Fedex to pay $228 million to settle independent contractor case
- Thread starter MAKAVELI
- Start date
It will be fine
Well-Known Member
For those of you thinking this settlement is punitive to FedEx, it's time to play Let's Do The Math!
228 mil, 2300 contractor/employees, 7 years
~$100k/contractor
Costs over 7 years approximate.
New Truck lease - $67,000
2 full sets of tires - $3000
3 Pms/yr - $3000
Fuel - $25,000, wild guess fuel was cheaper then.
Work comp - $50,000
Employer match taxes - $30,000
Total ~$178,000
That assumes no truck repairs and a salary around $45k/yr which is low considering the average hours worked for contractors. I think they'll make that trade any day.
228 mil, 2300 contractor/employees, 7 years
~$100k/contractor
Costs over 7 years approximate.
New Truck lease - $67,000
2 full sets of tires - $3000
3 Pms/yr - $3000
Fuel - $25,000, wild guess fuel was cheaper then.
Work comp - $50,000
Employer match taxes - $30,000
Total ~$178,000
That assumes no truck repairs and a salary around $45k/yr which is low considering the average hours worked for contractors. I think they'll make that trade any day.
That settlement is 4500 people paid $50K per year. I wonder if the end game is they become employees and get settlements for time already served, so in hindsight making them contractors instead of employees cost the company more dollars long term. I'm sure one party is very ok with this and one isn't, you have to ask yourself, which party supports your position better. Would you rather be a contractor or employee?
MAKAVELI
Well-Known Member
Every settlement FedEx makes is punitive. Yes they still come out ahead and make big profits from the contractor scam. But $228 million is still a big chunk to come out of their bottom line. And one thing to consider is that this settlement is just for California. It sets a precedent and if other states follow, these settlements are going to get expensive.
It will be fine
Well-Known Member
They're already going on all over the country. They just aren't publicized. Every state that has gone ISP has a lot of settlements like this, they wouldn't switch the model otherwise.
It will be fine
Well-Known Member
MAKAVELI
Well-Known Member
And how many states are ISP?
robdabanks
Well-Known Member
What happened after 2007?
That is one vote. It seems I'm reading that some of your peers don't agree though or this lawsuit wouldn't have existed. From my readings I'd say it isn't 100% either way, surprise, but I seem to read that more people rather be a full employee than a contractor. Now there are large discrepancies in what contractors can make in various sectors. It seems in package delivery it is low wages, however in things like systems programmers, it could be $100's of dollars per hour. So I can see those enjoying the higher end of the scale preferring to be a contractor.
Why do you prefer being a contractor?
MrFedEx
Engorged Member
Now they will simply switch to the ISP model. However, isn't it interesting that FDX is really trying hard to "prove" that Ground contractors are independent after this ruling. There is much more in the pipeline.
MrFedEx
Engorged Member
Here's the essence of FedEx Ground scam. FDX passes off all possible costs to the contractor, and then simultaneously controls the drivers as though they were employees. You, the contractor, get a decent amount in return for FDX just killing-it overall with their profit margins. When are you going to understand that you are just there to pay Fred's bills and make it seem like you run the business...when you don't. You're just Fred's mechanic and overseer.
It will be fine
Well-Known Member
I don't know about other sectors, but in the package game, contractor is the way to go. If I had to summarize, if say freedom and growth potential. At Ground in about 15 years I went from package handler to president of my own company. For the last 5 years I've hardly had to deliver anything. I run some stuff during peak and rarely fill in for a real route. Had I started at brown, I would have spent years as a handler, several more years before I got to top scale and I'd be out working until 7-8pm daily.
It's risky, but if Ground continues its growth, by the time I'm ready to retire my company will be worth several million dollars. The bottom could drop out, but even if it does I'll have gotten to spend a lot of time at home with my family and made a good wage while doing so. You can't get both of those if you're an employee.
Fair enough, I was thinking I was talking driver perspective in the deal. Yes you were a driver and made it your own, but for most they will be a driver or a driver that has left.
One has to wonder why, if it's not a scam as MFE points out but contractors here deny, that FedEx keeps settling these cases out of court? What might happen if FedEx stuck to their guns and fought it in court? And as has happened in the past when they've gotten burnt by their own overreaching, Express employees will most likely take a hit to help pay for this.
I think FedEx settled because they believe in the ISP model and it's legality. I think behind the scenes, FedEx and California hashed out the parameters so Fedex can simply move forward with ISP implementation.
MAKAVELI
Well-Known Member
I think they settled because they knew eventually they'd lose and the award would be much higher.
Could be. But if they thoughtgoing to ISP in California wouldn't "fix the problem" there would be no reason to settle either.
MAKAVELI
Well-Known Member
Changing over to ISP would have zero effect on the outcome of this lawsuit. In fact, making such changes the model only gives these lawsuits for past practices more merit.
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It will be fine
Well-Known Member
I think the courts already ruled against the old model in California. This is a settlement for the damages for the rest of the drivers. Probably a couple drivers sued and won and they settle everyone else out of court since there's no point in continuing to go to court for each case.
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