"Shareholders Latest to Sue FedEx Over Drivers"
It certainly must be a long line of people suing FedEx Corp and FedEx Ground for misclassifying drivers.
Only the 'latest' is a shareholder - the Plumbers and Pipefitters Local 51 Pension Fund - who is suing the company's Board of Directors for "breach of fiduciary duty, abuse of control, gross mismanagement, corporate waste and unjust enrichment." The title of this post comes form a newspaper story with the same title.
The Reuters beat reporter for transportation also wrote an article that was picked up by some web sites.
FedEx's lawyers must be very busy.
-- May 09
New Resource: MDL Class Notice Order, Plaintiff Common Proof Brief
Following Judge Miller's certification orders for 19 states on March 25, things just might be speeding up in the multi-district litigation.
Last week, Judge Miller issued an order outlining the content and timing for the class notice order that will be sent to all potential class members. The order centered on the national ERISA claim and the KS state claim but will seemingly be applied to all other state class claims. Some key takeaways from the order: there will be one class notice (not two ie a separate notice for ERISA and second notice for state claim), there will be an opt-out process but there will not be an opt-out form included with the notice, language that threatens potential discovery by FedEx will not be included and FedEx will not insert propaganda into the notice.
On that last item, Judge Miller said:
FedEx seeks to add information about FedEx's right to express their opinion about the lawsuit. While FedEx believes it needs to express to the class that it has a right to express its opinion, that is not the purpose of class notice. Class notice is meant to inform the class of their rights, but it is not meant to protect the rights of the defendant. (See In re Brand Name Prescription Drugs Antitrust Litigation, 1995 WL 23058 at *1.) Consequently, this Court declines to entertain FedEx's suggestion that the notice include information about FedEx's right to express its opinion. (Original emphasis)
As for the timing, the final notice will be approved and an order directing the notice will be mailed will be sooner rather than later.
Based on this class definition, this Court certified class actions for the Kansas and ERISA case. FedEx had the opportunity to raise arguments about the insufficiency of this definition while this Court considered FedEx's opposition to Plaintiff's motions for class certification. This Court will not revisit whether the definition of the class is appropriate as a basis to delay class notice. In summary FedEx has not offered any persuasive justification for delaying the issuance of class notice at this time.
Another FedEx delay tactic. Another FedEx loss.
The second filing is the Plaintiff's brief on common proof. This brief lays out some of the evidence that the drivers' lawyers will submit to prove the control over the drivers by FedEx to support a ruling that finds employee status. Again, the drivers' lawyers here will offer evidence that goes to the common experience of drivers in the states where class claims have been certified.
There is a good discussion on the "individual versus policy" control factors over at FedExaminer.com for anyone who is interested.
-- April 11
New Resource: Washington state class action case
This state case on the misclassification of FedEx Ground/HD drivers slipped past us until the company talked about it in its March 20 SEC filing.
This Anfinson case in King County (Washington) Superior Court has traveled a long and winding road between Washington court and the USDC in Northern Indiana.
But the Superior Court Judge certified the class in January 2008 as "all persons who performed services as a pick up and delivery driver or "contractor" for defendant during the period (Dec. 21, 2001 through Dec. 31, 2005) who signed (or did so through a corporate entity) a FedEx operating agreement and who handled a single route at some point during the class period; excluding persons who only performed or filed one or more of the following positions during the class period: multiple route contractors, temporary drivers, line-haul drivers or who worked for another contractor."
In light of the March 25 class certification orders in the MDL, the history of Anfinson and its long journey is interesting to say the least.
-- April 04
Fred Smith Put $7 Million in His Pocket This Week
Just because the headline for the recent news article that noted Fred Smith's stock market transition was so clearly misleading, we set out to look more closely.
In a Form 4 filed with the SEC Monday, the founder of the shipping giant bought the shares for $31.98 each, spending $9.6 million on the acquisition. Smith then disposed of 175,800 shares at prices ranging from $92.69 to $93.01.
FredEx's stock sales were in the open market. So he exercises call options to buy the stock at $31.98, costing $9.6 million. Then he sells 175,800 shares at an average of, say, $92.80 which nets him $16.3 million.
