FedEx sues Texas Workforce Commission

Discussion in 'FedEx Discussions' started by RTURNSONLY, Jan 2, 2013.



    This just fresh out of the Dallas Morning News paper:

    Texas political leaders frequently boast about how friendly the state’s regulators are to businesses compared with the federal government and other states.

    In a new lawsuit, global mail and package shipper FedEx Corp. disagrees.

    FedEx Ground Package System is suing the Texas Workforce Commission for ordering the company to pay unemployment taxes for its drivers, whom the company classifies as independent contractors. The company says the TWC ruling could cost it $1 million from 2005 to present.

    In addition, Memphis-based FedEx accuses the state of double dipping by attempting to collect unemployment taxes from both the company and from its hundreds of independent contractors across the state. The lawsuit, which was filed Dec. 21, is garnering a lot of attention from other major corporations that use independent contractors in the state, including AT&T, TimeWarner Cable and energy retailers. “This case is being watched very closely by a lot of major companies, workers and the state because there’s a lot of money involved,” said Richard Carlson, who teaches employment law at the South Texas College of Law. “The courts have struggled with this debate for about 100 years and have gone back and forth on whether some workers are contractors or employees,” Carlson said. “These cases are very close calls and are extremely fact-intensive.”

    Texas Attorney General Greg Abbott’s office did not respond to requests for an interview, but in court documents, the state writes that it denies “each and every allegation. ”The Texas AG argues that the lawsuit should be dismissed, saying the state is immune from such litigation. But the state does not directly address any of the factual or legal arguments in FedEx’s claim.

    The Texas suit is not unique. FedEx is involved in more than two dozen lawsuits across the United States regarding the classification of its drivers. Most have been filed in federal court by FedEx drivers demanding they receive the benefits that come with full-time employment.

    Attorneys general in New Jersey, New York and Montana announced in October that they would sue FedEx if the company doesn’t reclassify 12,000 of its drivers as employees. Those states say they are owed tens of millions of dollars in payroll taxes.
    In the cases that have progressed in the courts, judges have tended to side with FedEx. Legal experts point out that the IRS under the Obama administration has been friendlier to the assertion that FedEx drivers are contractors, reversing a $319 million tax assessment against the delivery company in November.

    The FedEx lawsuit against Texas primarily comes down to a single question: How much control does the company have over the worker?
    In its petition, FedEx stresses how independent its drivers are. “FedEx Ground contractors are responsible for exercising significant independent discretion and business judgment to achieve the agreed upon business objectives and results,” the suit states. “FedEx Ground imposes no set work hours, routine or schedule on the contractors or their workers.”

    The company notes that the contractors own their trucks, that FedEx does not help them with financing equipment and that the contractors can deliver for companies other than FedEx, though not for UPS, which lists its drivers as employees.
    FedEx points out that the contractors create their own companies, which in turn employ the drivers.

    Independent legal experts familiar with the case tend to side with FedEx.

    “FedEx appears to meet the tests of what is legally required for independent contractors,” said Mark Shank, a partner at Gruber Hurst Johansen Hail Shank. “These FedEx contractors appear to own multiple trucks and have their own employees driving the trucks,” says Shank, who teaches employment law at SMU Dedman Law School. “I’m surprised by the position the TWC is taking in this case.”
    Michael Maslanka, an employment law expert at Constagy, Brooks & Smith in Dallas, says the challenge for the courts in deciding the case is how dependent the drivers are on FedEx for their livelihood.

    “FedEx has had pretty good success winning this issue just about every time it has come up,” Maslanka said. “The Texas Workforce ruling is the aberration.”

    Sutherland Asbill & Brennan litigation partners Kent Sullivan and Sean Jordan represent FedEx in the suits filed in state court in Austin. Sullivan is a former state district judge in Austin. Jordan is a former deputy solicitor general for the Texas attorney general’s office.

    No hearing dates in the case have been set.
  2. bbsam

    bbsam Moderator Staff Member

    Sounds like Fedex knows very well how to win these cases.


    It all boils down to 3 things: money, money & more money.


