FedEx Contractor Troubles?? - Brown Cafe

pretzel_man · 10-20-2009, 04:53 PM

ATTORNEYS GENERAL CUOMO, BULLOCK AND MILGRAM ANNOUNCE INTENT TO SUE FEDEX GROUND OVER VIOLATIONS OF STATE LABOR LAWS

FedEx Ground Improperly Classifies Drivers as Independent Contractors, Denying them Benefits and Crucial Protections Under New York, Montana and New Jersey Law

Letter Sent Today Demands that FedEx Ground Change Policies or Face Lawsuit

NEW YORK, NY (October 20, 2009)- New York Attorney General Andrew M. Cuomo, Montana Attorney General Steve Bullock, and New Jersey Attorney General Anne Milgram today announced their offices’ intent to sue FedEx Ground Package System, Inc. (“FedEx Ground”) for violations of state labor laws. Today’s announcement is the latest in a string of actions taken by the Attorneys General to protect their states’ workforces and enforce labor laws.
According to the letter sent today to FedEx Ground, the company unlawfully misclassifies its drivers as independent contractors. As such, drivers do not receive Workers’ Compensation coverage through FedEx Ground. Moreover, independent contractors are not protected by anti-discrimination laws, labor relations laws, and other important laws that protect New York, Montana and New Jersey workers. At the same time, drivers are required to spend thousands of dollars out-of-pocket for their trucks, repairs, fuel and uniforms while being held to strict FedEx Ground rules that control the hours they work, the way they dress, and their ability to contract with anyone else outside the company.
“By blatantly misclassifying its drivers, FedEx Ground has denied these individuals the employment rights they are guaranteed by law,” said Attorney General Cuomo. “FedEx Ground drivers have been forced to pay thousands out of pocket for work-related expenses and adhere to strict employment policies, despite being deprived of the protections of full-time employee status. Our letter today demands that these policies be reversed or this office will not hesitate to bring legal action immediately.”
“This is an issue of fairness. By classifying their drivers as independent contractors rather than employees, FedEx Ground is denying the drivers rights and protections afforded to all workers in our state. And in the process, FedEx Ground is shifting its tax obligations onto hardworking Montanans,” said Attorney General Bullock. “These drivers are the backbone of the business and they should not have to give up the protections they are guaranteed just so FedEx Ground can circumvent our laws.”
“FedEx Ground’s failure to fairly classify and adequately protect its drivers is a violation of New Jersey’s labor laws,” said Attorney General Anne Milgram. “This company denied its drivers the benefits they should be guaranteed, while forcing them to be financially and personally accountable for strict employment requirements. Today’s letter is a multi-state effort to get FedEx Ground to end its unlawful business practices and protect the hardworking men and women who tirelessly support the company.”
The investigation by the Attorneys General revealed that the level of control FedEx Ground exercises over its drivers merits, under New York, Montana and New Jersey state law, employee status and the protections inherent in that status. FedEx Ground strictly controls all aspects of the work of drivers doing pick-up and delivery. Hours are prescribed by FedEx Ground with drivers having almost no discretion as to the hours they work. Workers’ performance of their tasks - from the loading of their trucks to their hand-off to customers - is directed and supervised by FedEx Ground. Drivers’ uniforms are mandated by FedEx Ground, even down to the colors of drivers’ socks, and drivers’ opportunities to engage in non-FedEx Ground related work are also almost entirely constrained by FedEx Ground rules. Drivers are only allowed to use their own trucks for non-FedEx Ground purposes if the trucks are used outside of FedEx Ground working hours. Additionally, the work of FedEx Ground drivers is at the very core of FedEx Ground’s business activities; drivers are completely integrated into the overall business functions of the company.
FedEx Ground drivers must also undertake significant expenses to perform their jobs in the manner required by FedEx Ground. These expenses range from purchasing or leasing trucks for as much as $70,000, to paying approximately $40 per week for the use of a FedEx Ground uniform and scanner. Drivers must also purchase fuel and do required maintenance for their trucks, and must purchase their own Workers’ Compensation insurance, as required by FedEx Ground.
This matter is being handled by Deputy Labor Bureau Chief Patricia Kakalec under the supervision of Executive Deputy Attorney General for Social Justice Mylan Denerstein in New York and by Assistant Attorney General Jennifer Anders for Montana.

BLACKBOX · 10-20-2009, 05:52 PM

Are states suing independently against FDX ground? What's preventing all states to go after FDX as a class action?