FredEx has a realized gain of $6.7 million and an unrealized gain of an additional $8 million at current prices. Of course, he has to pay capital gains taxes but he just put $7 million pre-tax into his pocket.
-- April 03
New Resource: MDL Class Cert Orders and Denials
There has been a back and forth exchange of press releases from FedEx and from the drivers' lawyers. We've uploaded Judge Miller's order from March 25 to our Multi-district Litigation resource page.
It seems like this split the baby in two-thirds ruling is making no one completely happy. Drivers who are named plaintiffs will know the most about the views and developing strategies of their lawyers.
As for FedEx, two-thirds of a loss still is a loss. This isn't NHL hockey. The Orwellian talk of 'future of the majority' is the best spin they could muster.
To understand the size of FedEx's misclassification problem, one can ignore the company's yes-men and spokespodpeople but one must pay attention to the company's lawyers. Here is what the FedEx Corporation said in its quarterly regulatory filing (enter FDX and read the latest 10-Q on Edgar) with the Securities and Exchange Commission on March 20:
Independent Contractor - Estrada. Estrada v. FedEx Ground is a class action involving single-route contractors in California. In August 2007, the California appellate court affirmed the trial court's ruling in Estrada that a limited number of California single-route contractors (most of whom have not contracted with FedEx Ground since 2001) should be reimbursed as employees for some of their operating expenses. The Supreme Court of California has affirmed the appellate court's liability and class certification decisions. The case has been remanded to the trial court for reconsideration of the amount of such reimbursable expenses and attorneys' fees. We do not expect to incur a material loss in the Estrada matter.
Independent Contractor - Other Lawsuits and State Administrative Proceedings. FedEx Ground is involved in approximately 45 other purported class-action lawsuits (including two that have been certified as class actions), several individual lawsuits and approximately 25 state tax and other administrative proceedings that claim that the company's owner-operators should be treated as employees, rather than independent contractors. Most (approximately 40) of the class-action lawsuits have been consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court for the Northern District of Indiana. With the exception of recently filed cases that have been or will be transferred to the multidistrict litigation, discovery and class certification briefing are now complete.
In October 2007, we received a decision from the court granting class certification in a Kansas action alleging state law claims on behalf of a statewide class and federal law claims under the Employee Retirement Income Security Act of 1974 on behalf of a nationwide class. The court also required the parties to submit briefs on the issue of whether the decision should be applied to the other actions pending class certification determination in the multidistrict litigation. In January 2008, the U.S. Court of Appeals for the Seventh Circuit declined our request for appellate review of the class certification decision.
In January 2008, one of the contractor-model lawsuits that is not part of the multidistrict litigation, Anfinson v. FedEx Ground, was certified as a class action by a Washington state court. The plaintiffs in Anfinson represent a class of FedEx Ground single-route, pick-up-and-delivery owner-operators in Washington from December 21, 2001 through December 31, 2005 and allege that the class members should be reimbursed as employees for their operating expenses and should receive overtime pay. The Anfinson case is scheduled for trial in June 2008. The other contractor-model lawsuits that are not part of the multidistrict litigation are not as far along procedurally as Anfinson.
FedEx Ground is also involved in several lawsuits, including three purported class actions, brought by drivers of the company's independent contractors who claim that they are jointly employed by the contractor and FedEx Ground.
Adverse determinations in these matters could, among other things, entitle certain of our contractors and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground's owner-operators. We believe that FedEx Ground's owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company's independent contractors.
Given the nature and status of these lawsuits, we cannot yet determine the amount or a reasonable range of potential loss, if any, but it is reasonably possible that such potential loss or such changes to the independent contractor status of FedEx Ground's owner-operators could be material. However, we do not believe that any loss is probable.
