Even If You Spend Your Career Driving For FedEx, You Might Not Be An Employee
Bloomberg Businessweek reports that hundreds of former drivers are awaiting court decisions regarding a slew of lawsuits levied against the company.
The workers contend they regularly lost nearly half their yearly wages to deductions and truck expenses because the company unfairly labeled them as independent contractors.
In one case a plaintiff says that for 10 years he worked 10-hour shifts delivering packages in San Diego for FedEx Ground. During that time he was never paid overtime and didn’t receive contributions to his Social Security benefits.
The man tells Businessweek that he made about $90,000 per year from the company, but between 40% and 60% was lost to deductions and truck expenses the company wouldn’t cover because he was just an independent contractor.
FedEx Ground, a subsidiary of FedEx, has long employed independent contractors, a practice officials with the company say differentiates it from competition.
“The entrepreneurs who run these small businesses have a flexibility and drive not often found in a traditional workforce,” the company said in a statement to Businessweek
Former contractors, however, say that the motivating difference for the company was its bottom line.
According to the National Employment Law Project, a workers’ rights group, employing independent contractors can save companies up to 30% of payroll costs by not including unemployment insurance, workers’ compensation, and state taxes.
Additionally, because independent contractors aren’t covered by wage and hour rules, companies aren’t obligated to pay overtime or cover the costs for uniforms.
In early October, a ruling by the Kansas Supreme Court bolstered the workers’ claims that FedEx uses the independent contractor label to save money.
“As FedEx’s counsel acknowledged at oral argument,” the Kansas court said in its decision, “the company carefully structured its drivers’ operating agreements so that it could label the drivers as independent contractors to gain a competitive advantage, i.e., to avoid the additional costs associated with employees.”
The ruling was a drastic change from previous court decisions that sided with FedEx Ground.
Businessweek reports that back in 2009 the D.C. Circuit Court of Appeals sided with the company. The same outcome happened in 2010 when a federal district court in Indiana ruled in favor of the company, throwing out other state claims.
The lawsuits against FedEx Ground are perhaps the biggest indicator of a shift in the workforce.
Back in 2006, the U.S. Government Accountability Office estimated that independent contractors and temp workers made up 31% of the country’s workforce. Two years later, Maryland Labor officials found that one in five employees were wrongly labeled as independent contractors.
Perhaps in light of the lawsuits, FedEx tells Businessweek that it’s changed business practices and now contracts drivers through other companies.
Still, former drivers suing the company say that’s not entirely truthful.
The owner of one such business says FedEx still tells his drivers when they’re leaving and how to drive, much like an actual employer might do.
While it remains to be seen what while happen with the many lawsuits facing FedEx Ground, the company insists the law is on its side.
“We are committed to protecting our way of doing business and the rights of thousands of independent business owners to continue owning and operating their own businesses,” it tells Businessweek.
As for the former independent contractors, they continue to feel taken advantage off.
The former San Diego driver says that while he once thought working for FedEx Ground would be like owning a “piece of the dream,” it’s not that way anymore.
FedEx Ground Says Its Drivers Aren’t Employees. The Courts Will Decide [Bloomberg Businessweek]
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