Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘FedEx’

Delivery Drivers Sue Amazon Over Misclassification, Failure to Pay Overtime and the Minimum Wage

Tuesday, December 20th, 2016

With wage and hour lawsuits becoming increasingly common across the country, there was little reason for the lawyers at Amazon.com’s Seattle headquarters to be surprised when one landed on their doorstep recently. But they may have been concerned to learn that their newest legal adversary is “Sledgehammer Shannon” Liss-Riordan, a Boston attorney who gained legal fame by beating corporate giants like FedEx and Starbucks in just these kinds of contests.

The new lawsuit against Amazon is similar to one of Liss-Riordan’s best known cases—a suit against FedEx that charged the company was misclassifying delivery drivers as independent contractors when the workers were, as a matter of law, regular employees. Liss-Riordan won that fight and, this year, FedEx announced that it would give up on a series of related legal fights and pay $240 million to some 12,000 drivers in 20 states.

Liss-Riordan took the fight to Amazon in a suit filed October 4 in the U.S. District Court for the Western District of Washington. It charges Amazon and Amazon Logistics Inc. with violating the minimum wage law in Seattle, state labor law in Washington and the federal Fair Labor Standards Act (FLSA).

Liss-Riordan explains that Amazon is experimenting with a delivery system where the company contracts with individuals to use their own cars to pick up parcels at Amazon warehouses and deliver them to local customers. The drivers typically sign up for a specific work shift and are paid an hourly wage. They are not compensated, however, for expenses like gasoline, car maintenance, telephone calls, or other incidentals. When subtracting these expenses, drivers often end up earning less than the minimum wage and are denied overtime pay, she says.

That description of delivery methods was echoed by Stacy Mitchell, co-director of the advocacy group Institute for Local Self-Reliance. Along with co-author Olivia LaVecchia, Mitchell has just completed a major study of Amazon’s business practices that warns that the giant corporation is killing good jobs in local economies as it seeks to monopolize different sectors of the retail business.

“Amazon has substantially expanded its warehouses in recent years and is experimenting with the so-called ‘last mile’ of the delivery system. They are increasingly using on-demand drivers, and also regional couriers, to move goods,” Mitchell says. “In the past, this sort of ‘last mile’ delivery was typically done by the U.S. Postal Service or United Parcel Service. USPS and UPS jobs are good-paying union jobs, and Amazon is undermining these with its gig economy model.”

In These Times reached out to Amazon to comment on the lawsuit. Spokesman Jim Billimoria provided the following response:

“The small and medium sized businesses that partner with Amazon Logistics have their own employees and are required to abide by applicable laws and Amazon’s Supplier Code of Conduct, which focuses on compensation, benefits, and appropriate working hours. We investigate any claim that a provider isn’t complying with these obligations.”

Liss-Riordan says this sort of a defense is typical of large corporations, many of which have lost wage and hour lawsuits in court.

“It’s not what you say that counts, it’s what you do,” she said. “We’ve been able to demonstrate, time and time again, that a lot of these corporations just don’t live up to their stated policies when it comes to real-life employment practices on the ground. That’s why you see more and more of these suits.”

Indeed, a 2015 report from the law firm of Seyfarth Shaw LLP described an “onslaught” of litigation resulting in a record high number of federally-filed wage and hour cases in 2015. According to the firm, there were 8,781 such cases in 2015, compared to only 1,935 in 2000.

Asked about her nickname “Sledgehammer Shannon,” Liss-Riordan laughed out loud.

“It’s sort of silly. Mother Jones magazine did an article last year about a case I have against Uber, and I get a lot of jokes. I don’t care. The fact is, we will take on cases like this and fight them for 10 years if we have to.”

This blog originally appeared at Inthesetimes.com on December 12, 2016. Reprinted with permission.

Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA’s Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper’s New York City headquarters and in the Washington, D.C. bureau.

Justice Gets Delivered To FedEx Workers

Thursday, June 18th, 2015

Emily-Foster_avatarFedEx says it “lives to deliver.” Last Friday, more than 2,000 of its workers finally received a delivery of justice from a federal judge.