Independent Contractor - IRS Audit. On December 20, 2007, the Internal Revenue Service informed us that its audit team had concluded an audit for the 2002 calendar year regarding the classification of owner-operators at FedEx Ground. The IRS has tentatively concluded, subject to further discussion with us, that FedEx Ground's pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of $319 million plus interest for 2002. Substantially all of the IRS's tentative assessment relates to employment and withholding taxes for the 2002 calendar year and, if paid by the company, would be fully deductible. Similar issues are under audit by the IRS for calendar years 2004 through 2006. We are preparing to meet with the IRS audit team to review their tentative assessment and to provide an initial response. We expect that the meeting will occur during the fourth quarter of 2008 and that a final resolution of this matter will not occur for some time. We believe that we have strong defenses to the IRS's tentative assessment and will vigorously defend our position, as we continue to believe that FedEx Ground's owner-operators are independent contractors. Given the preliminary status of this matter, we cannot yet determine the amount or a reasonable range of potential loss. However, we do not believe that any loss is probable.
Soundbites are meaningless. The damage control is hard to mask. State court judges, federal court judges, National Labor Relations Board, state tax officials, and the IRS are putting the lie to FedEx's claim that a small group of former drivers are 'wrong' and the company's 'contractor' scam is right.
FedEx Ground and Home Delivery drivers need to keep their attention on the larger picture.
-- April 01
Attacking FedEx Ground from the Right
Here's a criticism of FedEx Ground's contractor scam that comes from the right/libtertarian point of view.
But first, we should mention the other companies which use "contractors" that Fred Smith has cited positively. FredEx is trying to muddy the waters with apples:oranges comparisons with some of these but is also playing with fire by id'ing other companies that could draw the IRS stink eye.
Fred Smith in Jan 10, 2008 conference call: "There are many many major corporations in this country who use independent contractors - here are just a few of them: AllState, DirectTV, Dynamex, NASCAR, Publishers Circulation Fulfilment, Raymond James, State Farm, Velocity Express, Yellow Cab, Mary Kay, Avon, Lowes Home Depot, Mac Tools and so on down the line."
FedEx-cess: Inviting In the Big, Bad Government Wolf
By Chuck Muth CNSNews.com Commentary
March 17, 2008We all know a few bad apples can spoil the whole barrel. And never is this saying truer than when it comes to a rogue company or industry abusing its privileges, thereby inviting the government to stick its nose even further into the business of business. Think Enron, and the resulting compliance nightmare known as Sarbanes-Oxley. Or just ponder the red-tape regulation-palooza headed the mortgage industry's way this year.
Which is why the nation's self-employed independent contractors need to be aware of the dangerous line FedEx is walking these days. The regulatory wolf rabidly believes that when it comes to imposing new controls on American businesses, it absolutely, positively has to be there overnight. And FedEx is inviting the hairy one with big fangs in.
At issue is the difference between being a self-employed independent contractor and a company employee. Generally speaking, independent contractors perform various services for various people. Employees work directly for one company. Independent contractors pay their own taxes and provide for their own benefits, such as health insurance and retirement. Employees have taxes deducted from their paychecks and receive unemployment benefits and workers comp.
Employees cost a company more money because of this, which is why many companies choose to outsource certain services to independent contractors. For example, a business might contract out grounds-keeping to an independent lawn care service rather than hire a full-time gardener. The independent lawn care owner, providing his services to various businesses, is self-employed; the full-time gardener is an employee.
The government, especially the IRS, doesn't much like independent contractors. If they had their way, every worker would be designated an "employee," thus falling under more of their direct control and scrutiny.
For their part, independent contractors don't much like government. They prefer to be, um, independent. Which is why an abuse of the independent contractor option by FedEx should be of grave concern to all true independent contractors.
At the heart of this matter is FedEx's claim that its delivery drivers are independent contractors and not employees. This claim seems laughable on its face, even for those who aren't familiar with the "official" definition of independent contractors. Let's face it, the drivers drive FedEx trucks, wear FedEx uniforms and identify themselves as FedEx representatives. I mean, come on. If it walks like a duck and quacks like a duck, it's not a gorilla, right?
<snip>
Or putting it even more plainly, the Appeals court stated flatly, "We affirm the finding that the drivers are employees." Period. And if FedEx continues trying to call a duck a gorilla, it will endanger the rights and prerogatives of all legitimate independent contractors.
This is not to say I agree with the government's position on this issue. In my opinion, every worker should have the right to freely enter into whatever kind of employment relationship the worker and the employer deem acceptable to both parties with no government intrusion whatsoever. But the reality is that Big Brother already has its hooks in the employment market and there are those in Congress who would like to further put the squeeze on independent contractors.
