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Nov
2014
28

Misclass Mainstream: CNN Covers the Story of Independent Contractor Abuse at FedEx

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After leaving his job with the United States Postal Service (USPS) for what he thought would be a lucrative career at FedEx, Reggie Gray eventually found himself bankrupt and in the middle of a legal battle with the company. This lasted the better part of a decade before his story was told by CNN. It mirrors the stories of thousands of FedEx drivers who have been affected by the company’s business model of misclassifying its employees as independent contractors.  FedEx has over 32,500 uniformed drivers, managers and affiliated workers who lose out on health benefits, unemployment insurance, retirement accounts and overtime pay due to their misclassification.  

Gray, who has since returned to working with the USPS, left for the FedEx ground division in 2002, just two years after its creation.  As he told CNN, “We all signed up for what we thought was the American dream.  We received the exact opposite. It was a really bad deal.”

During his time with FedEx Ground, Gray earned between $50,000 and $70,000 each year.  But given his misclassification as an independent contractor, costs that would normally be absorbed by the company fell into his lap. In the end he earned roughly the minimum wage while working 12 to 16 hour days.  

CNN’s Ben Rooney explains Gray’s situation:

Gray had to purchase his delivery route for $5,000. He bought his own van for $17,000. FedEx later made him to buy another vehicle for $11,000 and hire a second driver when his route got so busy that one van wasn’t enough to deliver all the packages. The vehicles needed constant maintenance — oil changes, brakes, transmission and radiator replacements — and all came out of his own pocket.

He paid for FedEx uniforms and decals for his vans, company mapping software and also leased a FedEx scanner for the package bar codes. He also had to pay for Department of Transportation inspections and random drug tests the company required.

Gray said FedEx managers in the terminal where he worked hounded him about the condition of the tires on his van and the conduct of a driver he hired to help him with his route.
His supervisors constantly threatened to revoke his contract and docked his pay with inflated “claims” for lost packages. In one case, he said the company charged him $1,600 for a $400 box of vitamins that he failed to deliver.

The debts piled up and Gray was forced to file bankruptcy in 2008. The financial turmoil took a toll on his marriage, which ended in divorce. He almost lost his house.
“This whole ordeal cost me a lot, it really did,” said Gray. “Financially, it was a huge, huge hit. And the pressure of that weight was crushing.”

The IRS reviewed his contract and informed him he was actually an employee who should have been receiving benefits, so Gray decided to take action.  After unsuccessfully dealing with the company directly, Gray filed a lawsuit — along with other drivers in the same predicament — in 2006.  

The case was dragged through the legal system until April of 2014 when Gray was awarded more than $90,000 in damages.  FedEx is currently appealing the decision.  The company currently faces more than 30 similar lawsuits around the country.

As CNN notes, the wave of lawsuits, both successful and unsuccessful, have led to changes at the behest of the federal government.  Those changes, however, do not go far enough and still allow FedEx to skirt basic responsibilities:

Under pressure from Attorneys General in several U.S. states, FedEx Ground changed its policy in 2011. The drivers are still not FedEx employees. But the company now contracts with incorporated businesses that agree to treat staff as employees. That way, drivers get basic protections required by law such as workers compensation coverage and unemployment insurance. But again it’s the contractor that provides those protections, not FedEx Ground.

For more on recent worker battles (and victories!) against FedEx, comb through this curated search of our archives.

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