Hello FedExWatcher,

FedEx Home Delivery is defending its illegal contractor model in the U.S. Court of Appeals for the District of Columbia Circuit. 

In a brief filed March 17, FedEx Home Delivery is requesting a review of a National Labor Relations Board determination that drivers at two Massachusetts terminals are employees and not "contractors" as contended by FedEx.

The drivers at the two facilities overwhelmingly voted in October 2006 to join Teamsters Local 25. The NLRB ordered FedEx to bargain with Local 25, but FedEx refused to do so and filed the request for review in the Court of Appeals instead.

The D.C. Circuit is the highest court yet to hear a case on FedEx's illegal contractor model. 

FedEx's filing restates the many losing arguments that the company has tried in previous trials and hearings before the NLRB, civil courts and state and federal agencies. FedEx's brief focuses on the false claims of "entrepreneurship" offered by the company and ignores the many control factors that directs the drivers as employees in practice.

"The National Labor Relations Board has repeatedly and rightly determined that FedEx Ground and Home Delivery drivers are employees, yet FedEx is trotting out the same failed arguments and false promises before the Court of Appeals," said Teamsters General President Jim Hoffa.

"Instead of sitting down, negotiating a contract with these drivers that literally deliver profits to FedEx everyday and getting back to business, FedEx is repeating its mistakes," said Local 25 President Sean O'Brien. "These drivers and Local 25 are ready to talk and get a contract, but FedEx insists on delaying the process and raising the stakes with an appeal that will only result in another legal setback to its scam contractor model."

After FedEx Corporation held its quarterly conference call to report its earnings, Reuters and other reporters are pointing out how legal challenges to the "contractor" model are weighing FDX down.

Revenue at FedEx's ground delivery unit FedEx Ground rose to $1.72 billion from $1.52 billion, but margins were hurt by intercompany charges and "costs to enhance and defend" its independent contractor model.

FedEx faces lawsuits in more than 30 states that claim the contractors should be classified as employees. The Internal Revenue Service has also tentatively concluded that the 15,000 contractors at FedEx Ground should be reclassified as employees and that the company owes more than $319 million in taxes and penalties for 2002.

"I am concerned that we have this situation where the management is spending so much time, effort and money on this issue," said the AHA Diversified Equity Fund's Meyers. "For me, that is the only wart in FedEx's results."