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Wage Watch: Court ruling could upend FedEx’s biz model

August 29, 2014, 3:48 PM UTC
FedEx Reports Sharp Decline In Quarterly Profits
SAN FRANCISCO, CA - JUNE 19: FedEx workers unload packages from a delivery truck on June 19, 2013 in San Francisco, California. FedEx, the world's second-largest delivery service, reported a 45 percent decline in fourth quarter profits with earnings of $303 million, or 95 cents per share compared to $550 million, or $1.73 per share one year ago.(Photo by Justin Sullivan/Getty Images)
Photo by Justin Sullivan—Getty Images

FedEx drivers are employees, court says

In a ruling with the potential to upend the logistics industry, a three-judge panel on Wednesday decided that FedEx Ground and FedEx Home Delivery drivers are employees of the company and not independent contractors, as FedEx had characterized them.

The 9th U.S. Circuit Court of Appeals panel in Portland, Oregon ruled that FedEx had misclassified 2,300 drivers in California and Oregon as contractors—a decision that might prompt claims for back wages and benefits that could cost the company hundreds of millions of dollars.

The decision overturns a lower court’s ruling that had kept the former drivers’ lawsuit from moving forward.

Unlike employees, independent contractors are not guaranteed overtime pay under the federal Fair Labor Standards Act, they’re not protected under state minimum wage laws, and they’re not entitled to time off under the Family Medical Leave Act. FedEx also required its contracted drivers to pay out of pocket for their uniforms, truck maintenance, and the package scanners that they rent.

In its ruling, the court discredited that model, determining that FedEx had the “broad right to control the manner in which its drivers perform their work.” The workers should therefore be classified as employees, the judges said.

Over the years, workers have challenged the independent contractor model that FedEx pioneered and that other delivery companies adopted in approximately 40 states. Until Wednesday, the courts had sided with FedEx.

FedEx says it fundamentally disagrees with the ruling and will ask for a review of the decision by the full 9th Circuit panel.

Costco sued over worker’s stalker

The Equal Employment Opportunity Commission on Monday sued Costco for discriminating against a female employee by subjecting her to sexual harassment.

According to the suit, the big box retailer deprived employee Dawn Suppo of equal employment opportunities by “creating and tolerating a sexually hostile work environment of offensive comments of a sexual nature, unwelcome touching, unwelcome advances, and stalking by a customer and constructively discharging her.”

The lawsuit, which was filed in federal court in Chicago, said that the agency had attempted to address the “unlawful” practice through “informal conciliation efforts” with Costco last year but determined that it would be unable to do so without legal action.

Costco did not immediately return a request for comment.

NLRB to Jimmy John’s: It’s icky but not a fireable offense

The National Labor Relations Board determined earlier this month that sandwich chain Jimmy John’s had wrongfully terminated union workers participating in a campaign by the Industrial Workers of the World. The Minnesota-based workers were protesting their lack of sick days by putting posters on community bulletin boards that pictured a Jimmy John’s sandwich with the words “Your sandwich made by a SICK Jimmy John’s worker.”

The Jimmy John’s franchisee argued that the posters were intended to harm the company, rendering the firings lawful. The NLRB disagreed, finding that the posters’ claim about the lack of paid sick leave “was factually accurate” and there was no indication that the workers had “acted recklessly.”

Does your wallet feel lighter? You’re not alone.

American workers’ wages fell in the first half of 2014 compared to the first half of 2013 with few exceptions, according to a report released this week by the Economic Policy Institute.

The falling wage trend goes back even further. When compared to the first half of 2007, for instance, wages in the first half of this year were flat or falling. In fact, the depressed wages pattern holds fast even when you compare 2014 wages to those in 1979 (after accounting for inflation).

Productivity from 1979 to 2013 grew 64.9% while hourly compensation of production and nonsupervisory workers, who account for 80% of the private sector workforce, grew by just 8%.

What does it all mean? Even in an age of economic growth, American’s standard of living isn’t getting any better.