One way to avoid troubles with a union is to not have employees, the strategy FedEx is using to compete with UPS. Naturally, the union will fight back, as the Teamsters are doing. The case is being heard in South Bend, and a loss would be bad news for FedEx:
The court is weighing suits filed by 150 independent contract drivers who say they are treated as full-time employees and should be paid as such. Limiting the FedEx ground-delivery unit's use of contractors may wreck its chances of gaining on larger rival UPS. The unit helped FedEx take as much as 19 percent of the ground-delivery market, while UPS has fallen from 82 percent to 70 percent in the past decade.
Losing the battle could flatten the company's model of using workers who are self-employed and don't get benefits or paid time off. FedEx may have to buy as many as 15,000 drivers' trucks for $45,000 apiece. That $630 million bill could jump even higher if health care, pension costs and back pay are added.
''Treating any particular class of workers as independent contractors is, in many ways, an all-or-nothing proposition,'' said Carey Bartell, a labor lawyer at Reed Smith in Chicago. ''If you're right, you avoid certain expense and hassle. If you're wrong, however, you can lose big.''
It would, of course, also be bad news for consumers, who benefit from vigorous competition in the delivery business. FedEx is using a business model that helps it compete. I don't need to point out, do I, that people who want to be drivers have a choice of where to seek employment? If they want to stay independent, they work for FedEx or some similar employer or simply stay freelance. If they want the full-time-employment status with all the benefits, they look for a UPS-type company.
You may or may not know this, but newspapers don't have delivery employees. All those carriers who almost hit your porch are independent contractors, just like FedEx drivers. I haven't researched the history of that aspect of our business, but I suspect that the practice in our case stems more from liability issues than benefits issues. Companies aren't as liable for the actions of contractors as they are those of employees. And when you have scores of people out there delivering your product who are beyond your control, many of them not even of high school age, that's no small concern.
