While it would be a long shot the 4% annual growth in the GDP required to offset the revenue loss from the tax cuts fails to materialize compelling Congress to take a closer look at the hundreds of billions in unpaid taxes owed by so called " contractors" and decides to pass legislation that more clearly defines the term "independent contractor" . You might see something in that area. In the meantime it would appear that they do in fact want the big money boys coming in to backup their contractor model and by doing so would provide a better firewall against any future legal challenges .
Ground to absorb Express
- Thread starter dvalleyjim
- Start date
A lot of current drivers, in fact most were not covered by the settlement, unless they happened to be a contractor before becoming a driver. Current drivers are controlled by fedex, and eventually fedex will need to either give up that conttrol, or accept drivers as fedex employees. And if drivers are going to be fedex employees, the whole reason for using contractors- avoiding taxes and liabilities- will be gone.
We have a big money guy who came in a few years ago. He also happens to be married to an attorney.
The big money guys pose other challenges to the company.
Compensation isn't part of the control fedex exerts, but compensation doesn't have to be the same for every driver to prove fedex controls the drivers. When fedex still controls the choice of vehicles, the uniform, schedules drug tests, approves drivers, controls service areas, etc, etc, there is plenty of evidence. In fact, when I proved before a judge that I was a fedex employee in 2006, the amount of compensation I was paid was not an issue at all. And when I proved before a state judge to be the actual employer of drivers I used to cover my other routes, the amount of compensation was not an issue either. Fedex chose to settle those cases with the state because taking them to the next level would have set a precedent for all drivers in the state.
But fedex will be able to stall this for a long time- a decade at the minimum, and then even that result will not be universal across the country. But if drivers are found to be employees, and if fedex decides in some states to just use an employee workforce, it is not likely that in a few states they would stick with a contractor model if most states they are forced to use employees. It would be too expensive to administer two different models.
But showing that ground/HD drivers are controlled by fedex won't be much of a battle in at least several states where laws are nearly identical to where I was.
Under current S-Corp rules and most contractors are S-Corps they are required to pay themselves a reasonable salary which in turn makes them employees of their own S-Corp. So right now I don't see anything in the way of a major legal challenge to the current ISP/CSP model anywhere on the horizon outside of new legislation which would be needed to back any new court challenges and that is nowhere to be seen.
The lawsuit I referenced earlier IS a challenge to the ISP model. If fedex is determined to be employer or co-employer, it eliminates the need for ISP. If fedex becomes directly responsible for any problems a driver has, or if they become liable for taxes, worker's comp, etc if the contractor fails to pay, and if they become liable for deaths and injuries caused by drivers, much of the reason for the ISP to stand in the middle disappears.
Question : Is it a class action or another type of civil complaint and has it been filed in state court or federal court?
I put the case number and location in a previous post and said it is a class action.
Any word yet about whether the courts have certified it as a class action ? Recent legislation passed by Congress makes acquiring certification status much tougher.
59 Dano
I just want to make friends!
I can't remember. Wasn't the change to the current model the result of a court ruling (or of court rulings) where the court said that conditions X, Y, Z, and so forth had to be met in order to properly operate the contractor model and FedEx merely started putting those conditions in the contracts from that point forward? Another part of me wants to say that FDX simply adopted the most stringent state requirements and made that the norm, but again, I've slept since then.
It will be fine
Well-Known Member
From what I’ve seen you are correct. As soon as they started losing in Cali they started behaving to fit the rules out there. They started incentivizing multi route ownership before they eventually mandated it.
Dmac is I believe referring to a current case in CT where employees of contractors are going after FedEx for unpaid overtime. I’m guessing their contractor went bankrupt so there’s nowhere else to go. I read the complaint and it seems mostly false, at least as their accusations would apply to my company. Every station/district and contractor is different so it’s hard to say what level of control local Fedex management was trying exert there.
59 Dano
I just want to make friends!
Okay, I hadn't paid much attention to it but was under the assumption that's what had happened.
I don't know how FedEx is responsible for another company's unpaid wages.
