Hello FedExWatcher,

New York Times

April 20, 2008

Working Life (High and Low)

by Steven Greenhouse

(Excerpt from Greenhouse's new book, The Big Squeeze: Tough Times for the American Worker) 

WHEN Jean Capobianco was diagnosed for the second time with breast cancer, her doctors ordered a mastectomy. She first contracted the disease three years earlier and suffered through seven months of chemotherapy. After her cancer came back, her husband walked out on her. “He told me he wasn’t sexually attracted to me anymore,” she said.

For more than a decade, Jean and her husband had been a truck-driving team, driving hazardous waste. Now, with husband and truck gone, her career as a long-haul driver was gone as well.

After she recovered, Jean started looking for work. She spotted a help-wanted ad from Roadway Package Systems, which said it was looking for independent contractors to deliver packages.

“I needed a job,” said Jean. “They tell you, ‘You’ll make all this money working for yourself.’ ”

She soon discovered that her new employer had embraced a controversial strategy to squeeze down costs by millions of dollars each year: it insisted that Jean and the other drivers were independent contractors, not employees. The I.R.S., New York and many other states are investigating this strategy, convinced that many companies use it to cheat their workers and cheat on taxes.

Jean arrived at the Roadway terminal in Brockton, Mass., at 6 each morning and spent the next 90 minutes loading 100 to 140 packages into her truck. She usually left the terminal around 7:30 a.m. and returned after 6 p.m.

Jean had to leave her job for two years when she suffered a severe back injury while lifting a package. Before she could return to work, FedEx Ground, which had acquired Roadway, required her to purchase a truck. The list price was $37,800, with Jean having to make 60 monthly installments of $781.12 and a final, one-time payment of $8,000.

In Jean’s view, it was ludicrous for Roadway and FedEx to call the drivers independent contractors.

“We’re told what to do, when to do it, how to do it, when to take time off,” Jean said. “You have to wear their uniform. You can’t wear your hair certain ways. You have to deliver every single thing they put on the truck.”

Jean called it “a great deal for FedEx. They don’t have to pay for trucks, for the insurance, for fuel, for maintenance, for tires,” she said. “We have to pay for all those things. And they don’t have to pay our Social Security.”

By some estimates, this arrangement saves FedEx $400 million a year, giving it a significant cost advantage over UPS, which treats its drivers as regular employees. Moreover, FedEx Ground has sought to rebuff a Teamster organizing drive by arguing that its 15,000 drivers have no right to unionize because they are independent contractors.

“These drivers are more like business people,” said Perry Colosimo, a FedEx Ground spokesman. “They can set their own hours. They can buy routes. They can develop their business.”

In 30 lawsuits, FedEx Ground drivers have argued that they are employees, not independent contractors, and that the company should therefore pay for their trucks, insurance, repairs, gas and tires. In one lawsuit, a California judge ruled that FedEx Ground was engaged in an elaborate ruse in which FedEx “has close to absolute control” over the drivers. Last December, FedEx acknowledged another setback: the I.R.S. ordered it to pay $319 million in taxes and penalties for 2002 for misclassifying employees as independent contractors. FedEx could face similar I.R.S. penalties for subsequent years. FedEx said it would appeal.

To attract drivers, FedEx Ground often runs ads claiming that its drivers earn $60,000 to $80,000 a year. Many drivers say those ads are deceiving. Gross income can exceed $60,000, but Jean, echoing many drivers, said she had to pay nearly $800 a month for her truck, $125 a week for gas, $55 a week for business equipment, $4,000 a year for insurance policies, plus outlays for tires, maintenance and repairs. Some years, Jean calculated, her net pay was just $32,000, amounting to $10.25 an hour.

Many drivers find it hard to walk away because they have invested so much in their trucks. If they leave, they might still be stuck with years of monthly payments and the final payment of $8,000.

One morning in August 2004, Jean doubled over in pain. Three days later, her doctor informed her she had ovarian cancer.

“The doctor told me to stop working immediately,” Jean said. She not only finished her route that Friday but worked the following Monday and Tuesday as she struggled to find someone to cover her route. Her terminal’s two replacement drivers demanded unrealistic amounts, she said. “They knew they had me over a barrel.”

On Aug. 21, 2004, surgeons removed a large, malignant tumor and did a hysterectomy. The next week the doctors told her she had Stage 4 cancer that had spread to her lungs. She would need chemotherapy through late December.

Jean had twice beaten breast cancer, and she was intent on beating this, too. She fully expected to return to her job in January, and called FedEx Ground’s headquarters to request a leave of absence. Weeks later, a letter arrived saying she was terminated.

“I was crazy with anger,” she said.

Fired and with no income, Jean stopped making payments on her truck. She had already paid more than $40,000 on it, but now she was powerless to prevent it from being repossessed.

“Ten years of beating my brains out for them, and they throw me away like I was a piece of garbage,” Jean said.

FedEx Ground officials said they had sympathy for Jean but had to terminate her under company rules, because she was no longer covering her route and she hadn’t found a replacement driver.

Company officials said they were free to terminate her because in FedEx’s view she was an independent contractor and therefore not protected by the Americans With Disabilities Act. That law requires companies to make reasonable accommodations to keep employees who have cancer or other disabilities. Jean has sued FedEx, asserting that it violated the act.

“To this day, I still can’t understand how they can get away with it,” Jean said. “You work for a company for 10 years and you give 150 percent. I used to go above and beyond. And then I get sick, something totally out of my control. And then to get fired.”

Her voice dropped off, then tears streamed down her cheeks.