When one Missouri man decided a dozen years ago to ditch his job with the United States Postal Service as a letter carrier, he envisioned a successful future working as a FedEx driver. He never imagined that the substantial costs he was forced to invest would bankrupt him.
FedEx classifies its drivers as independent contractors who are required to purchase their delivery routes and vans. The former postal worker bought his route for $5,000 and a van for $17,000. Later, he was required to buy a second van for $11,000 and hire another driver when his route expanded. He was responsible for maintenance on both vehicles, picking up the tab for new radiators, transmissions, brake jobs and routine oil changes.
But there were other costs, too, including Department of Transportation vehicle inspections, random drug tests, FedEx decals for the vans, company uniforms and special mapping software. He had to pay lease fees for the scanner he used to read the bar codes on the packages.
Additionally, due to their classification as independent contractors, none of the 32,500 ground transit drivers were eligible for company benefits like health insurance or retirement funds. They were ineligible for unemployment insurance and overtime pay.
The Missouri man sued FedEx in 2006 for illegally misclassifying him as an independent contractor and not an employee. He, and others, won their case and a jury awarded him over $90,000 in damages. According to FedEx, they plan to “appeal the court’s decision in this case.”
The research director at a labor rights group, Jobs with Justice, sees the company’s position as “an intentional policy on the part of FedEx Ground to deny drivers their rights as employees.”
FedEx had control over almost every aspect of the driver’s self-funded business. Managers berated him about the deportment of the driver assisting him with the route. They hassled him about the vans’ tires. Supervisors repeatedly threatened to revoke his contract and docked his pay to cover exaggerated claims for undelivered packages. He was once charged $1,600 for a box of undelivered vitamins worth $400.
FedEx claims that an average business with around four drivers annually takes in about $443,000. The 44-year-old Missouri man had a different experience, making between $25,000 to $35,000 after costs.
A Missouri employment law attorney is one source of information about the practice of misclassifying employees to save companies money.
Source: CNN, “The FedEx driver who sued and won” Ben Rooney, Nov. 21, 2014