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Justice Gets Delivered To FedEx Workers

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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.

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St. Louis Mayor Joins the Fight for $15

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Emily-Foster_avatarSt. Louis Mayor Francis Slay is announcing today a bill that will raise the city’s minimum wage to a living wage of $15 an hour for those who work for the city’s larger employers.

The plan would steadily raise wages by $1.25 an hour per year until 2020. However, small businesses that gross less than $500,000 annually or have fewer than 15 employees would be exempt.

The state’s second-largest city is on its way to join others across the nation, such as Los Angeles and the District of Columbia, that have set their wages higher than the federal minimum wage. The federal minimum wage stands at a mere $7.25 – not nearly enough for anyone to live on.

Via his personal Twitter account, the mayor addressed the need for the plan: “The discussion about a local increase of a minimum wage has been positive: how we best make this work. Read the bill. The legislative process is just beginning. There is opportunity to address concerns. Bottom line, though: the city and the region must make it possible for full-time workers to live, raise families.”

The city’s clock is ticking, however. Missouri’s Republican-led state legislature passed a bill last month that prohibits cities from adopting various local ordinances, including increases in the minimum wage. Cities must raise their wages by August 28, before the bill takes effect.

Missouri’s Republicans must be threatened by the evidence that a living wage is overdue and necessary. According to the Economic Policy Institute and the National Employment Law Project, “the minimum wage in 2014 was 24 percent below its 1968 level despite the fact that U.S. productivity more than doubled over that period.”

These same Republicans are also threatened by the legislative support raising wages has gained. In fact, 29 states and the District of Columbia, as well as 21 cities and counties, have recently set their minimum wages above the “inadequate federal rate of $7.25,” according to the same EPI and NELP report.

One of the states trying to also get on board is New York. Last month, New York governor Andrew Cuomo proposed a wage increase for fast-food workers in the state.

In his New York Times opinion piece, Cuomo detailed how in fact raising wages boosts our economy. “More than 600 economists, including seven Nobel Prize laureates, have affirmed the growing consensus that raising wages for the lowest-paid workers doesn’t hurt the economy. In fact, by increasing consumer spending and creating jobs, it helps the economy. Studies have shown that every dollar increase for a minimum-wage worker results in $2,800 in new consumer spending by household,” wrote Cuomo.

According to the National Employment Law Project, fast-food employment in the state has grown “57 percent between the years 2000 and 2014. Private sector jobs overall grew 7 percent during the same period.” In New York City, fast-food employment” grew even faster—at the rate of 87 percent, to almost double its level 15 years ago.”

Raising the minimum wage is common sense if we want to have a thriving middle class and a strengthened economy. EPI and NELP have both outlined who will benefit from a wage increase – in short, over 35 million Americans.

Mayor [Slay] stands behind his plan with confidence. “Make no mistake about it. We are raising the minimum in STL. There are arguments against a minimum wage and a higher minimum. They are not as good as the arguments in favor,” he said.

This blog was originally posted on Our Future on June 8, 2015. Reprinted with permission.

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

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