FedEx Ground ISP Transition, Expediting Ramifications?

[ATeam]

(Posted in the General Forum because I am interested in hearing comments from FDCC competitors and former contractors too.)

FedEx Ground recently announced its "ISP Transition" in response to lawsuits that alleged misclassification of its drivers.

People who have been following this issue know that a number of cases have been tried in court in various states. FedEx has won some and lost some. This ISP (Independent Service Provider) Transition seems to be an attempt by FedEx Ground to remove all possible doubt that its route drivers are anything but independent contractors.

The ISP transition has itself generated a lawsuit. You can read more about the transition and the suit here.

That's FedEx Ground. I have never been overly concerned about maintaining our independent contractor status with FedEx Custom Critical because the nature of our work and relationship with our carrier is so much different than that of FedEx Ground drivers.

Regarding company/contractor relationships, this ISP Transition is a significant development within the FedEx family of companies that makes one thing clear. FedEx has no desire or plans to use anything other than independent contractors (ISP's as FedEx now calls them) on FedEx Ground routes.

I remain mostly unconcerned and do not think that the FedEx Ground ISP Transition will affect FedEx Custom Critical contractors much, if at all, but we never know, do we?

Your thoughts?

 

[greg334]

I have never been overly concerned about maintaining our independent contractor status with FedEx Custom Critical because the nature of our work and relationship with our carrier is so much different than that of FedEx Ground drivers.

You think so?

I don't think you are any different.

You are contracted to take care of and transport FedEx's customer's items and do not have any more control or lack of as Ground drivers do. Your station in the FedEx picture is to control the vehicle within the law, make an on time pickup and delivery and to follow the instructions of FedEx or the customer for that specific load.

There couldn't be less of a difference unless there is something special that you are capable of doing for FedEx that Ground drivers can't do, say like consult for FedEx on customer's issues or make arrangements through a third party to help with problem solutions. Outside of that, your training is about the same, the qualifications are the same and the contract is pretty close to the same.

The other mitigating factor is the problem with CC being part of Freight and where you access some inter-company freight from that customer pool, this is important because if there is some distinction, it is all eliminated by the fact that ground can do that work too.

There, that's what I think!!

 

[jansiemoo]

For the most part I agree with you Greg. The main difference between cc and ground being our willingness to invest way more money into specialized equipment that we may not be required to have anywhere else.
I whole-heartedly believe Fdcc will never have "company" drivers. They cannot/will not invest in the equipment- as evidenced from their thin-walled company reefer trailers, nor are they interested in taking on the day to day problems of the equipment or the drivers' issues. Don't get me wrong- I love working with them- but they've got a better fleet with o/os than what they could do themselves. (Even dealing with all the problems that can go with more limited control than company equip/drivers, IMHO.)

 

[greg334]

For the most part I agree with you Greg. The main difference between cc and ground being our willingness to invest way more money into specialized equipment that we may not be required to have anywhere else.

I understand what you are saying but you may not know the rest of FedEx. I mean if you are White Glove, then you are a small percentage of the CC fleet to begin with and most who are in the fleet haven't made a substantial investment to actually be a majority of the fleet.

I whole-heartedly believe Fdcc will never have "company" drivers. They cannot/will not invest in the equipment- as evidenced from their thin-walled company reefer trailers, nor are they interested in taking on the day to day problems of the equipment or the drivers' issues.

I don't know... I mean there is a lot more there than meets the eye. Their Soft Side fleet seems to be an indication that they invested right for their customers and so is their supply chain reefer units that I seen being built, not cheap nor thinned walled.

They have company drivers, freight.

Don't get me wrong- I love working with them- but they've got a better fleet with o/os than what they could do themselves. (Even dealing with all the problems that can go with more limited control than company equip/drivers, IMHO.)

I agree, they would be better off but see it isn't up to them, it is up to the teamsters who targeted them and the politics of congress who are helping the teamsters. The law suits are the biggest issue facing them, but much of that has been caused by the blurring of the line between a contractor and an employee.

One thing which I can point out that has been discussed off line over this blurring of the line in CC has been the dispatch system they use, which pretty much preconditions the contractor to react quickly. It is a well planned move to get the contractor to take work they would not normally take. Another issue which has been discussed off line is the idea they will terminate the contract when a contractor reaches a low level of acceptance, both of these issues are employee driven, not contractor driven and both happen in CC.