A settlement in the case filed in U.S. District Court on behalf of the workers, Alexander v. FedEx Ground, means the company will pay $277 million to resolve the claims of FedEx Ground and FedEx Home Delivery workers who were victims of worker misclassification since the year 2000. These are workers FedEx classified as “independent contractors” but treated largely as if they were on the company payroll.

We first wrote about this last August, when the 9th U.S. Circuit Court of Appeals ruled that FedEx’s employees (in California and Oregon, and likely many states with similar employee-protection laws) are, in fact, “employees as a matter of law” – not independent businesspeople who had the level of control over their jobs that a self-employed person would expect to have.

“The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards,” the ruling said. “FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent.”

According to the Economic Policy Institute, worker misclassification is an increasingly common problem, “a business model for unscrupulous employers who use it to avoid employment-related obligations and save on labor and administrative costs.”

EPI says independent contractor misclassification occurs “when a worker who should be considered a direct employee of a business is treated as a self-employed contractor.” Françoise Carré, in his June 8, 2015 report for EPI titled “(In)dependent Contractor Misclassification,” workers who are misclassified are “ineligible for unemployment insurance, workers’ compensation, minimum wage, and overtime, and are forced to pay the full FICA tax and purchase their own health insurance.” Misclassification also “undermines their bargaining power and leaves workers more vulnerable to wage theft.”

Carré also wrote that misclassification leads to the federal and state governments losing revenue from necessary income taxes, while unemployment insurance, workers compensation and disability insurance systems are “adversely affected.”

It also makes it easy for companies to bypass requirements of the Fair Labor Standards Act and the 1986 Immigration Reform and Control Act.

The report points out that worker misclassification is most common in professions where “work is performed in isolation,” which FedEx drivers exemplify.

The ruling found that the company owes its drivers “for illegally shifting to them the costs of such things as the FedEx branded trucks, FedEx branded uniforms, and FedEx scanners, as well as missed meal and rest period pay, overtime compensation, and penalties.” Drivers were required to pay out of pocket for the trucks, uniforms, and scanners, and even the wages of other employees the company asked the drivers to hire.

After the settlement, the 2,000 workers were granted the rights and benefits entitled to employees under California’s laws. FedEx Ground’s independent contractor model was deemed unlawful, and the settlement is considered as one of the largest in recent history – showing that mislabeling workers can be economically catastrophic to a business.

That doesn’t mean that FedEx isn’t still trying to game the system so it doesn’t have to treat its workers as workers. The company has since 2011 implemented a new system in which delivery drivers are employees of a subcontractor to FedEx, and the trade publication Transport Topics quoted a FedEx spokesperson as saying that the company would “complete the transition to a new independent service provider agreement later this year.”

After Friday’s settlement, FedEx did tweet that new job openings were available. We’ll see if FedEx has learned its lesson about worker misclassification – or if the company is absolutely, positively delivering new ways to scam its workers.

This blog was originally posted on Our Future on June 16, 2015. Reprinted with permission.

About the Author: The author’s name is Emily Foster. Emily Foster is a regular contributor to Our Future.

FedEx Threatens to "Destroy" Members of Congress

Tuesday, June 9th, 2009

FedEx CEO Fred Smith’s arrogant campaign of threats and intimidation continued this week when his top spokesman threatened to take down members of Congress who oppose FedEx’s position on a key piece of legislation.

When asked about FedEx’s multi-million dollar ad campaign against the legislation that is reported to launch on Tuesday, June 9, top FedEx flack Maury Lane told U.S. News and World Report in a story posted in The White House Bulletin, “I’m going to try to destroy them.”

This follows Smith’s repeated threats to cancel a $10 billion contract to purchase Boeing 777 planes if FedEx Express workers were moved under the National Labor Relations Act (NLRA).

FedEx clearly threatened in a March 24, 2009 SEC filing, and Smith reiterated in testimony before Congress in May, that its contract to purchase additional aircraft from Boeing is contingent upon its labor relations for all of its employees being governed by the Railway Labor Act (RLA). Under this provision, if Congress dares to grant even a portion of its workers the rights enjoyed by most American private sector employees under the NRLA, FedEx has the right to cancel those purchase orders.