This got to be costing FDX a bundle, if I was a lawyer this would be a potential goldmine with a favorable ruling.

helenofcalifornia · 10-20-2009, 06:04 PM

About time those drivers got benefits. I know one driver that is forking over $5000 in medical bills. He was too sick one day to work and the guy that owns the route told him he "only" had to deliver half the route that day. Lucky guy.

Bubblehead · 10-20-2009, 06:07 PM

What's the source of this story?
Looks like the Wall Street Journal to me?
My guess is that the other states will watch this precedence setting case unfold and proceed accordingly.
Crazy Fred will fight it to the bitter end, he always does.
I'm sure he'll find a way to blame it on UPS.

brownmonster · 10-20-2009, 06:09 PM

Quote:

Originally Posted by Bubblehead

What's the source of this story?
Looks like the Wall Street Journal to me?
My guess is that the other states will watch this precedence setting case unfold and proceed accordingly.
Crazy Fred will fight it to the bitter end, he always does.
I'm sure he'll find a way to blame it on UPS.

More bad news for Fedex. Means their stock will go up.

LED · 10-20-2009, 06:19 PM

Check out the Memphis paper (Fedex HQ).
There will be plenty of comments on there tomorrow from all the fedex people, so feel free to get your comments in first.
http://www.commercialappeal.com/news...threats-over-/

Treegrower · 10-21-2009, 05:56 AM

Quote:

Originally Posted by brownmonster

More bad news for Fedex. Means their stock will go up.

EXACTLEY !!! I just posed a question on another thread about our stock price. This article was pressed released and then their stock jumped $ 1.69 at the close. Ours was up a astounding 11 cents at the close.

brownIEman · 10-21-2009, 06:44 AM

uh oh, looks like three state AG's are starting a new brownbailout...

MrFedEx · 10-21-2009, 02:14 PM

FedEx always uses the verbage that they will "vigorously defend" themselves against any and all legal actions. These latest actions aren't anything new...just more states jumping on the bandwagon. FedEx often settles out of court, but this one is probably eventually headed to the Supreme Court.

My personal opinion is that this is going to eventually cost FedEx a ton of money to resolve, and that would tend to make FedEx stock go down sharply.

This is the one item that has prevented a wholesale shift of Express products over to Ground, so every time someone sues FedEx over the IC issue, it makes me a happy boy.

bbsam · 10-21-2009, 03:30 PM

Are you guys serious? This is a blip on the radar screen. Three months ago, it was three other states. Seems like attorneys general like to put out statements, but don't bring charges. Why wait? Ground's business model is well known and has been for decades. Why would the states wait to act? Because they feel they can't win a case with the IC definition so ambiguous and subject to individual interpretation.

MrFedEx · 10-21-2009, 08:30 PM

Quote:

Originally Posted by bbsam

Are you guys serious? This is a blip on the radar screen. Three months ago, it was three other states. Seems like attorneys general like to put out statements, but don't bring charges. Why wait? Ground's business model is well known and has been for decades. Why would the states wait to act? Because they feel they can't win a case with the IC definition so ambiguous and subject to individual interpretation.

Then why say anything at all? Just for show? I doubt it. If the Ground model is so iron-clad, why does anyone ever dare to challenge it? The original RPS model has been altered by FedEx as little as possible and only because of the legal challenges. Also, if FedEx is so supremely confident, why did they go to the multiple IC model at all? Because they had to.

JustTired · 10-22-2009, 05:17 AM

Quote:

Originally Posted by MrFedEx

FedEx often settles out of court, but this one is probably eventually headed to the Supreme Court.

Are you serious???
In this type of case (involving state government) settling out of court shouldn't even be an option. What does it solve? Who gets any monetary awards? If it is the state, then it amounts to no more than a fine and business continues as usual. The employee ( I mean contractor) doesn't get any benefit.

If a state accepts an "out of court" monetary settlement.....then shame on them. So much for looking out for the injustice to their constituents.

My feelings are that a non-union company has a right to contract out their work. But when that company is forcing all of the rules that they hold their regular employees to, it ceases to be a company-contractor relationship. JMO

bbsam · 10-22-2009, 04:40 PM

Quote:

Originally Posted by MrFedEx

Then why say anything at all? Just for show? I doubt it. If the Ground model is so iron-clad, why does anyone ever dare to challenge it? The original RPS model has been altered by FedEx as little as possible and only because of the legal challenges. Also, if FedEx is so supremely confident, why did they go to the multiple IC model at all? Because they had to.

Yes, for show. It is good politics to go after greedy capitalists and those tax dodgers and makes for wonderful theatrics Elliott Spitzer style. But if they are serious, why not bring charges? Remember that in going to the multiple IC model met the requirements of the California court. ISP models in some states. So why does anyone believe that without an overhaul of federal guidelines for IC/employee classification Fedex even could be forced to abandon an IC model?

