MEMPHIS¡ªIn a decision that may influence future employee classifications for FedEx the United States Court of Appeals for the D.C. Circuit issued a ruling in favor of FedEx, saying that FedEx Ground independent contractors are independent business owners rather than employees and are outside the jurisdiction of the National Labor Relations Board (NLRB).
According to a FedEx statement, this ruling was made based on a petition filed by FedEx Ground for review following a September 2007 NLRB decision that gave the International Brotherhood of Teamsters the green light to conduct a membership election among single work area contractors in Boston and Wilmington, Mass. The NLRB said at the time that the FedEx home delivery single area contractors were employees.
FedEx officials said that the U.S. Court of Appeals ¡°agreed with FedEx Ground¡¯s contention that the NLRB Regional Office wrongly excluded material evidence and misapplied settled law on the most appropriate factor that defines the statutory ¡®independent contractor¡¯ exemption from the National Labor Relations Act.
This week¡¯s news follows a decision made earlier this month by a Washington state court that ruled the people who handle deliveries in that state are independent contractors rather than employees, according to a Reuters report. The report added that FedEx Ground has been at odds with the Teamsters for years, with the Teamsters saying FedEx employees are contractors are employees as opposed to independent contractors¡ªor entrepreneurs.
¡°The Court determined that the company had provided clear evidence that FedEx Ground contractors are properly classified as independent contractors,¡± said FedEx spokesman Maury Lane, in a statement. ¡°Court decisions like this and a recent state court decision in Washington State¡ªthe Anfinson case¡ªconfirm that FedEx Ground contractors are independent business owners who choose to own and operate their own enterprises as they like.¡±
Ed Wolfe, president of Wolfe Research, wrote in a research note that this particular case was part of an action by the Teamsters to enforce certification of the union representation in Massachusetts. He added this can be viewed as a ¡°modest positive¡± for FedEx, because it could have spread to further union organization, coupled with that fat that Fed still currently has a Ground network that remains 100 percent union free.
¡°We continue to believe that the Ground contractor status issues are likely to persist for FDX and that they will have a very difficult time fighting this battle on multiple fronts including state and Federal courts, and multiple state and federal agencies, such as this current decision that originated with the NLRB,¡± wrote Wolfe. ¡°FDX seemingly needs to win all the cases in every venue, while even one Ground contractor decision against FDX can force FDX to materially change its operations, as we saw after the Estrada case in California.¡±
In the Estrada case, the Los Angeles County Superior Court ruled that FedEx Ground single vehicle drivers were employees, with multi vehicle contractors excluded from the decision. The court added that FedEx Ground/Home must classify all single route drivers as employees starting in April 2006.
FedEx¡¯s operating model is completely opposite form the one employed by UPS, whose drivers are Teamsters members. A Bloomberg report stated that its contract drivers have sued the company and said they should be treated as full-time regular employees with benefits.
¡°FedEx has been moving aggressively ever since the Estrada decision to make sure their independent contractors are really running a business,¡± said Doug Caldwell, vice president of ParcelPool, a small parcel delivery consultancy and services provider. ¡°They have encouraged contractors to have multiple routes whenever possible. They had to do it in California and are doing it throughout the U.S. and have been fairly successful at that by providing various incentives in getting drivers to take more than one route on. This has insulated them a bit, because the decisions that have gone against them have said the single route drivers are not really independent contractors and are employees. It is clear that if you are running three-to-five routes, you are running a business.¡±
