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A Tale of Two Drivers

arrowEmployee vs. Independent Contractor

Labeling its drivers as independent contractors has proven to be an effective strategy for FedEx Ground.  Lowering its labor costs by avoiding payroll taxes and benefits gives the company an unfair and unethical advantage over competitors such as UPS and DHL, who classify their drivers as employees, many of which have union representation.

An Orlando Sentinel article compared the benefits of a FedEx Ground driver (a so-called independent contractor) and a union-represented UPS driver (an employee). Although the jobs are nearly identical, the comparison reveals how a little label makes a huge difference:

  FedEx Ground Driver UPS Driver
Annual earnings Roughly $50,000-60,000, paid per delivery $70,000, includes $26.17/hour wage plus overtime
Job-related expenses Fuel, maintenance, other supplies; cost of route/truck: $30,000 None specified
Health care Driver can opt into plan with some contribution from FedEx Ground  UPS covers full cost of family-covered health insurance*
Retirement Driver can opt into plan with some contribution from FedEx Ground UPS pays into a defined benefit pension plan*
Leave Unpaid time off, based on availability of replacement  4 weeks paid vacation, 1 week paid for personal or sick leave
Job security FedEx Ground can terminate driver’s contract at any time** Union contract mandates UPS demonstrates “just cause” for dismissal*

Sources:
Wessel, Harry.“Tale of 2 drivers,” Orlando Sentinel, 21 Dec. 2005: G1.
* “National Master United Parcel Service Agreement,” for the period of Aug. 1, 2002 through July 31, 2008.
** Estrada v. FedEx Ground, BC 210130 (CA Super. Ct. 2004).