MrFedEx · 10-26-2009, 05:17 PM

This isn't for show because the issue is tax revenue.

MrFedEx · 10-26-2009, 07:57 PM

Let me add that simply calling an employee an "independent contractor" doesn't make it so, although FedEx would like to think it does. It was a scam when it was RPS and it's still a scam. How many billions has FedEx saved while simultaneously gaining a large part of the UPS market share by running this con?

The state AG's see a cash cow here because the scheme has allowed FedEx to illegally benefit from not paying millions in taxes. In a down economy, where sales tax, gas tax, and other revenue streams have dried-up, what makes anyone think that the states won't pursue this until they get their hands on some of Fred's money. And since he didn't earn it honestly, they are entitled to receive the taxes Fred didn't have to pay.

If he'd been an honest businessman from the get-go, he'd have nothing to worry about. But that's not exactly Smith's forte', is it?

bbsam · 10-27-2009, 09:06 AM

Quote:

Originally Posted by MrFedEx

This isn't for show because the issue is tax revenue.

then they would have done it 15 years ago.

bbsam · 10-27-2009, 09:14 AM

Oh look who might run for governor--Attorney General Cuomo. Looks even more like a show all the time.

Bill48 · 10-27-2009, 12:20 PM

Why are there a number of FedEx routes for sale. Anyone know what is causing this???

bbsam · 10-27-2009, 01:43 PM

Quote:

Originally Posted by Bill48

Why are there a number of FedEx routes for sale. Anyone know what is causing this???

at any given time there are a any number of routes for sale.

MrFedEx · 10-27-2009, 04:33 PM

Quote:

Originally Posted by bbsam

then they would have done it 15 years ago.

The economy wasn't in a meltdown 15 years ago. And has there ever been a politician who wasn't aspiring to a higher office? The reality is that they are going after someone with deep pockets who deserves to pay-up. A scam is a scam.

bbsam · 10-27-2009, 05:12 PM

Quote:

Originally Posted by MrFedEx

The economy wasn't in a meltdown 15 years ago. And has there ever been a politician who wasn't aspiring to a higher office? The reality is that they are going after someone with deep pockets who deserves to pay-up. A scam is a scam.

Who's the bigger scam? Fedex or the states looking to line their self depleted coffers? Set aside your prejudice and answer that one honestly.

MrFedEx · 10-28-2009, 11:39 AM

Quote:

Originally Posted by bbsam

Who's the bigger scam? Fedex or the states looking to line their self depleted coffers? Set aside your prejudice and answer that one honestly.

FedEx, because denying the states legitimate tax revenue is illegal. Why do you think the RPS business model was so attractive to FedEx in the first place? Besides passing-off almost all costs to the "contractor", they also avoided paying a slew of taxes.

You're just playing the hand of cards you've been dealt, so I don't blame you. It's the basic RPS model itself that is a scam. It always has been a scheme to have "employees" but not call them as such in order to reap massive profits and undercut the competition.

bbsam · 10-29-2009, 07:00 AM

Quote:

Originally Posted by MrFedEx

FedEx, because denying the states legitimate tax revenue is illegal. Why do you think the RPS business model was so attractive to FedEx in the first place? Besides passing-off almost all costs to the "contractor", they also avoided paying a slew of taxes.

You're just playing the hand of cards you've been dealt, so I don't blame you. It's the basic RPS model itself that is a scam. It always has been a scheme to have "employees" but not call them as such in order to reap massive profits and undercut the competition.

You might want to look into Ground's use of ISP's (Independent Service Provider). Should more courts find the contractor model deficient, this is the direction the company will head--not the employee model.

MrFedEx · 10-29-2009, 01:11 PM

Quote:

Originally Posted by bbsam

You might want to look into Ground's use of ISP's (Independent Service Provider). Should more courts find the contractor model deficient, this is the direction the company will head--not the employee model.

This worked in California. Are you assuming other states will buy-off on this? Also, what do the states do to collect all of the tax revenue they lost between the sale of RPS to FedEx and their speculated acceptance of the new ISP model? I'm guessing that they sue, and then collect.

JimJimmyJames · 10-30-2009, 04:50 AM

Is the ISP model where an IC owns multiple routes?

If it is, then technically the drivers who worked for said IC would be able to unionize under their employer.

Now, would an IC allow this to happen? Heck no! To unionize today you have to jump over such hurtles (the major one not being fired by your employer) it is near impossible in many instances.

But remember folks, according to one person (not me), the 7.4% in America in the private workforce who are unionized are destroying the country. So maybe were better off.