Reuters.....
Mon Oct 15 21:08:16 UTC 2007
CHICAGO, Oct 15 (Reuters) - A California court has rejected a request for a temporary restraining order and preliminary injunction that was aimed at stopping FedEx Corp <FDX.N> from changing its contractor model at its ground business in the state.
In September, the Memphis-based package delivery company began instituting changes to the FedEx Ground model, which has been the subject of a long-running lawsuit that challenges its use of contractors instead of employees to deliver packages.
Lawyers representing present and former contractors say these drivers should be treated as employees and receive benefits. FedEx says the contractors are entrepreneurs, not employees.
The change in FedEx Ground's model in California consists of phasing out the single-route contractors and replacing them with multiple route contractors, which the California courts have so far ruled it can use. Under the multiple-route system, FedEx uses one contractor, who would subcontract individual routes to others.
This came after a ruling by the California Court of Appeal in August, upholding an earlier decision that single-route drivers at FedEx Ground should be classified as employees.
The latest appellate court ruling, dated Oct 12, rejected the request for the restraining order against FedEx Ground. The court ruled, "In effect, the plaintiffs' motion for a preliminary injunction asks the court to make FedEx Ground continue the business model for which it is being sued and for which the plaintiffs seek damages."
"Further, uncertainty as to the status and future of (single-route) contractors would menace FedEx Ground's ability to maintain a stable work force in its heaviest business season, threatening incalculable damages to FedEx Ground's till, good will, and future business," the court finding continued.
FedEx, like main rival United Parcel Service Inc <UPS.N>, faces its busiest time of year in the fourth quarter, when the holiday season falls.
FedEx welcome the new court ruling.
"There is no question that we will move ahead with our plan that allows us to better serve our customers and independent contractors, while balancing the difficult legal and regulatory environment in California," FedEx spokesman Maury Lane said. (Reporting by Nick Carey, editing by Jeffrey Benkoe)