Absolutely. Microsoft lost a similar, major battle over the issue in 2000, forcing it to make a $97 million settlement.