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Bloomberg Businessweek reports that hundreds of former drivers are awaiting court decisions regarding a slew of lawsuits levied against the company.
The workers contend they regularly lost nearly half their yearly wages to deductions and truck expenses because the company unfairly labeled them as independent contractors.
In one case a plaintiff says that for 10 years he worked 10-hour shifts delivering packages in San Diego for FedEx Ground. During that time he was never paid overtime and didn’t receive contributions to his Social Security benefits.
The man tells Businessweek that he made about $90,000 per year from the company, but between 40% and 60% was lost to deductions and truck expenses the company wouldn’t cover because he was just an independent contractor.
FedEx Ground, a subsidiary of FedEx, has long employed independent contractors, a practice officials with the company say differentiates it from competition.
“The entrepreneurs who run these small businesses have a flexibility and drive not often found in a traditional workforce,” the company said in a statement to Businessweek
Former contractors, however, say that the motivating difference for the company was its bottom line.
According to the National Employment Law Project, a workers’ rights group, employing independent contractors can save companies up to 30% of payroll costs by not including unemployment insurance, workers’ compensation, and state taxes.
Additionally, because independent contractors aren’t covered by wage and hour rules, companies aren’t obligated to pay overtime or cover the costs for uniforms.
In early October, a ruling by the Kansas Supreme Court bolstered the workers’ claims that FedEx uses the independent contractor label to save money.
“As FedEx’s counsel acknowledged at oral argument,” the Kansas court said in its decision, “the company carefully structured its drivers’ operating agreements so that it could label the drivers as independent contractors to gain a competitive advantage, i.e., to avoid the additional costs associated with employees.”
The ruling was a drastic change from previous court decisions that sided with FedEx Ground.
Businessweek reports that back in 2009 the D.C. Circuit Court of Appeals sided with the company. The same outcome happened in 2010 when a federal district court in Indiana ruled in favor of the company, throwing out other state claims.
The lawsuits against FedEx Ground are perhaps the biggest indicator of a shift in the workforce.
Back in 2006, the U.S. Government Accountability Office estimated that independent contractors and temp workers made up 31% of the country’s workforce. Two years later, Maryland Labor officials found that one in five employees were wrongly labeled as independent contractors.
Perhaps in light of the lawsuits, FedEx tells Businessweek that it’s changed business practices and now contracts drivers through other companies.
Still, former drivers suing the company say that’s not entirely truthful.
The owner of one such business says FedEx still tells his drivers when they’re leaving and how to drive, much like an actual employer might do.
While it remains to be seen what while happen with the many lawsuits facing FedEx Ground, the company insists the law is on its side.
“We are committed to protecting our way of doing business and the rights of thousands of independent business owners to continue owning and operating their own businesses,” it tells Businessweek.
As for the former independent contractors, they continue to feel taken advantage off.
The former San Diego driver says that while he once thought working for FedEx Ground would be like owning a “piece of the dream,” it’s not that way anymore.
FedEx Ground Says Its Drivers Aren’t Employees. The Courts Will Decide [Bloomberg Businessweek]
If you’ve ever looked a lawn that needed trimming and said to yourself, “I’ll get around to it. What are they gonna do, arrest me?” this story of a woman in Tennessee might have you dusting off the mower and hedge clippers.
WVLT-TV in Knoxville reports on a local woman who was told she had to spend a five-day term behind bars for failing to keep up with her yard work.
She initially received a citation from the city during the summer because her property required some grooming.
“With my husband going to school and working full time, me with my job, with one vehicle, we were trying our best,” she explains. “[The bushes and trees] were overgrown. But that’s certainly not a criminal offense.”
But following a second citation and a recent court hearing, the mother of two was looking at five days in the clink.
The woman says she was steamrolled by the process; that she was never told of her legal rights or that she could have a lawyer represent her at court.
“It’s not right,” she claims. “Why would you put me in jail with child molesters, and people who’ve done real crimes, because I haven’t maintained my yard.”
Earlier this week, the judge acknowledged that this was not a criminal case and reduced the sentence to only six hours of jail time. She offered to do five days of community service instead, but the judge insisted on some time behind bars.
She served her time on Tuesday evening, but the judge could give her additional jail time if he’s not happy with her lawn-maintenance efforts when they review her progress at a November check-in hearing.
For comparison’s sake, semi-celebrity Nicole Richie only spent 82 minutes in jail for an incident in which she drove the wrong way on a highway while admittedly being under the influence of alcohol, marijuana and Vicodin.
[Thanks to Steve for the tip!]

"My car was stolen and the insurance company won't pay me." This is a phone call I get too often – considering I do not advertise that I handle insurance claim denials. People only call me because they heard I handle "car cases." Close enough.
The family had buried her with her mobile phone because she’d loved texting her family with nice messages, reports the Daily Mirror. Her son said he called up the phone company, O2, and asked that her number be canceled end never used again. He says the company agreed, and the family continued to text her when they felt like being close to her again.
But then her granddaughter got a reply: “I’m watching over you, and it’s all going to get better. Just push through.”
Shocked, as one would be, to hear from her dead grandmother, she worried that the worst had happened.
“Then I started getting horrible visions that someone might have dug up her grave and taken her phone, my mind was full of all sorts of really unpleasant possibilities,” she said.
As it turns out, O2 had given the number to a new customer, who’d been using it for a few weeks. He thought his friends were joking with him at first, so he replied, until he realized maybe that wasn’t the nicest thing to do, either.
The family says they called him up and he was apologetic about the situation, but now things can never be the same.
“We are a big family of texters, if we ever fell out or had something to say, we’d always just send a message, that’s why we buried her with her phone,” her son explained. “So to think someone else now has our mam’s number is just awful, we can’t believe 02 has done this.”
In the meantime, they’re trying to get the number deleted for good, but O2 says it sold it off to another phone company, complicating things.
A spokeswoman from 02 said: “We’ve been in touch with [the other company] and they have left their customer messages on e-mail. At the moment it’s a waiting game until he gets back in touch. Meanwhile we have spoken to [the woman's son]. He understands what’s happening and is appreciative that we’re trying to get the number back.”
Family who sent texts to mobile buried with late gran get replies ‘from beyond grave’ [Daily Mirror]