 

[Deville]

In my travels I have spoken to many ground drivers in various city's & states. I've never spoken to a ground driver that is happy. FED really does treat them like employees in almost every sense of the word. They have supervisors & must meet certain criterias to keep there lease.

Several of the changes that FEDX has imposed on them is forcing IC's who have more than one driver & truck to use FEDX Grounds payroll provider so FEDX can show to whom ever that there Contractors drivers are being paid by that IC & taxs are being with drawn. If the IC does not want to use there payroll service there leases were terminated.

Another change that was announced in Late December That I think took effect on April 1st was that the single IC O/O has been eliminated. In order to contract with FEDX Ground you have to have multiple trucks & routes, I believe the minimum was 3. FYI; I'm not sure if this particular decsion was a country wide decsion or if it's regional. It may only apply to certain States. I know NJ & possibly NY were doing this because of how certain decsions pretaining to the class actions suits turned out.

My take, as far as the FDCC side goes is this; what we do is a completly diffrent animal. We aren't preforming route work, our work is time sensitive & is same day p/u & del. The FDCC side also has alot of down time & is VERY unpredictable. Our Investments in equipment is far greater than an IC with 1 to 5 package cars or even tractor trailers. A FEDX ground straight truck is a class 6 or 7 city truck that are easily aquired.

I on several seperate occasion have considered Ground routes but shyed away when I saw the tremendous amount of requirements FEDX puts on these guys. Not to mention the supervisors are just dirt. Most of them are retired UPS sups. who don't know the diffrence between a company driver & a business owner.

I do think that these requirements FEDX Ground has put into place are thelast dying gasps to save this side of there business. I think they screwed up on so many diffrent levels but mainly what did them in was there treatment of drivers in particular there screwing around with driver settlements on a weekly basis that they will cease to exist altogether in 5 years.

 

[Deville]

I understand what you are saying but you may not know the rest of FedEx. I mean if you are White Glove, then you are a small percentage of the CC fleet to begin with and most who are in the fleet haven't made a substantial investment to actually be a majority of the fleet.



I don't know... I mean there is a lot more there than meets the eye. Their Soft Side fleet seems to be an indication that they invested right for their customers and so is their supply chain reefer units that I seen being built, not cheap nor thinned walled.

They have company drivers, freight.



I agree, they would be better off but see it isn't up to them, it is up to the teamsters who targeted them and the politics of congress who are helping the teamsters. The law suits are the biggest issue facing them, but much of that has been caused by the blurring of the line between a contractor and an employee.

One thing which I can point out that has been discussed off line over this blurring of the line in CC has been the dispatch system they use, which pretty much preconditions the contractor to react quickly. It is a well planned move to get the contractor to take work they would not normally take. Another issue which has been discussed off line is the idea they will terminate the contract when a contractor reaches a low level of acceptance, both of these issues are employee driven, not contractor driven and both happen in CC.

I can say this is a very thin line that CC straddles, No force dispatch is part of our lease, but yet they have an acceptabce rate they like to go by. I can honestly say That I have never EVER worried about my accpetance rate. I won't work for free. This is why many singles don't make it. They take every load given to them & think they are running great until they tally up the week or the month or whatever & they reliaze they are broke. I have met many new CC driver's who invested a ton of money in a great looking truck but can't pay for the note or for fuel because he is running .95c a mile.

If you look at our new leases you will see they put this wacky admenment in. I think it's sec. 3.1 that states out Liablitly is $2500 OF EVERY INCIDENT. The key word is incident, it applies to weather it's freight damage or phyiscal truck damage. I know of several drivers who had minor accidents & upon calling into safety they were told not to do anything else & did not call there insurance companies & CC paid out the claims & are now deducting money from there settlements. These were incidents that should have been reported to Baldwyn & Lions & were covered by one of the 2 policys he contractor pays for weekly.

By puting this langauge in the new lease CC is taking the insurance company out of the loop, which does 3 things; protects there CSA rating, keeps the fleet insurance rates low, & forces the driver to pay out regardless if the driver was at fault.