    “FedEx Ground contractors are responsible for exercising significant independent discretion and business judgment to achieve the agreed upon business objectives and results,” the suit states. “FedEx Ground imposes no set work hours, routine or schedule on the contractors or their workers.”

    This just sounds like a lot of bologna to me.
  5. MrFedEx

    MrFedEx Engorged Member

    Unfortunately, this is Texas we are talking about, not a more progressive state. Why oh why does FedEx Ground keep getting charged with having "employees" over and over again?
  6. bbsam

    bbsam Moderator Staff Member

    Why? Nobody tells me what time to start my drivers, they don't tell me what vehicles to buy and don't pay for my repairs.


    Doesn't Fedex tells you, as a contractor, what time your package sort starts and what time you need to be there? Then you, as a contractor, can start your people as you found fit.
  8. STFXG

    STFXG Well-Known Member

    The sort runs in the morning. And you can show up and take your trucks before the sort is over if you want. You're still responsible to get them delivered. But you can come and go as you please.
  9. bbsam

    bbsam Moderator Staff Member

    I could set up a route (and have) that starts at 11 am and runs until 8 pm.
  10. bbsam

    bbsam Moderator Staff Member

    We have recently had trucks return at 10:30 pm full of pickups. By agreement, the sort can run to 9:15 am, but there is nothing that says what time the truck must return. Most simply want the routes done early.
  11. HomeyinNY

    HomeyinNY New Member

    Been a Fedex Home Delivery contractor since the beginning, in 2001. Seen a lot of changes over the years. The one thing about being a "contractor", is , yes the contract is one sided. You have to sign it, or you don't have a job. Yes the work is hard, but if you work hard it is rewarding. Now, in reply to this report, Fedex tells you what" type" of vehicle to buy. You can buy what you feel is right for your route. I'm on my third vehicle. 1st was a ford e250 cargo. I'm in upstate NY, and there are not many jobs out there that i can make the kind of money i make doing this. Yes there are some "issues", but if the culture in your terminal is tumultuous, it can affect every contractor. Seems like our ground and home drivers try to work together to help each others route that they border. Being in NYS sucks, the unemployment taxes are ridiculous! I have to pay them even though i can't collect . I'm a single driver contractor. This was one of the "ISSUES" when the Annual Compliance came out!
  12. MrFedEx

    MrFedEx Engorged Member

    OK, Mr. Independent. Start all your routes at 11 am..every day. See how that goes.
  13. MrFedEx

    MrFedEx Engorged Member

    OK, how about if I come in at 11 today, 0800 tomorrow, and 1500 the next day? Oh, and everyone else in the building decides they want to work the same schedule.
  14. bbsam

    bbsam Moderator Staff Member

    I could probably get away with that. I have alot of residential deliveries on all my routes. But my drivers prefer to be off earlier. Besides, it comes down to how I want to structure the routes. And you want me to do it to prove something to you? You do see how ridiculous that is, don't you?
  15. bbsam

    bbsam Moderator Staff Member

    As long as my CSA (Contracted Service Area) provides 98% service or higher, nobody is going to say a thing.


    Now, wait a minute, lets be honest. You are telling me that because FedEx gives you the "flexibility" to start your drivers at whatever time you like:

    1. You'll be able to provide 98%+ service?
    2. Nobody will say anything?

    I doubt very much that would happen if you decide to start your people at, lets say, 11:00 AM every day. I'll give you one example; don't you think you will have customers calling and complaining because you knocked at their doors at 8-9 PM with a freaking delivery? Does that makes any business sense?
  17. Hmm .. what about all the customers who had FDXE drivers knocking on their door at 8-9 PM the past few weeks? Does that make any business sense??
  18. DS

    DS Fenderbender

    UPS has been doing this for years,I just think they could care less about
    what the public,or for that matter,the drivers whine about.
  19. There is No more service...Just profits and dividends Thats all that matters!!...............................................................Oh wait i forgot SPHOR!!! and the five seeing habits...
  20. overflowed

    overflowed Well-Known Member

    Who said we knock? I don't.