Saturday, December 31, 2005

Some thoughts on reading that Fedex is not going to be able to keep classifying its drivers as independent contractors and not employees...

First, this case applies to Fedex Ground drivers, Fedex's parcel delivery service (green Fedex logo, lower prices, slower delivery) and not to the ubiquitous Fedex Express drivers we normally see, who (I believe) are very much classified as employees. Not too many people writing on this story have picked up on this.

Next, the Fedex drivers were awarded $5.3 million in various damages. Their attorneys somehow managed to get themselves a $12.3 million fee. I thought attorneys were supposed to take 1/3 of the pot, with the victims getting 2/3, not the other way around.... ah, just another great example of our tort system at work.

And, as far as the damages, they were awarded as reimbursement for "expenses the company should have covered, including paying for fuel, oil, tires, repairs and liability insurance". Now, I have no problem with California law requiring employers to pick up certain expenses. But ALL of these supposed victims entered into a contract with Fedex Ground where they agreed to bear those costs in return for a fee... a fee that was higher than would be the case had Fedex Ground agreed to pick up those expenses. Are the victims going to reimburse Fedex Ground for the difference between what they were paid and what they would have been paid?

And this last issue illustrates a problem I have with the whole employee or contractor debate. Nobody is forced to take a job, whether it be as an independent contractor or as an employee. The terms of the agreement, again whether as an independent contractor or employee, are negotiated between company and the person providing the service. To the extent that someone doesn't want to be an independent contractor, they're going to extract more from their relationship in order to make up for whatever disadvantages they perceive in working as an independent contractor. For example, contractors don't get health benefits... which is usually seen as not a good thing. But they do get paid at a higher hourly rate than people doing similar work and classified as employees.

So, for a judge to retroactively distribute only part of the transaction, to give one side more of what they want without having them give up what they received in return is an example of either judicial activism or economic cluelessness on the part of the judge. Either way, the decision stinks...