A DAY & ZIMMERMANN COMPANY

FedEx tries to quit, should you? (Part 2 of 2)

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Posted by Matt Rivera

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July 13, 2010

The case of independent contractor truck drivers working at FedEx has garnered a lot of attention. It's not by accident that the states chose such a high profile company. I don't know about you, but I see a FedEx truck out my office window about two or three times a day.

Without going too far into the details, the basic premise for the states' case against FedEx is that they control many aspects of how the truck drivers perform their job, and in performing that job, they are critical to FedEx's operations. To the states, this looks like an employer-employee relationship.

As I pointed out in the first part of the series, FedEx has now told the drivers that they have until October to register as corporations and treat anyone working for them as employees. Does anyone else see the irony in that?

After losing the first round in the U.S. District Court, FedEx is making this change to take care of one aspect -- the fact that the independent contractors are individual corporations. However, in doing so, they are again exerting control over how these independent businesses deliver their service to FedEx.

This might seem like a good tactic on the surface, and many of you might argue that you are protected if your independent contractors are in registered corporations with the state of their choosing. However, much of this case (and, I predict, more cases in the future) will be decided on the issues of control, not incorporation.

FedEx controlled how the employees looked, the trucks they drove, and when they drove them, and then, they wanted a significant say in how they performed their jobs. So, the fact that an independent contractor might be incorporated seems to be of little value if you are controlling and monitoring everything they do. Not very independent, is it?

This is just one step in a series of steps that FedEx is likely to take to reform their approach to independent contractors. To be certain, more will follow, and this is where we're likely to see them start backing off of the controlling aspects of the relationship, or set up the contractual relationship to focus more on what they will deliver, rather than how they will deliver it (literally, in this case).

This is where human resources and procurement professionals should take a cue from FedEx. The main lesson here is that an independent contractor is actually a pretty accurate name. They should be doing their job independent of any direction, tools, hours, and supervision.

They should be able to independently structure their time and performance to meet the deliverables in the contract, not the expectations of a company manager. They should be able to become independently wealthy or destitute based on how they run their business.

I think you probably get the idea. We still, however, see clients with cubicles full of independent contractors who come and go like regular employees and take daily direction from a company manager, further evidence that it's hard to quit once you get started.

It's tough, but the bottom line is that you should follow FedEx's example and start to take steps to change your approach to independent contractors. The first step is admitting you have a problem.

On a side note, one interesting aspect of the FedEx case is that in the U.S. District Court ruling, the judge pointed out that FedEx required the independent contractors to drive trucks with the FedEx logo.

What are the chances we'll start seeing a bunch of "Dan's Dashing Deliver" or "Sam's Speedy Shipping Service" trucks out there delivering FedEx packages? That's a lot of free advertising that FedEx could potentially lose. Actually, if all the fines stick, it might not have been free after all.























Topics: Staff Management

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