It All Becomes Clear Now

Some time ago a video went around the Internet of a FedEx delivery driver throwing an expensive computer monitor over a seven-foot security gate, marking the package as “delivered,” and driving off. A few weeks later a second video showed us another FedEx driver stealing a package left by another service off of a doorstep while making a later delivery. This was rapidly followed by a blizzard of additional videos, some real and some staged, in which people in FedEx uniforms (real and home-made) did a variety of wince-inducing things that the company would probably like to believe never actually happen, before something else popped up and the world’s collective attention moved on. At the time, I was baffled by the minority of these videos that were eventually verified as real; it seemed fantastical that even a very large company could possibly experience that much bad behavior in that short a span of time. Little did I know that many of the people involved didn’t actually work for the company…

You can pick up the story from the Bloomberg site if it hasn’t been taken down, but apparently ever since FedEx bought Roadway Package Systems in 1998 and developed it into the FedEx Ground subsidiary, they’ve been classifying all of the delivery drivers as independent contractors, not employees. As a result, the company does not pay for overtime, health or retirement benefits, or even the drivers’ Social Security contributions; they actually deduct money from the drivers’ paychecks to cover the use of the delivery trucks and the cost of the uniforms that these personnel are required to wear. According to some of the lawsuits that have popped up about this, the company is, in fact, taking as much as sixty percent of the “wages” paid to these personnel, turning what would otherwise be good jobs into ones that barely pay…

It remains to be seen how the various legal actions will turn out; U.S. Circuit Courts in Indiana and D.C. have sided with the company, but the U.S. Ninth Circuit Court of Appeals in San Francisco ruled that the FedEx Ground drivers are employees (and entitled to all of the same rights as any other employee) in a decision handed down just this past August. Now the Kansas State Supreme Court has ruled in favor of the drivers (as of October 3^rd), and the National Labor Relations Board (NLRB) has rejected FedEx Ground’s claims, finding that the drivers are in fact employees. This issue is still a long way from being resolved, and so far the company is still fighting, but the momentum seems to be with the drivers. As a former management consultant and analyst, I can’t help wondering if anyone has pointed out to the company that this whole policy was idiotic in the first place…

FedEx Ground drivers are the company’s front line customer service personnel; in many cases they are the only human contact customers will have with the firm. If those employees are conscientious, helpful, and treat both the customer and their packages well, it reflects well on the company and makes people more inclined to use the service again. If those employees are grumpy, surly, disgruntled, resentful, or angry with their employer, they are likely to do things like throwing packages of delicate electronics over fences, leaving packages in garbage cans, or even (in extreme cases) leaving the shipments at any random address along their route rather than delivering them. And while it would facile to blame the company for all of the bad behavior of its personnel, this system is creating the perception that the company does not care about its delivery personnel, and will cheerfully rip them off for more than half of what they are allegedly making in the first place…

None of this excuses the bad behavior (and outright criminal offenses) being committed by the “independent contractor” driver personnel, of course. But it does offer some explanation for those nagging questions about how an otherwise highly successful company ends up with that many miserable excuses for employees…