This is somthing that once it's reliazed widely across the board will come back to haunt CC in the form of another lawsuit. When I reviewed my lease it did not look right to me, I had my attorney look at both new & old lease & we discussed the changes. I sent my lease in with that section crossed out & intialed by me. I have not heard anything about it, but if I have an incident which results in damage to another veichle the first think I will do is call B&L Than call CC. CC requires you call them first than they give you premisson to call B&L.

As a business owner to allow CC to make these types of decsions for you can be construed by a judge that CC IC's are not IC's, they are company drivers.

 

[greg334]

...

As a business owner to allow CC to make these types of decsions for you can be construed by a judge that CC IC's are not IC's, they are company drivers.

I agree with most of what you are saying but remember that you are part of Freight, and not all that independent from them.

The contract thing is a whole 'nother issue but it is really blurring the lines badly.

The investment that you and others mention I don't see it.

I mean knowing Ground from my other activities, the truck seems to have more "requirements" than a CC vehicle does, outside of WG. You can pick up a used CC truck easily (one example is Caffee's old truck) and have it accepted into the fleet without much expense while not needed to have specific equipment installed. The equipment, liftgate, reefer, etc is optional while I understand that Ground trucks will be required to have CARB certified APUs on them and be up to a certain standard to run in all 48 (source Ground managers). They don't go as far as to asked for actual proof of PM or do spot inspections when you roll into the terminal as they have with Ground.

Regardless how you cut it, FedEx as a company is a target, openly and unfairly. I would venture to guess that if they can do something like this with a majority of their fleet (Ground is one, isn't express another they have been sued over?), it may be a case where FedEx will take in consideration that it is easier to be uniformed in all areas of their operation than it would be to have a small slice here or there be different.

 

[ATeam]

By puting this langauge in the new lease CC is taking the insurance company out of the loop, which does 3 things; protects there CSA rating, keeps the fleet insurance rates low, & forces the driver to pay out regardless if the driver was at fault.

If damages from an incident or accident were incurred by Diane and me, and it happened because of someone else's fault, and the insurance policy did not pay the full claim we felt we had, that would not be the end of it. We would act on our own to recover the damages (assuming of course enough money was at stake to make the action worth the effort).

 

[davekc]

I think your attoney advised you correctly in not signing that provision. Even more so if you are a existing contractor.
One may be better served to insure outside of the carrier to ensure there is no conflict of interest.

 

[Deville]

I agree with most of what you are saying but remember that you are part of Freight, and not all that independent from them.

The contract thing is a whole 'nother issue but it is really blurring the lines badly.

The investment that you and others mention I don't see it.

I mean knowing Ground from my other activities, the truck seems to have more "requirements" than a CC vehicle does, outside of WG. You can pick up a used CC truck easily (one example is Caffee's old truck) and have it accepted into the fleet without much expense while not needed to have specific equipment installed. The equipment, liftgate, reefer, etc is optional while I understand that Ground trucks will be required to have CARB certified APUs on them and be up to a certain standard to run in all 48 (source Ground managers). They don't go as far as to asked for actual proof of PM or do spot inspections when you roll into the terminal as they have with Ground.

Regardless how you cut it, FedEx as a company is a target, openly and unfairly. I would venture to guess that if they can do something like this with a majority of their fleet (Ground is one, isn't express another they have been sued over?), it may be a case where FedEx will take in consideration that it is easier to be uniformed in all areas of their operation than it would be to have a small slice here or there be different.

I tend to agree with most of what your saying. I wasn't aware of the carb requirements. That alone is a huge expense. But if it is one those things that goes un checked than it's really not so much of a requirement, but more of an excuse to terminate the contract for a non complyment if other issues arise. Could be anything.

 

[Deville]

If damages from an incident or accident were incurred by Diane and me, and it happened because of someone else's fault, and the insurance policy did not pay the full claim we felt we had, that would not be the end of it. We would act on our own to recover the damages (assuming of course enough money was at stake to make the action worth the effort).

Your missing the point. It should not be an issue of who is at fault. Your insured, B&L should be paying the claim. The ONLY out of pocket money you should be paying is for your own physical damage deductable. If you hit some ones car wether you are at fault or not & there is $5k in damage, B&L shoukld cover all of it. CC should not be saying well we decided to pay them out of our pocket because it's "easier" for them to pay out & collect $2500 from the driver rather than fight it in court or notify B&L to file a claim. CC is actually making that decsion now for us. Regardless if you have B&L or a private carrier like progressive. They will tell the contractor not to do anything that they will handle everything inculding speaking to the insurance company & it doesn't happen. Months later you get a letter describing the settlement & weekly deductions.

