CT Blue

The New York Times broke a major story today, even if it does fit into the “what else is new” category into which so much news can be placed. Is anyone remotely surprised that the military experts on television are spewing administration talking points in the service of their current employers, arms dealers and the like? Is anyone surprised that the networks were cavalier about checking into these people, and that the networks never bothered to reveal their connections to the arms merchants? We all know we should be outraged, but it’s so hard these days.

I personally got more outraged about this story in the business section, simply because nothing about Iraq can get me truly outraged anymore, but other stories can still push my buttons. The story contrasts two employers, FedEx and Patagonia. It tells the story of one FedEx employee who worked for the company for 10 years, only to be fired when she asked for a leave so she could battle cancer. Patagonia by contrast, pampers the workers at its corporate headquarters (it’s not clear how the folks who actually make the clothing are treated).

FedEx would say the comparisons are unfair, because the sick lady, Jean Capobianco, was not an employee, she was an independent contractor. You see, one of FedEx’s ways of holding down costs is to call the folks who wear its uniform and drive its trucks “independent contractors”. Now this definition of independent contractor is pretty much black letter law:

A person or business who performs services for another person under an express or implied agreement and who is not subject to the other’s control, or right to control, the manner and means of performing the services; not as an employee. One who engages an independent contractor is not liable to others for the acts or omissions of the independent contractor.

Does FexEx qualify?

In Jean’s view, it was ludicrous for Roadway and FedEx to call the drivers independent contractors.

“We’re told what to do, when to do it, how to do it, when to take time off,” Jean said. “You have to wear their uniform. You can’t wear your hair certain ways. You have to deliver every single thing they put on the truck.”

Jean called it “a great deal for FedEx. They don’t have to pay for trucks, for the insurance, for fuel, for maintenance, for tires,” she said. “We have to pay for all those things. And they don’t have to pay our Social Security.”

By some estimates, this arrangement saves FedEx $400 million a year, giving it a significant cost advantage over U.P.S., which treats its drivers as regular employees. Moreover, FedEx Ground has sought to rebuff a Teamster organizing drive by arguing that its 15,000 drivers have no right to unionize because they are independent contractors.

“These drivers are more like business people,” said Perry Colosimo, a FedEx Ground spokesman. “They can set their own hours. They can buy routes. They can develop their business.”

In 30 lawsuits, FedEx Ground drivers have argued that they are employees, not independent contractors, and that the company should therefore pay for their trucks, insurance, repairs, gas and tires. In one lawsuit, a California judge ruled that FedEx Ground was engaged in an elaborate ruse in which FedEx “has close to absolute control” over the drivers. Last December, FedEx acknowledged another setback: the I.R.S. ordered it to pay $319 million in taxes and penalties for 2002 for misclassifying employees as independent contractors. FedEx could face similar I.R.S. penalties for subsequent years. FedEx said it would appeal.

Now, UPS is hardly a paragon of virtue, but it at least acknowledges that its employees are employees. They have a union. UPS is following the law. It is, essentially being put at a competitive disadvantage, not be being nice to its employees, but merely because it is not engaged in the same “elaborate ruse” as its competitor. FedEx is not an outlier, it’s part of a trend.

The FedEx workers’ experience is not unique, but part of a widespread trend in which companies misclassify workers as independent contractors, allowing employers to avoid making contributions to Social Security, unemployment insurance, workers’ compensation and health insurance. Independent contractors are also not extended protections under labor and employment law, and they cannot form or join unions.

Initially, there might be some attraction to think that you’re your own boss. But in the end, they’ll see that they don’t have any protections. “It makes [workers] responsible for a whole range of things that normally an employer should provide,” said Suren Moodliar, coordinator for the North American Alliance for Fair Employment (NAFFE). “In effect, [independent contractors] are responsible for their own exploitation.”

This sort of thing could not be happening without a government that did its best to look the other way. Our corporate and government masters tell us that market forces will take care of everything, and then they game the market forces by breaking the few rules that limit them. This lawlessness drives even well meaning employers toward these kinds of scams, because they can’t compete unless they move toward the lowest common denominator.

The Times story, by the way, is adapted from “The Big Squeeze: Tough Times for the American Worker,” by Steven Greenhouse, the Times Reporter.