FedEx's abuse of the independent contractor provision will only add fuel to the regulatory fire. They should cut their losses and change their employment practices before the big, bad wolf comes for the rest of us.
-- March 17
Are you paying your boss's taxes?
There are potentially hundreds of thousands of people who work as "contractors" but are legally employees. In the tech industry, Microsoft became the poster child for misclassification because of the Vizcaino verdict on permatemps. Now FedEx is becoming the poster child for misclassification. "If your boss tells you not only what to do but how to do it, the game is over. You're an employee."
-- February 20
New York Crackdown on misclassification
Following Governor Spitzer's executive order to target employers that misclassify their employees, the New York Department of Labor got serious and started investigations. In some cases, they are raiding companies after getting tips from employees. "Labor Commissioner Rebecca Smith said the state planned more sweeps that would look at not just the construction and restaurant industries, but also at car washes, janitorial firms and trucking companies."
The New York Department of Labor has listed a number of ways to send tips on misclassification to the proper authorities:
Misclassification of workers occurs when an employer improperly treats an individual as an independent contractor instead of as an employee. Because of this labeling, some employers attempt to avoid complying with unemployment insurance, workers’ compensation, social security, tax withholding, temporary disability, and minimum wage and overtime laws that protect workers. Paying workers off the books also fraudulently deprives workers of the protections they deserve. These practices also put law-abiding business at a competitive disadvantage because of the significant unemployment insurance and workers’ compensation expenses they incur for their employees.
The Joint Enforcement Strike Force includes staff from: the Department of Labor, the Attorney General’s Office, the Department of Taxation and Finance, the Workers’ Compensation Board and the New York City Comptroller’s office.
If you believe that you have been misclassified by your employer and want to file a complaint, please contact the Task Force in the department's Employer Fraud Unit, 24-hours a day at 1-866-435-1499. You may also contact the Task Force, weekdays at 518-485-2144 between 8am and 4pm or send us an email to
Please complete the Tip Sheet and fax it to 518-485-6172 or mail it to:
New York State Department of Labor
Liability and Determination, Fraud Unit
W.A. Harriman State Office Campus
Building 12 - Room 356
Albany, New York 12240If you think an employer is committing fraud by misclassifying its workers or is committing violations of New York State laws related to the employment of workers, it is important that you let us know about it. All allegations of fraud and violations are taken seriously, and you can remain anonymous. Please include as much information as possible. All information will be maintained in a fully secure environment.
FedEx Ground and FedEx Home Delivery drivers in New York should make good witnesses.
-- February 12
Worcester Newspaper on Northboro
Although the headline writer at the Worcester newspaper was fooled, the reporter filed a piece that puts the FedEx drivers and Local 170 decision to not hold the Feb 1 election in the proper context.
-- January 30
Northboro Election Won't Proceed on Feb 1
After more than 2 years of delay and repeated illegal actions by FedEx in Northboro, Local 170 had to put off the election originally planned for Feb 1.
Much of what happened in Northboro was also documented in the ARAW/LCCR report "Fed Up at FedEx" with statements by a number of the present and former drivers from that terminal.
The Associated Press put the decision to not go ahead with the election in the proper context. The drivers in Northboro continue to cooperate with the Massachusetts Attorney General in her investigation into FedEx Ground's misclassification of its workforce in the Commonwealth.
This is a step so that we can come back to Northboro when the conditions are safer for the drivers and they feel free to vote without intimidation.
-- January 29
Appeals Court Panel Unanimously Rules Against FedEx Ground in MDL
After the federal judge in the multi-district litigation certified the class for claims under the Kansas and ERISA laws, FedEx unsurprisingly went to the U.S. Appeals Court for the 7th Circuit to ask the class certification order be reviewed by the higher court. The three judge panel for the 7th Circuit unanimously denied FedEx's request. Like a dog chasing its own tail, FedEx is stuck in the cycle of appeal and lose, appeal and lose, appeal and lose.
And what did FedEx have to say about their latest loss in courts? Nothing of substance just more denial .
