FedEx Ground sets new contractor rules

Jill Dunn | May 26, 2010

FedEx Ground has issued new standards for its owner-operators, include requiring independent contractors to be incorporated.

Division spokesman Patrick Fitzgerald confirmed contractors were informed of the new rule last week. “We announced that in response to recent concerns by several states, we made a business decision to only contract with independent contractors that satisfy certain standards,” Fitzgerald said.

Many of its 12,000 contractors already meet these standards, he said.

The Dow Jones Newswire reported in a May 21 story it had obtained a copy of the letter sent to contractors on the new rules, which also require independent contractors to classify their personnel as employees. Current contractors will have at least 180 days to comply and those who do by the end of February 2011 are eligible for “monetary incentive,” it reported.

FedEx is wrestling with related issues on several fronts.

On May 17, the company participated in a legal challenge to the National Mediation Board’s recent issuance of a voting rule change for union representation. The plaintiff is Air Transport Association of America, the trade organization for leading U.S. airlines, and FedEx is one of the companies that elected to bring the suit in the U.S. District Court for the District of Columbia.

The plaintiffs say the NMB final rule dramatically changed the procedures for airline and rail industry union representation elections without justification.

Another contentious issue is proposed legislation. The Express Carrier Employee Protection provision would put FedEx Express truck drivers under the National Labor Relations Act, which would allows local union organization.

That provision was included in the House version of final Federal Aviation Administration Reauthorization bill. The Senate approved the bill in March without the language, but Congress will have to reconcile the bills. On April 28, the House and Senate passed an FAA funding extension, which will expire July 3.

Last year, FedEx said in a company report that FedEx Ground was involved in litigation and other proceedings that challenged the status of its owner-operators as independent contractors. “FedEx Ground anticipates continuing changes to its relationships with its contractors,” it said.

In 2009, FedEx Ground was involved in 50 class action lawsuits, including 21 that had been certified as class actions. There were several individual lawsuits and 40 state tax and other administrative proceedings, which argued the company’s owner-operators should be classified as employees.

Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court for the Northern District of Indiana.

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