“Fred Smith and FedEx breed a culture of arrogance,” said Teamsters General President Jim Hoffa. “First, they cut wages, increase medical insurance premiums and eliminate pension benefits for its employees. Then they try to blackmail Congress with threats to pull the Boeing contract. Now they threaten to destroy the political careers of those who oppose them.”

Currently, all workers at FedEx Express are covered by the RLA regardless of whether they have any direct relationship with the operation or maintenance of the air fleet. This includes package delivery drivers, workers at sorting facilities and truck mechanics.

The House of Representatives overwhelmingly passed legislation on May 21 that is a part of the Federal Aviation Administration reauthorization and would place those workers under the NLRA, the statute that protects virtually all other private sector workers. Under the NLRA, workers may organize by individual terminals while the RLA requires a more difficult path to unionization that requires a national vote by every worker at FedEx Express. The reauthorization bill is currently awaiting action in the Senate.

“It’s astonishing that Fred Smith and his flacks will go to any length to boost FedEx’s profits at the expense of American workers and the economy,” said Ken Hall, Director of the Teamsters Package Division. “By threatening to destroy members of Congress, FedEx’s efforts to manipulate the American system of government have crossed the line.”

About the Author: Richard Negri is the founder of UnionReview.com and is the Online Manager for the International Brotherhood of Teamsters.

This article originally appeared in Union Review on June 5, 2009. Reprinted with permission by the author.

California's Salaried Workers Score a Victory

Tuesday, April 7th, 2009

On Thursday, March 19, 2009, the Ninth Circuit Court of Appeals reversed a District Court’s order and reinstated a class action lawsuit against FedEx Kinko’s Office and Print (“FedEx”) seeking unpaid overtime and related penalties on behalf of a class of hundreds of the company’s Center Managers. This short three page decision carries monumental implications which extend far beyond the class members of this single action to reinforce the rights of all California employees who are paid on a “salaried” basis and denied compensation for their overtime work.

The case filed in May 2005 alleged that Center Managers at FedEx’s California Stores were improperly classified as “exempt” from overtime pay under California law on the basis that these employees met what is commonly referred to as the “managerial” exemption. Under California law, exemptions from overtime pay are narrowly construed and the employer has the burden to prove the exemption applies. For the managerial exemption to apply, the employer must prove, among other things, that the employees spend more than one-half of their work time on exempt duties and “customarily and regularly” exercise discretion and independent judgment under Cal. Labor Code § 515.

The case was certified as a class action in 2006. In May 2007, FedEx moved for summary judgment asking the District Court to conclude that the entire class was exempt from overtime under California’s “executive” exemption. The District Court agreed and granted Defendant’s motion. The Plaintiff appealed to the Ninth Circuit seeking to have that decision overturned.

The Ninth Circuit reversed the District Court’s decision holding that the class members testimony and expert witnesses raised triable issues regarding whether the Center Managers were primarily engaged in management duties. The decision is important as it reinforces the heavy burden employers must meet in order to show that their employees are spending at least half of their time on exempt tasks – merely referring to those employees as “managers” is not enough.

By reversing the District Court’s finding for FedEx, the Ninth Circuit sent a clear message of the Court’s intention to require employers who seek to circumvent overtime laws by paying their employees fixed salaries to provide substantial evidence to support these decisions – rather than merely referring to thoseemployees as “managers”. The fact that the decision was issued a mere eight days after the hearing is somewhat unusual and bodes well for the rights of all salaried employees throughout the state.

In light of the ruling, the parties will be proceeding toward trial. If successful there, hundreds of FedEx Center Managers could recover compensation for years of lost wages. Employees with similar claims would be well advised to strike while the iron is hot in seeking to recover owed wages pursuant to this ruling. If you are currently working in the state of California and are not receiving overtime pay (or if you are an attorney currently representing such an employee), please visit the Scott Cole & Associates, APC website to obtain further information regarding this lawsuit.

About the Author: Matthew R. Bainer, Esq. is an experienced and successful advocate of employees’ rights and has successfully represented tens of thousands of employees, both in California and throughout the nation. Mr. Bainer, a well-respected practitioner in his field, has written for both legal periodicals and academic law reviews. For more information about Mr. Bainer and his firm, please visit the Scott Cole & Associates, APC website at www.scalaw.com.

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