May 7, 2005

FedEx Drivers Head to Federal Courts: A Declaration of Dependence?

We have been focusing on the issue of independent contractors for some time now. As recently as April 27, we blogged that the FedEx strategy of hiring their drivers as "independent contractors" was not likely to prevail in Massachusetts, where the standards for establishing independence are very high indeed. Now Diane Lewis of the Boston Globe (registration required) reports that a handful of current and former FedEx drivers have gone one step further: they have filed a class action suit in Boston federal court on behalf of all 17,000 FedEx drivers across the country.

Lewis's article clarifies one of the mysteries of this arrangement: how do these "independent contractors" come up with the money for FedEx box trucks with company logos? The answer is that they lease them, presumably from a company that is "independent" of FedEx itself. The suit alleges that in addition to leasing the trucks, the independent contractors have to buy gas, uniforms, and equipment, thus netting much less than what they expected to make and less than what salaried drivers at rival UPS are paid. (In my April 27 blog, it appeared that FedEx drivers made more than UPS drivers.)

Federal Court versus State
I am a little disappointed that the case is bypassing the state courts. It's a slam dunk that FedEx would lose here in Massachusetts, but it would have been a great show. The fate of this case in federal court is perhaps less certain. By bringing the action in federal court, the plaintiffs have set their sites on a nation-wide action that challenges FedEx's core strategy across the country. This case is likely to end up at the US Supreme Court.

While I am all for innovation in management, I have a problem with the FedEx business strategy. By calling their drivers independent contractors, they break the natural bond between employer and employee. Independence is wonderful, but it must be true independence. FedEx drivers are caught in a nether world: they lack the job security and benefits of employees and also lack the true independence of entrepreneurs. By taking the company to court in Boston, the drivers are issuing a declaration of dependence in one of the home cities of American independence. It's the American way.

| 1 Comment

1 Comment

Fred Smith has just joined the list of BILLIONAIRES according to Forbes.

His organization is so full of disparities that it makes one dizzy. HIs pilots are unionized yet he threatens to shut the company down if his drivers consider a union.

Across the street from the underpaid "contractor" in the ground truck is the FedEX Express (air) driver who often makes twice the money and usually delivers far less packages each day.

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This page contains a single entry by Jon Coppelman published on May 7, 2005 2:17 PM.

Course and Scope: A Case of Flag Waving was the previous entry in this blog.

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