Might be a situation where the contractor/ employer withheld FIT and FICA from his employees wages but never filed the quarterly's or remitted the taxes instead kept the money and filed for bankruptcy leaving contractor employees to sue in an effort to get the money out of XG under co-employer rules. Sounds like a low percentage chance of prevailing. However, if they were to somehow prevail it would open up the mother of all can of worms and if it is awarded class action certification then it's off to the races.
It will be fine
Well-Known Member
It’s a bit convoluted for an argument. They claim FedEx hires employee drivers through intermediaries known as ISPs. Then controls those drivers making Fedex a co-employer. For my company that argument is total nonsense. I can envision a scenario where it is closer to reality with local management sticking their nose into a failing contractor’s business to try and save service. I don’t find the arguments compelling and I don’t think it’s applicable as a class, there aren’t that many drivers operating vehicles under 10k lbs.
You would think that the normal course of action would be through bankruptcy court where the employees would have to get in line along with the other creditors. We had a similar situation where a contractor was indicted on several embezzlement charges regarding a separate company he owned, turned his XG routes over to his daughter in an effort to keep them but she had multiple wrecks never reported them. She was immediately terminated. The company then took over as a de facto employer and ran his operation until the next lucky contestant showed up. If this too was a case of XG having stepped over the line and creating a whole new set of legal challenges thereby creating an opening then XG had better lawyer up because this could be the chance ISP contractors have been waiting for.
It will be fine
Well-Known Member
Chance for what? I have no desire to be a Fedex employee, neither do most of my employees, if we did we’d work for Express.
Maybe you don’t want to be an employee of x, but I would not speak for your employees. They wouldn’t want overtime, paid vacation, 401k and medical? If you do offer these benefits then you are one of a very few contractors that do.
This what they want you to believe. The intent is to make you feel confident that the ISP model is secure and sustainable so you would continue to invest in resources, even with all things evident pointing to the contrary.
Express will be around far longer than a patch work of entities that are losing money and are in disarray.
X is doing a text book job on you guys and you will likely fall for it.
Spot on Bounty. This over riding questions still remains. What is the end game? What is the real role of the contractor? The answers are pretty simple. First the end game is to create a pathway to cheap trucking and cheap labor. The role of the contractor is to keep that pathway open and cleared. If he can't do it they'll present that departing contestant with a gift. A gift? Yes indeed. A bunch of worn out smelter bait trucks that have little or no alternative use.
Overtime? Never. Benefits? By his own admission he sends his employees over to their spouses employers and expects them to extend coverage and protection against catastrophic medical expenses and to bear the additional costs accordingly. In doing so he wants his profits to be privatized but the risks to be socialized IWBF depends on those employers to provide that coverage. If not then he would have 3 guys on every truck. One coming, one driving and one leaving.
I don't think any court ever told fedex how they needed to change. Courts generally just decide on the legality of what is presented to them. I followed the court cases pretty closely, but not compulsively, plus it's been 13 years since I went into the courts with/against fedex.
Fedex made changes that they felt they could get away with, nothing else, and those changes were meant to make it harder for anyone to get an attorney to fight for them. Fedex gave up none of the control that was the issue with 'individual' contractors, and I know for a fact that in Oregon it didn't even matter if you 'owned' multiple routes. I owned 'multiple' routes and hired drivers, and was found to be an employee of fedex. My drivers were also found to be employees, although fedex never fought on that point. Control was THE issue. But instead of fighting to the end, and FEDEX being required to change, the attornies tired of the fight and settled, taking it out of the court system. So the case basically dropped out of the court system, and until and unless at least two ISPs can find an attorney to take a case that will takes years, fedex is safe from the ISPs. And my case was based on state laws that don't apply in most other states.
My opinion is that it will end up being drivers who have problems with their ISP who end up with the best chance of ending the ISP plan. Or when enough drivers kill enough children, or murder or rape enough customers, and courts find fedex liable enough times. the cost of avoiding the liabilities might outweigh the savings. If the public was really aware of fedex drivers being treated like crap, instead of believing fedex was the ideal employer, and some boycott materialized, the bad publicity might also be a catalyst for change. Maybe a combination of all these circumstances will happen, and hasten the ISP demise, or maybe it will never happen.
I still think fedex can combine the divisions and through efficiencies they can then enforce using all employees, fedex can be more profitable.