In a decision received today, the United States Court of Appeals for the Seventh Circuit declined to hear the request of FedEx Ground, an operating unit of FedEx Corp. for interlocutory review of the class certification decision in the Kansas case pending before the United States District Court in Indiana. The decision had granted class certification on the Kansas state claims and a national ERISA claim.
The court did not rule on the validity of the contractor model and has not decided class certification in any other multi-district litigation case. FedEx Ground will continue to vigorously defend the MDL.
This procedural ruling does not change any aspect of the FedEx Ground operation and we will continue to provide the world-class service our customers have come to expect.
The most likely next step in this case is that the federal judge in Indiana will certify most if not all of the other state claims. The stakes will get raised even higher for FedEx after that.
-- January 23
Fred Smith's "Trust Me" Message to FedEx Employees
If Fred Smith was Tom Cruise and he wanted to make a video about the Ground independent contractor scam, he'd make a promo video like Cruise's video.
Instead, Fred Smith sent this email message to FedEx employees. An Express guy sent it to us. This follows FDX's 'come to salvation' non-event call last week.
From:
Sent: Tue 1/15/2008
Subject: Message from Fred Smith
I want to take this opportunity to thank you for closing out another outstanding Peak season with record-high volumes and service levels. BZ to everyone for delivering such a strong performance - particularly in the face of such difficult economic conditions.
I also want to address some speculative and misleading reports that you may have seen or heard about in recent weeks related to FedEx Ground. I want to personally assure you that this business is operating at very high levels of service and will continue to do so in the future. We have full confidence that our business model is good for our owner-operators as well as our customers. The FedEx leadership team is highly focused on the marketplace challenges facing FedEx Ground and fully committed to our business strategy, our customers and to you.
First and foremost, the bedrock of this company is the Purple Promise, which says we will make every FedEx experience outstanding. At the heart of the Purple Promise is our people and you are the ones who make it come alive every day.
FedEx remains true to our core value of people first and always takes that value into account during the decision-making process. We will continue to provide our team members with opportunities to grow and benefit from the company's success.
Second, I have the utmost confidence in our FedEx team. We are used to dealing with complex issues successfully. Being able to adapt to changing environments and business conditions has been a hallmark at FedEx. We thrive on challenges and opportunities. Our excellent track record over the past 35 years demonstrates our team's intelligent and balanced approach to any challenges we face.
One of the great strengths of FedEx is the ability to adapt quickly to changes in the marketplace. For example, we've been able to expand rapidly at FedEx Kinko's and FedEx Ground, while at the same time building strong networks in China and India, two of the fastest-growing economies in the world. We will continue to remain agile and resilient enough to respond to changing customer needs and marketplace conditions with new innovations and services. We know that a company that does not adapt does not succeed, and we intend to remain a powerful force in the marketplace for years to come.
Finally, one of the most important assets we have is our shining FedEx reputation. An excellent reputation enables us to attract and retain the best and brightest human talent, build customer loyalty and grow our business. Some groups are trying to chip away at the reputation we have all worked very hard to build over the years. As ambassadors of the FedEx brand, you have the greatest power to deflect their efforts. By continuing to deliver seamless service to our customers and collaborative support to team members, you prove that FedEx remains one of the best companies in the world. Once again, thank you for your commitment and hard work. I am deeply grateful to have each and every one of you on our team.
To keep you current on what we're communicating to our external stakeholders, I'd like to share the following statement. These were my opening remarks during a conference call with analysts and reporters last week to address some of the misinformation related to the recent decision by the IRS related to our FedEx Ground independent contractors.
"Last time we chatted was the morning of December 20 during our quarterly earnings call. Later that day, we got a preliminary notification from the IRS about a preliminary finding related to the classification of our owner-operators at FedEx Ground. The next day, we filed our 10-Q. Over the holidays, we received some questions, which we answered and sent out some more information. The reason we are having this call today is primarily to give us the opportunity to address the speculative, and, in some cases, unfounded reporting regarding this issue. I wanted to give you a chance to catch up on this directly with me and our management team.
First, I want to tell you that today, tomorrow and every day going forward, our customers will continue to receive the level of "absolutely, positively" service that FedEx has delivered for 35 years. That's true in every sector of our business.
