Posted Aug 08, 2007 04:12 pm CDT
Are Federal Express drivers independent contractors? That is the potentially very expensive question to be answered by a federal case in South Bend, Ind., where a judge is to hold a hearing later this month about whether similar claims from drivers in 29 states that they are actually employees should be combined in a single class action.
Unlike United Parcel Service, a major competitor, FedEx considers its drivers to be independent contractors, not employees, explains Bloomberg. That helps keeps costs down for FedEx, because drivers purchase and maintain their own trucks, for instance, and are not paid any benefits.
However, drivers in the suit say they essentially are treated as employees, and characterize their situation as a fraud perpetrated by the company to avoid complying with laws concerning employees, according to Lynn Faris, an Oakland, Calif., lead attorney. “What they have now is a sham,” says Faris. “It’s illegal.”
The lawsuits seek unspecified damages, including back pay and the cost of buying or leasing trucks, Bloomberg notes. There are also, presumably, potential issues for FedEx concerning standard employer payments, such as social security taxes, unemployment and worker compensation benefits, should the drivers be determined to be employees, according to a Kansas Department of Revenue Web site about misclassification of workers.
A spokesman for Memphis, Tenn.-based FedEx claims that the litigation is being driven by outsiders, including the Teamsters labor union. “Both the Teamsters and plaintiffs attorneys have targeted FedEx as a way to generate revenue, and they have proven time and time again that they will say and do anything to achieve those results,” says Maury Lane in an e-mail.
Faris says the FedEx litigation is not funded by the Teamsters.
“Treating any particular class of workers as independent contractors is, in many ways, an all-or-nothing proposition,” says Carey Bartell, a partner in Reed Smith’s office in Chicago. “If you’re right, you avoid certain expense and hassle. If you’re wrong, however, you can lose big.”