The FedEx use of “independent contractor” is another example of their stretching the law to the limits of possible credibility. I’m going to get just a little technical, so that I can better illustrate the fallacious use of independent contractor by FedEx Ground. An Independent Contractor is legally defined as: “A person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right of control with respect to his physical conduct on the performance of the undertaking. He may or may not be an agent”. I’m not going to cause you to fall asleep taking about what an agent is, but for our purposes all package deliveries are made by an agent of the principle (FedEx). To get an idea of independent contractor, think of a company contracting with an electrician to do some work that will last a few weeks and then the work is completed. The contracting party doesn’t tell the electrician how to do their job, or how to run their business (ACME Electricians). It is simply a promise for a promise (work in exchange for payment). Courts use a seven question test to determine if a person falls under the category of independent contractor, or employee. 1) How much control can the employer exercise over the details of the work? (the more control, the stronger the status becomes employee). 2) Is the employed person engaged in an occupation or business distinct from that of the employer? (An electrician is distinct from a company doing retail sales out of a strip mall) 3) Is the work usually done under the employer’s direction, or is it done by a specialist without supervision? (The retail store owner isn’t going to be directing the electrician, the electrician operates without supervision). 4). Does the employer supply the tools at the place of work? (The electrician brings their own tools). 5) For how long is the person hired or retained? (The electrician has a short term relationship with the retail store). 6) What is the method of payment? Is it by time period or at the completion of the job? (The electrician is paid for successful completion of the agreed work, how long it take the electrician to complete the job is irrelevant to payment – within limits). 7) What is the degree of skill required to do whatever it is the person was hired or retained to do? (The electrician must be licensed and requires a substantial amount of skill). Now the law also states that “truck drivers” that own their own equipment and hire out on an ad hoc basis are independent contractors. This is the tiny crack that FedEx is inappropriately using for Ground. Ground drivers don’t do ad hoc work for FedEx; it is an ongoing relationship (employer-employee). The courts usually consider all seven of the questions and determine employee/independent contractor based upon the preponderance of the facts in one direction or another. Let’s analyze FedEx Ground. 1) FedEx has a very high degree control over the drivers. The drivers wear FedEx clothing; use FedEx computers and information processing techniques. That electrician wears their own clothing, with their own company name (ACME Electricians). By the first test, the drivers are clearly employees. 2) The delivery drivers are engaged in the exact same business as FedEx Ground, they are both elements of package delivery. If that retail store had a contract delivery service, those drivers could be classified as independent contractors under this test. Ground drivers are the logical extension of FedEx Ground’s service, therefore are employees under this test. 3) The Ground drivers have a fair degree of supervision in the performance of their work. They have meetings on a regular basis regarding the performance of the deliveries, and have a set of guidelines issued by FedEx regarding how to perform the work. This test isn’t as easy to define as the previous two, but the preponderance of the test supports classification as an employee. 4) Ground Drivers (the route “owners”) have technical ownership of the vehicles that they use. The “tools” are owned by the owner operators, thus satisfying the test for independent contractor. This is the PRIMARY (and about only) test that FedEx passes regarding the employee/independent contractor evaluation. HOWEVER… The trucks MUST be painted in FedEx colors. The “owners” cannot paint their trucks as “ACME Package Delivery Service”. This is against the intent of the independent contractor model. 5) The Ground drivers can literally work for years driving the same route. There is no “temporary” nature to their work. They are clearly employees by this test. 6) Ground pays on the basis of pieces delivered, not hours worked. The owner/operators may pay their “helpers” an hourly rate, but FedEx pays based upon pieces, not hours billed to the owner operator. Under this test, the work can be classified as independent contractor. This is a subversion of the intent of this test, since we all know that for a given route, an expectation of time required to complete delivery of all pieces can be made. 7) Making deliveries is considered an unskilled occupation. No advanced training is neither required; nor any specific state licensing (electrician, real estate agent, RN, etc.). The delivery driver is clearly an employee under this test. Only on two of the seven tests, do Ground drivers fall on the side of the independent contractor model. The courts SHOULD’VE shut this down from the beginning, since it requires a preponderance of the tests to support classification as independent contractor status. This is why the Ground drivers will eventually be classified as employees. The issue is working its way through the courts and eventually, the classification will be mandated to that of employee. So why did FedEx choose to try this game? To keep the Teamsters out of Ground, simple as that. Independent contractors cannot unionize against the party they are contracting for (FedEx). The “helpers” could conceivably unionize against the owner-operators that hire the helpers. But what is the use of having a union of a handful of drivers? An additional benefit for FedEx is that they were able to get pieces delivered for less that they pay for deliveries on the Express side. They save about 25-30% on labor costs, by going through this convoluted measure. Don’t try to get between Fred and a dollar, he’ll run you down to get that dollar. I apologize for the length of this post, but it is better to get the legalisms out so that everyone can see the issues, without just talking about the issue without getting into details or understanding the complete argument for and against.