Specifically to our FedEx Ground segment, we have full confidence that we will continue to provide excellent service. We just finished our Peak season and at Ground, we delivered record volumes and we posted our best service levels ever. Morale at FedEx Ground remains at very high levels.
Now I know there have been a lot of questions recently about our Ground business. We believe the business model we use is good for our contractors and good for our customers. As you know, there are millions of people in this country who have chosen to work for themselves. I personally believe that's what freedom is all about. We've given that entrepreneurial opportunity to thousands of contractors - to own, grow and expand their own business and provide financial security to themselves and their families. This model provides quality service at a very competitive price for our customers.
I've been in this business for 35 years, and I know that continuing success in any business means constant change and evolution to meet customer needs. Let me give you one recent example. Last fall in California, we announced incentives for contractors to become multi-route contractors or sell their routes. Virtually all of our 735 single-route contractors accepted this offer. From the point of view of our California customers, this transition has been business as usual. I want to point out that on a national level, more than half of all Ground packages are delivered through multi-route contractor arrangements, so this isn't new to us. This is only one of many ways we have adjusted our business over the years to meet evolving conditions and customer needs. Our track record on this is very clear. We will continue to do what it takes to make us the ground shipper of choice for customers.
On this matter with the IRS preliminary finding, as we said in our 10-Q, we believe that no loss is probable. We are surprised at the preliminary finding because in 1994, the IRS—through a settlement agreement and ruling letter - affirmed FedEx Ground's treatment of the owner-operators who perform pick-up and delivery services as independent contractors for tax purposes. We have relied on that 1994 ruling and we strongly disagree with their tentative conclusion.
IRS proceedings are often very long processes, with final resolution years away. Some of you will remember a disagreement we had with the IRS over jet engine maintenance. That took more than ten years to resolve, and in the end we won. In terms of the current IRS matter, we are confident in our position.
I'm sure you've got some questions and we'll get to those shortly. Please understand, however, that although we are actively managing these issues, we will not be able to discuss the specifics at this time given the proprietary and strategic nature of these issues.
You know, our top management team has been together a long time, and we are used to dealing with complex issues successfully. In the past few years for example, we've put together networks to offer superior value propositions to our customers in two of the fastest-growing economies in the world - China and India. That's not a simple thing to do, but it's just part of how we keep evolving FedEx. Certainly we will see continuing evolution in our U.S. business as well. We believe our track record over the last 35 years demonstrates our team's ability to deal successfully with challenges we face. What won't change is the commitment of 290,000 FedEx people to meet the evolving needs of our customers."
-- January 18
Justice for FedEx G/HD Drivers Moved Closer in 2007
The cause of the FedEx Ground and Home Delivery drivers is undeniably just: the offer of independence was made under false pretenses and FedEx misled the drivers into a relationship where they were illegally controlled like employees. Many many drivers fell victim to a bait and switch.
The Teamsters want to see the drivers properly classified and FedEx adhere to the law like other employers. Drivers who want to join the Teamsters must first win the legal argument at the NLRB that they are illegally labeled 'contractors' but should have the rights of employees like the right to unionize. This is not something created by the Teamsters. And as the NLRB has ruled in the drivers' favor, this position is also not a real debate any more.
The core issue is that drivers want to be truly independent or they want the rights and protections that all employees are entitled to and and have earned. Since FedEx has proved repeatedly they will not grant drivers more than token independence, then the just fight is for drivers to take back their rights. Reclaim their rights through the courts, through the NLRB, through the state and federal tax procedures. By any legal means necessary.
So to the drivers who are fighting and winning, the Teamsters salute you. Your fight in 2007 made great strides closer to a just outcome.
The Home Delivery drivers in Wilmington, MA and Hartford, CT secured their rights to join the Teamsters at the NLRB.
The drivers in the national class action lawsuit got the first of a series of class certification orders from a federal judge.
The drivers in the California class action lawsuit won their case.
The drivers in Massachusetts who filed complaints with the Attorney General caused an investigation, citations and orders to be treated as employees.
The drivers who filed SS-8 Forms with the IRS got the feds to audit FedEx and the audit found that FedEx was illegally not paying proper taxes.
