FedX

[Brat]

Recently I attended an HR law seminar, some time was spent on 'independent contractor' relationships as many an employer have been tempted to go this route. As one who worked for DOL for many years this is a 'one more time around' behavior for me. DOL is the least of an employers' risks... IRS, worker's compensation, unemployment taxes, social security and Medicare taxes are all in the mix.

Recent litigation regarding the 'independent contractor' status of delivery drivers in the 9th Circuit IMHO puts their business model in question. If they loose more cases going forward, as I think they will, I think they will be in difficulty. I understand that they will say that they have robust defenses but I doubt the courts will see it their way. Reflect on the Microsoft independent contractor litigation years ago and the money it took to unwind that problem. FedX is no Microsoft.

[Texas Proud]

I agree... when I heard of the FedEx lawsuit.... I was thinking... are they crazy.... how can you classify a driver as independent when they drive a truck with your name, wear uniforms with your name, and are directed by you on what to deliver and when to work....

Am I missing something here

[ERD50]

Quote:

Originally Posted by Texas Proud I agree... when I heard of the FedEx lawsuit.... I was thinking... are they crazy.... how can you classify a driver as independent when they drive a truck with your name, wear uniforms with your name, and are directed by you on what to deliver and when to work.... Am I missing something here

I also saw some articles on this a few weeks back. They sure didn't sound like independent contractors to me.

One of the requirements I had always heard is that the independent set their own work hours. I hardly think a FedEx driver could decide to work from 8PM to 3AM to beat the traffic.

I had no idea those delivery men/women were not straight employees. I guess they are saying it's like a McDonald's franchise? Sure seems to be pushing it.

-ERD50

[Lakewood90712]

My 2 cents worth , I think FEDEX is going to loose, and it will be a drag on earnings for a few years. It will not sink them.

[purplesky]

Quote:

Originally Posted by Brat Recently I attended an HR law seminar, some time was spent on 'independent contractor' relationships as many an employer have been tempted to go this route. As one who worked for DOL for many years this is a 'one more time around' behavior for me. DOL is the least of an employers' risks... IRS, worker's compensation, unemployment taxes, social security and Medicare taxes are all in the mix. Recent litigation regarding the 'independent contractor' status of delivery drivers in the 9th Circuit IMHO puts their business model in question. If they loose more cases going forward, as I think they will, I think they will be in difficulty. I understand that they will say that they have robust defenses but I doubt the courts will see it their way. Reflect on the Microsoft independent contractor litigation years ago and the money it took to unwind that problem. FedX is no Microsoft.

Fred Smith at FDX has been screwing his FDX ground workforce for years now.

FDX express used to be a great job. Those days are long gone after pension and pay cuts.

FDX spends big money on lobbying and will find new ways to screw their so called independent contractor drivers.

Don't worry. FDX will win this somehow and continue to crush their workforce with pay cuts and benefit reductions.

Its not like anybody in America cares anyway? Remember Corporations are people.

[ERD50]

Quote:

Originally Posted by purplesky ... FDX express used to be a great job. Those days are long gone after pension and pay cuts. ...

Perhaps. However, is there any shortage of people willing to take the job? Then I guess it must offer something at least as good as other options.

Question: Do you routinely pay more than the market rate for the goods and services you buy? Like, just add 20% to your grocery bill, or your car repair, or for your computer, so that all those workers can do a bit better? I'm guessing 'no'.

Quote:

Its not like anybody in America cares anyway? ...

Are you really going to persist in telling us that we don't care? Does adding a question mark somehow protect you or exclude you?


-ERD50

[MRG]

I didn't realize this practice was still prevalent. Way back('70s-'80s) loggers and drivers were paid like that so the employer could avoid the huge workman's comp bills. But they had the ability to say 'it's raining, icey or other reasons'(hung over) they weren't working. I can't see a delivery driver being able to say 'I dont want to drive today. Let someone else take my route.' I thought that was the big distinction between employee and contractor.

