Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Driver Fight Could Force FedEx to Maintain Own Truck Fleet

July 28, 2005

The FedEx labor fight with 14,000 drivers could raise operating costs by millions and lead to an overhaul of its workforce, according to a story July 26 in the Memphis Commercial Appeal. The drivers are independent contractors who own the trucks, pay all operating costs and get no company benefits. Drivers in Tennessee, California, Massachusetts, Minnesota, South Dakota and elsewhere are suing FedEx. They argue the company skirts worker protection laws by refusing to hire them as employees eligible for overtime pay, health insurance, workers' compensation and other benefits. They also want to be reimbursed for back operating expenses and lost benefits.A victory by the drivers would raise employee costs and force FedEx Ground to maintain its own fleet of trucks, University of Memphis business professor David Ciscel said in the Commercial Appeal article.Spokesman Perry Colosimo said FedEx Ground is confident it can win in court and has no intention of changing the way it does business. The independent-contractor system, he said, keeps shipping prices competitive and allows the drivers to run their own small businesses.The drivers say FedEx controls just about everything they do - the hours they work, where and when they pick up or deliver packages, how they maintain their trucks, even how they dress. FedEx also prohibits drivers from using their trucks to carry non-FedEx shipments.The arguments center on how much independence contractors have, the article said. If work is too tightly controlled, courts can order employers to hire them with the same benefits and legal protections other company workers enjoy. Many companies run into legal trouble when they try to categorize workers who should be on regular payrolls as temporary employees or independent contractors.FedEx went head-to-head with UPS in 1998 when it bought several trucking operations, including RPS Inc. which later became FedEx Ground. RPS had relied on contract drivers since its creation in 1985. Drivers for UPS are company employees driving company-owned trucks.
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