Years ago b4 I was contracted with CC I had some guy chase me down & said I hit his car & broke his mirror. Mirror was fine no dents or scratchs on the car.He called the COPS & I took lot's of pics. Waited around COPS never showed so I left. Months later he sues me in small claims court for $1200.

I was self employeed at the time, he did not know I owned the compamy so he sued my Company. I find out that he tried to file a claim with my insurance company which was denied. I had to fight it in court & it was thrown out.

Had the same thing happened while I was driving my CC truck, & he goes after me though CC I think CC pays out for the sake of paying out, & cuts B&L out of the loop & I wind up paying. All because some one makes a claim. I know it seems like i'm getting off topic, It seems like a long way to get to my point, which was this is a provsion in the current lease which could be seen as CC IC's more like employees.

 

[Deville]

I think your attoney advised you correctly in not signing that provision. Even more so if you are a existing contractor.
One may be better served to insure outside of the carrier to ensure there is no conflict of interest.

It's been over a year & I haven't heard anything. I'm really not worried about it.

 

[springrivergroup]

Contractor or employee is a tax issue and the IRS is not completely clear on it. Generally a contractor is defined by how work is done. A job is defined and a contractor uses their experience and judgment to select which of their tools and equipment to use and how to perform the work. Everyone else is an employee. The problem comes from a company telling a contractor what tools must be used, or how to perform a task , or anything else that a contractor must do, then the contractor becomes an employee.

The state has a vested interest in having everyone be an employee because of the tax laws and other laws to control the employee and employer.

In this business when the company tells the contractor that they must use only this piece of equipment, or what the contractor can and cant do with their tools and equipment or when and how much, or that they must do something to meet the company’s compliance requirements, the line between contractor and employee is crossed.

Most companies in this business will have a problem with the contractor employee issue, its just a matter of time. From what I can see the management teams of the companies don’t understand the issues or just don’t care.

When the tax man comes to the company for whatever reason (unions politics etc…) to make the contractor employee test the results for the contractor could be very bad, years of tax filing that are incorrect at best, deductions that are disallowed, back taxes owed with interest and penalties, and who knows what else.


Cost of tools and equiptment has nothing to do with it.

 

[Deville]

Contractor or employee is a tax issue and the IRS is not completely clear on it. Generally a contractor is defined by how work is done. A job is defined and a contractor uses their experience and judgment to select which of their tools and equipment to use and how to perform the work. Everyone else is an employee. The problem comes from a company telling a contractor what tools must be used, or how to perform a task , or anything else that a contractor must do, then the contractor becomes an employee.

The state has a vested interest in having everyone be an employee because of the tax laws and other laws to control the employee and employer.

In this business when the company tells the contractor that they must use only this piece of equipment, or what the contractor can and cant do with their tools and equipment or when and how much, or that they must do something to meet the company’s compliance requirements, the line between contractor and employee is crossed.

Most companies in this business will have a problem with the contractor employee issue, its just a matter of time. From what I can see the management teams of the companies don’t understand the issues or just don’t care.

When the tax man comes to the company for whatever reason (unions politics etc…) to make the contractor employee test the results for the contractor could be very bad, years of tax filing that are incorrect at best, deductions that are disallowed, back taxes owed with interest and penalties, and who knows what else.


Cost of tools and equiptment has nothing to do with it.

If you read my posts in this thread you will see that I have out lined several diffrent occurances wehre FEDX Ground & CC have set policy on certain things a contractor is required to do to either contract with them, stay contracted with them, or because they feel it's in Fedx's best intrest over the contractor.

I do understand the diffrence between a contractor & employee. In my experiance the line is blured & is crossed over more times than not. Mostly because people don't care.

 

[greg334]

Had the same thing happened while I was driving my CC truck, & he goes after me though CC I think CC pays out for the sake of paying out, & cuts B&L out of the loop & I wind up paying. All because some one makes a claim. I know it seems like i'm getting off topic, It seems like a long way to get to my point, which was this is a provsion in the current lease which could be seen as CC IC's more like employees.