Of course when an accident occured it got ugly. I recall a co-worker having a chain saw kick back and hit his neck. After much rehab he could do a lot of things except use his left arm. Hard to find work when you're a one armed logger.

[purplesky]

Quote:

Originally Posted by ERD50 Perhaps. However, is there any shortage of people willing to take the job? Then I guess it must offer something at least as good as other options. Question: Do you routinely pay more than the market rate for the goods and services you buy? Like, just add 20% to your grocery bill, or your car repair, or for your computer, so that all those workers can do a bit better? I'm guessing 'no'. Are you really going to persist in telling us that we don't care? Does adding a question mark somehow protect you or exclude you? -ERD50

FDX used to be a great company to work for 20 years ago. Back then you had to know someone to get hired. It was a cool job and a respected company back in the day.
But now yes there is a huge shortage of drivers and ramp personal.
Very high turnover.

Lower labor costs for Corporate America are unfortunately just not being passed on to consumers these days so no I don't routinely pay more for goods and services.

No I don't think that many Americans really care if a FDX driver makes a living wage or gets paid overtime or is offered health benefits or a pension or a 401k. So FDX will survive their contractor scam and the shareholders will be fine.

I don't own individual shares of FDX but I do own UPS shares(great dividend).

[Brat]

I look at this as a former employment law enforcement professional and, at this stage in my life, as an investor of retirement savings. Throughout my life I walked between the employee/employer relationship much as a referee. This is not going to end well for FedX. They can't put lipstick on a pig.

[Texas Proud]

Quote:

Originally Posted by purplesky Fred Smith at FDX has been screwing his FDX ground workforce for years now. FDX express used to be a great job. Those days are long gone after pension and pay cuts. FDX spends big money on lobbying and will find new ways to screw their so called independent contractor drivers. Don't worry. FDX will win this somehow and continue to crush their workforce with pay cuts and benefit reductions. Its not like anybody in America cares anyway? Remember Corporations are people.

I do not see them winning... the rules are pretty clear....

[ERD50]

Quote:

Originally Posted by purplesky FDX used to be a great company to work for 20 years ago. Back then you had to know someone to get hired.

That doesn't sound very good to me. Having to "know someone" to get hired means that some more deserving people don't get a shot at a good job. That kind of favoritism also is at the center of a lot of racial discrimination issues. I guess I'd wonder if a person who describes that as 'great' is someone who cares about the little, 'unconnected' guy?

Quote:

But now yes there is a huge shortage of drivers and ramp personal. Very high turnover.

Well, if they really have a 'huge shortage' (the trucks keep coming to my house on schedule - how's that happen?), then FedEx will need to provide better total compensation. That's how it works.

Quote:

Lower labor costs for Corporate America are unfortunately just not being passed on to consumers these days so no I don't routinely pay more for goods and services.

So I take it that you do routinely pay more for goods and services to every small business transaction you make? Small businesses make up about half of non-farm GDP (you can look it up), so much of your money must go to them. They are not 'Corporate America', they are small business. Something tells me that answer is 'no' also.

Quote:

No I don't think that many Americans really care if a FDX driver makes a living wage or gets paid overtime or is offered health benefits or a pension or a 401k. So FDX will survive their contractor scam and the shareholders will be fine.

I don't think it is up to anyone other than FedEx and the drivers to care what their pay and benefits are. I am not a lawyer, and I'm sure FedEx hires many good ones, but from what I know of this (not much - anyone got a good concise source?), I'd say FedEx will be making big changes soon.

Quote:

Originally Posted by Brat I look at this as a former employment law enforcement professional and, at this stage in my life, as an investor of retirement savings. Throughout my life I walked between the employee/employer relationship much as a referee. This is not going to end well for FedX. They can't put lipstick on a pig.

I mentioned it above, but do you know of a good source to capture the issue? I'm really surprised to hear these drivers are contractors - goes against everything I know (which isn't much, but a little) about what defines a contractor versus employee.

-ERD50

[Brat]

As an attorney friend of mine remarked, the more things change the more they remain the same. Honest this stuff is basic, there is a reason for temporary employment agencies.