As individual headlines, these are each big news. Taken together, they show the world that FedEx isn't getting away with the Big Lie.
The lawyers are watching. The accountants are watching. The analysts are watching. The hr managers are watching. The competition is watching. The activist community is watching. Wall Street is watching.
The issue of misclassification and the fight for justice by Ground and Home Delivery drivers was once something FedEx dismissed as coming from a small group of malcontents and failures.
But the drivers have done what they felt was right and fair and the drivers are succeeding. Who are the failures now?
-- December 28
Comm Appeal WRONG as FedEx Wins Battle But Fight Continues
There is a disturbing pattern of the news coverage about FedEx in Memphis' paper recently. Since a very solid summary piece on the FedEx Ground contractor scam in October, the only news appearing in the Commercial Appeal seems to be 'good news' from FedEx's perspective.
Such is the case with the badly headlined story "FedEx Wins Labor Word War" that could lead a reader to the wrong conclusion.
It is true that the language which would remove the non-FAA certified workers at FedEx Express out from under the Railway Labor Act and under the National Labor Relations Act was floated during the discussion of the omnibus spending bill. And it is true that the language in the end didn't get inserted into that spending package.
But so what?
The original language introduced (properly) as part of the House version of Federal Aviation Administration re-authorization act still is there. And - as noted in the body of the Commercial Appeal article - "(House Transportation Committee Chairman Oberstar's spokesman) also pointed out that the National Labor Relations Act language remains in the House-passed FAA reauthorization bill. The Senate bill reauthorizing the FAA does not contain the provision and will be considered early next year." CongressDaily did a better job on this although also deep in the body of its analysis.
The FAA bill will be up again before the Senate next year. As anyone who flies knows, the air traffic system is breaking down . And it isn't going to be fixed by Santa's elves. Nor will fixing it be held up by one man or one company.
So FedEx Express employees shouldn't get spooked by headlines. FredEx might have won a battle but the fight continues.
-- December 20
Law.com Contributors Re-visit Misclassification
A pair of lawyers published an article at Law.com titled, "Misclassification of Independent Contractors and Employees Can Be Expensive." And they don't mean in an unfair competitive advantage way. Of course, FedEx Ground was an obvious object of the analysis.
While employers can effect great savings through classifying workers as independent contractors, employers who improperly classify employees as independent contractors face even greater liabilities in litigation brought by private parties or federal or state governmental entities, including the payment of lost wages and benefits, taxes, interest, penalties and attorney fees.
FedEx Ground Package System Inc. has been battling claims in multiple jurisdictions over its classification of drivers as independent contractors. On Oct. 15, 2007, Chief Judge Robert L. Miller of the Northern District of Indiana certified a nationwide class of more than 20,000 current and former drivers who brought suit under the Employee Retirement Income Security Act seeking benefits under several FedEx plans for which they were not eligible because they were deemed independent contractors.
<snip>
Legal battles like Estrada and Narayan over the misclassification of workers have lead to executive and legislative responses across the country, including Indiana, Minnesota, New Hampshire, New Jersey, New York and, recently, Illinois. In Illinois, the General Assembly has passed the Employee Classification Act, effective Jan. 1, 2008, which is applicable to construction contractors. The act provides that individuals performing construction services for a contractor will be deemed to be an employee unless the contractor can show that the individual meets several stringent tests. The act provides for both civil and criminal penalties and provides for a private right of action.
FedEx's legal troubles in Estrada should remind employers that actions speak louder than words. Simply contracting with a worker as an independent contractor is insufficient and is not dispositive of the worker's status. Courts will ignore the contract label if it is at odds with the actual relationship. The costs of erroneous classifications are great. Employers must carefully analyze the factual reality of their relationship with workers before classifying workers as independent contractors as opposed to employees.
FedEx is in danger of becoming a business school case study in misclassification and mismanaging this fundamental legal issue.
-- December 14
Pittsburgh Newspaper Covers Fed Up at FedEx Report
Although Memphis is clearly calling the shots in the old RPS headquarters in Pittsburgh, there must be some managers in western Pennsylvania that are concerned with the bad press that FedEx Ground continues to get.