I think this also speaks a lot about how they don't even view you as a separate entity - contractor. By making a decision without your input, it looks like you are an employee.

By the way, I don't think you are even close to being off topic, the question Phil put out there is if the actions of FedEx ground will have ramifications with FedEx CC and I think an cumulation of these changes (dispatching, contract, flat rates) all point to more or less a serious change in business relationships through changing it from owner operator being a contractor to strictly B to B to provide an extra layer of protection for them.

In this business when the company tells the contractor that they must use only this piece of equipment, or what the contractor can and cant do with their tools and equipment or when and how much, or that they must do something to meet the company’s compliance requirements, the line between contractor and employee is crossed.

I sort of agree with what you are saying but the IRS is one entity who handles this issue, the Department of Labor is another and has a lot to say about it.

The issue in this industry is divided up to more or less sub-contractors and contractors and owner operators. The difference being that the company can actually tell a sub-contractor how to drive, what to do and so on because they are not directly contracted with the company. However they can't for the other two.

There are also what is construed as common training - as I'm told they sometimes call it. It means that a company outside of regulatory training, can not legally train you on anything that is obtainable or not directly related to a specific type of work that is unique within the company, or for a specific type of software unique to the company (not Qualcomm training either) without stepping over the line of that employee/contractor line. Hazmat and flat bed load securement training is the exception but Nuke, special handling, and other training is not and should be charged back to the contractor to keep things legal.

 

[ATeam]

...Had the same thing happened while I was driving my CC truck, & he goes after me though CC I think CC pays out for the sake of paying out, & cuts B&L out of the loop & I wind up paying. All because some one makes a claim.

That is nothing new. From the first day Diane and I signed on with the company nearly eight years ago, drivers have told us stories about how such claims were paid out without contest and about how they felt victimized by an injustice because they really were not at fault.

It took us a very short time to figure out that the safety department is there not for our safety but for our carrier's. Our safety interests and our carrier's often coincide and safety will go to bat for a driver when it is in the best interests of the carrier to do so. However, when it is in the best interests of our carrier to settle a claim without regard to a contractor's culpability, it will be quickly done.

Whether that makes it more likely that contractors will be deemed employees, I'm not so sure. It might be argued that since the claim was against the carrier and the carrier did what it did without regard to the contractor's best interests, it stands a proof that the contractor is indeed an independent entity.

Again, I don't know. Nor do I care. I am fully satisfied that when all things are considered, we are independent contractors.

I am also less concerned than many people are about the breed of predator "victim" that you described. My first thought is that one would quickly back off when he or she saw the cameras mounted on our truck for the surveillance system. My second thought is that if a bogus claim were made, we would likely have the alleged event on tape and you can rest assured that once the claim was proven bogus, I would happily furnish the appropriate prosecutor with the tape so fraud or other appropriate charges could be leveled.

 

[Deville]

That is nothing new. From the first day Diane and I signed on with the company nearly eight years ago, drivers have told us stories about how such claims were paid out without contest and about how they felt victimized by an injustice because they really were not at fault.

It took us a very short time to figure out that the safety department is there not for our safety but for our carrier's. Our safety interests and our carrier's often coincide and safety will go to bat for a driver when it is in the best interests of the carrier to do so. However, when it is in the best interests of our carrier to settle a claim without regard to a contractor's culpability, it will be quickly done.

Whether that makes it more likely that contractors will be deemed employees, I'm not so sure. It might be argued that since the claim was against the carrier and the carrier did what it did without regard to the contractor's best interests, it stands a proof that the contractor is indeed an independent entity.

Again, I don't know. Nor do I care. I am fully satisfied that when all things are considered, we are independent contractors.

I am also less concerned than many people are about the breed of predator "victim" that you described. My first thought is that one would quickly back off when he or she saw the cameras mounted on our truck for the surveillance system. My second thought is that if a bogus claim were made, we would likely have the alleged event on tape and you can rest assured that once the claim was proven bogus, I would happily furnish the appropriate prosecutor with the tape so fraud or other appropriate charges could be leveled.

I think you are still missing my point.

 

[ATeam]

I think you are still missing my point.

It seems so. Forgive me. What is the point that I am missing?

 

[Deville]

It seems so. Forgive me. What is the point that I am missing?

Just re-read my post's.