What court rulings against FedEx mean for workers | MSNBC

Ninth Circuit Slaps FedEx Over Contractor Policy | The Recorder

Ninth Circuit Reverses District Court, Rules FedEx Drivers in California and Oregon are Employees | Employment Law Spotlight

Overtime is the least of their liabilities.

[purplesky]

Quote:

Originally Posted by Texas Proud I do not see them winning... the rules are pretty clear....

Hope you are correct. FDX has been fighting over this contractor scam for years. LOTS OF LOBBYING AND GOLF.
There are many other companies that play this same game and just label their employees "independent contractors". They are watching this case closely.

In today's political business climate I just don't have much faith in workers getting a break.

FDX will probably pay some big fines and adjust their contractor model with new loopholes and it will be business as usual.

[purplesky]

Quote:

Originally Posted by ERD50 That doesn't sound very good to me. Having to "know someone" to get hired means that some more deserving people don't get a shot at a good job. That kind of favoritism also is at the center of a lot of racial discrimination issues. I guess I'd wonder if a person who describes that as 'great' is someone who cares about the little, 'unconnected' guy? Well, if they really have a 'huge shortage' (the trucks keep coming to my house on schedule - how's that happen?), then FedEx will need to provide better total compensation. That's how it works. So I take it that you do routinely pay more for goods and services to every small business transaction you make? Small businesses make up about half of non-farm GDP (you can look it up), so much of your money must go to them. They are not 'Corporate America', they are small business. Something tells me that answer is 'no' also. I don't think it is up to anyone other than FedEx and the drivers to care what their pay and benefits are. I am not a lawyer, and I'm sure FedEx hires many good ones, but from what I know of this (not much - anyone got a good concise source?), I'd say FedEx will be making big changes soon. I mentioned it above, but do you know of a good source to capture the issue? I'm really surprised to hear these drivers are contractors - goes against everything I know (which isn't much, but a little) about what defines a contractor versus employee. -ERD50

The FDX express courier job was a highly sought after job 20 years ago so basically you needed a inside reference or just great luck.

Now the problem is some of these FDX ground drivers barely make $10.00hr which is not a fair wage for what these drivers are expected to do.

Most ground drivers work for route owners who have a contract year to year with FDX.

Its a mess at FDX.

[EastWest Gal]

Quote:

Originally Posted by MRG I didn't realize this practice was still prevalent. Way back('70s-'80s) loggers and drivers were paid like that so the employer could avoid the huge workman's comp bills. But they had the ability to say 'it's raining, icey or other reasons'(hung over) they weren't working. I can't see a delivery driver being able to say 'I dont want to drive today. Let someone else take my route.' I thought that was the big distinction between employee and contractor. Of course when an accident occured it got ugly. I recall a co-worker having a chain saw kick back and hit his neck. After much rehab he could do a lot of things except use his left arm. Hard to find work when you're a one armed logger.

There seems to be a general impression that an independent contractor gets to take days off, just because. They agree to work according to a contract but don't have employee status, including benefits. I worked as an IC physician a couple of times. For a physician, it's an excellent way to work part time in that one can take breaks. But you can't expect to get hired if you are irresponsible and don't keep your commitments. Or if you dress like a slob.

Having said this as an aside, it sounds like Fedex is taking advantage of it's drivers in an unfair way due to a shortage of jobs. It makes it all the more dangerous for us driving folks on the road who shouldn't have to deal with tired, overworked and underpaid truck drivers.


Sent from my iPhone using Early Retirement Forum

[Redbugdave]

I have talked with a longtime Fedex driver over the years. And it has been an ongoing battle. I understand the sarcasm that Purplesky has. The company has had deep pockets to hire good lawyers for their side. Many of those "contractors" have given up and moved on. And that is how the scam has been allowed to continue.

Lately, this contractor swindle deal with many other companies has come to a head in the news. I think the govt may clamp down because of the lost taxes not being reported and paid. It has been going into all the owner's pockets all these years.