One reporter from Pittsburgh was tuned in to the release of the American Rights at Work and Leadership Conference on Civil Rights report "Fed Up at FedEx: How FedEx Ground Tramples Workers' Rights and Civil Rights."
The Pittsburgh Post-Gazette printed an article on Sunday . The reporter did a good job to cover many angles of the story.
However, <Univ. of Pittsburgh Business School Professor Marick Masters> said, "If push comes to shove, one of the primary reasons that [companies] do this is to avoid unionization."
And what clever response did the FedEx spokespodperson have?
FedEx did not return phone calls seeking comment for this article.
Seeing how FedEx is always blowing its own horn, the silence seems out of character.
-- November 05
New Resource: Arbitration Clause "Unconscionable" in NJ Case
A group of former FedEx Ground and Home Delivery drivers in New Jersey won another round in their fight against FedEx. These Jersey guys have gotten the best of the company before - some of the same drivers were part of the Drivers' Association that won at the NLRB in 2006 that the drivers were employees.
The drivers in the Lucey case in New Jersey were terminated for standing up for their rights and FedEx wanted to railroad them into arbitration. But these drivers challenged the arbitration clause as unconscionable - and the federal judge agreed. The drivers' lawyer's arguments show that the language in the Ground/HD "Operating Agreement" can be beaten. The Judge's ruling is specific to the situation of this case but it is instructive for other driver's considering to take on the arbitration clause.
This case is updated regularly on the FedExaminer.com web site. It's always worth the time and money to go over there to join in the conversation.
-- October 22
National Misclassification Case Gets Class Certification
Well, that didn't take long. On Friday, Judge Miller denied the temporary restraining order requesting he prevent FedEx from firing all single-vehicle drivers in California. So perhaps FedEx lawyers thought they had snapped their losing streak.
They were wrong. On Monday, the same Judge Miller decided the multi-district litigation case can go forward as a class action lawsuit for both the state wage and federal Employee Retirement Income Security Act claims. The whole order is online here - the juicy stuff starts on page 22 following the order including the company's expert report.
The plaintiffs' statutory wage and recission claims are also typical of the putative class members claims' because they arise from the same event - the drivers' classification as independent contractors - and rest on the same theory - that the drivers have wrongfully been denied wages and have paid unjust enrichment to FedEx as a result fo their improper classification udner the operating agreement. The plaintiffs and proposed class members all signed a standard-form operating agreement, so the claims of the plaintiffs have the same essential characteristics as the claims of the class at large.
From these analyses, the court finds that determining whether the drivers are employees under Kansas law will depend upon the amount of control reserved by Fedex and will require a detailed analysis of the standard Operating Agreement. These common questions of law and fact predominate over issues affecting only individual members and so support class certification.
FedEx's treatment of the package and delivery drivers as independent contractors and denial of benefits on those grounds can be fairly characterized as a course of conduct that is "generally applicable" to the proposed class.
The predominate issue for purposes of liability under the FedEx ERISA plans is whether the putative members are eligible employees, and because this issue arises from a common nucleus of facts, it can be demonstrated by common proof and certification is therefore economical and appropriate.
Bloomberg and Reuters had early coverage of the ruling.
-- October 16
Judge Denies Temp Res Order in California Ultimatum
The federal judge in the multi-district litigation case against FedEx Ground denied the drivers' lawyer's temporary restraining order to block the firing of all California single vehicle contractors. The full October 12 order is available on the Alexander resource page.
Drivers should monitor FedExDriversLawsuit.com for the formal response from the plaintiffs' lawyers.
Between 750 and 1,000 single vehicle drivers in California face the unenviable choice of accepting termination or signing new 'conditions' to becoming multi-vehicle contractors. Drivers in the rest of the country need to reconsider their futures at FedEx Ground and FedEx Home Delivery. The company seemingly won this round in the fight and may be emboldened to try to steamroll others in any place and at any time.
-- October 15
UPS National Tentative Agreement Now Online
The tentative national agreement was unanimously endorsed by Teamster UPS Local Union leaders this week. The next stage is for the ballots to be sent to all UPS members for a ratification vote.
The full tentative agreement is now online at Teamster.org.
-- October 12
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