In the long run, this may mean more business for UPS.

[Texas Proud]

Quote:

Originally Posted by EastWest Gal There seems to be a general impression that an independent contractor gets to take days off, just because. They agree to work according to a contract but don't have employee status, including benefits. I worked as an IC physician a couple of times. For a physician, it's an excellent way to work part time in that one can take breaks. But you can't expect to get hired if you are irresponsible and don't keep your commitments. Or if you dress like a slob. Having said this as an aside, it sounds like Fedex is taking advantage of it's drivers in an unfair way due to a shortage of jobs. It makes it all the more dangerous for us driving folks on the road who shouldn't have to deal with tired, overworked and underpaid truck drivers. Sent from my iPhone using Early Retirement Forum

Hopefully this is OK... from the IRS site..

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action.

I think FedEx fails big time on both. They do not tell the drivers 'just deliver this package to Sue'.... and the driver gets to do it however they wish etc...






Just to give some info on this.... my last company was audited by the State to make sure we had everybody labeled properly.... there was one lady who would sub for our receptionist.... if our normal one was not going to be there we would call her... she either say 'yes' or 'no' and sometimes said 'I will work till 3'.... we had her as an independent contractor... the State said 'anybody who is a receptionist is an employee unless you hire them through a temp agency'....


The state did agree that all the other work she did for us would qualify, but not being a receptionist....

[Brat]

I don't think IRS judges whether or not a company is being 'fair' to it's claimed independent contractors. If the test fails then IRS wants, at a minimum, social security and Medicare taxes and it doesn't matter whether or not the 'independent contractors' have paid them. Then comes the various state taxes, particularly unemployment insurance and worker's compensation. There is no 'acted in good faith' defense.

Let me throw another hot potato on the table: health insurance, 401ks, stock. If those 'independent contractors' had been employees what fringe benefits would they have been entitled to? Consider for a moment the possibility that an independent contractor (or family member of the contractor) had huge unpaid medical bills.

[purplesky]

Quote:

Originally Posted by Brat I don't think IRS judges whether or not a company is being 'fair' to it's claimed independent contractors. If the test fails then IRS wants, at a minimum, social security and Medicare taxes and it doesn't matter whether or not the 'independent contractors' have paid them. Then comes the various state taxes, particularly unemployment insurance and worker's compensation. There is no 'acted in good faith' defense. Let me throw another hot potato on the table: health insurance, 401ks, stock. If those 'independent contractors' had been employees what fringe benefits would they have been entitled to? Consider for a moment the possibility that an independent contractor (or family member of the contractor) had huge unpaid medical bills.

FDX is a good example of our "race to the bottom" economy.

The corporate culture in the last 20 years at FDX has changed from a Southwest airlines type culture(happy employees) to something more like a Walmart culture(unhappy employees). I am talking frontline workers.

FDX once had a workforce that was well paid for hard work and they liked their CEO Fred Smith. Those days are long gone.

I remember 60 minutes did a story years ago about Fred Smith and the story
of FDX.
It was impressive. Now not so much.

I always thought FDX would take UPS down because of the Teamster union
wages but it would appear that UPS is stronger than ever.
UPS is going through a rapid expansion of their whole feeder and freight network.

I really think UPS is a good long term buy.

[Tadpole]

Back in the 80s when I was working for the DOD in CA, I became acquainted with contract engineers whose description of their work-life was one of moving up and down the CA coast wherever the contracting money was found. (I was quite sure that, even if true, it was an exaggeration and that most could at least find employment in a smaller area of CA.)

But, I think maybe skilled labor and professionals may eventually be treated like Just-In-Time workers. The contractor model fits here and I think the laws, courts, whoever, will morph to accept this model of labor and come to justify it as not violating labor laws of a previous generational model of work. I may not like this (I don't) but it may be exactly what is coming. (Construction workers aren't paid when their skill is not needed; it is only a small step to consider them contract labor and to make them handle their overhead/benefits within whatever it takes to win the bid for the contract.)