It isn’t clear that a new Labor Department regulation or, in California, the ABC test, is needed to find FedEx Ground’s policy toward its drivers in violation of labor law. For years the courts and the National Labor Relations Board have gone back and forth over whether FedEx drivers are employees or independent contractors. The matter never seems to get resolved in any permanent way, but in June the NLRB issued a ruling that, by implication, says FedEx Ground drivers are employees and therefore, crucially, able to unionize. When FedEx Ground drivers work for a contractor that employs many FedEx Ground drivers, the arrangement resembles the franchising model. These small businesses have complaints of their own about FedEx Ground. One of the larger “franchisees,” a Nashville-based contractor named Spencer Patton, who employed hundreds of FedEx Ground drivers, complained last year that FedEx was expanding profit margins at small-business contractors’ expense. To discuss this and other matters, Patton created a trade association for other small businesses employing FedEx drivers. In response, FedEx canceled Patton’s contract and sued him for spreading what it said was misinformation. The lawsuit was dismissed in April.
One cheering fact is that FedEx’s attempt to put UPS out of business hasn’t worked. Not only is UPS still here, it’s roughly twice as profitable as FedEx Ground. There are advantages, it turns out, to employing drivers rather than treating them as independent contractors or the employees of small-business contractors. When Covid hit, for example, FedEx Ground found that its drivers were just independent enough to stop driving and isolate at home, along with much of the rest of the country. As a result, FedEx Ground struggled to deliver packages. UPS did not experience comparable difficulties with its union drivers.
But FedEx isn’t UPS’s only problem. “The competitor that I think is the destabilizing one,” Weil told me, “is less FedEx than Amazon,” and specifically Amazon Flex, a crowdsourcing delivery service created in 2015. Depending on how you calculate, Amazon Flex drivers can net as little as $5 an hour, according to a 2018 report by David Vernon, an analyst at the brokerage firm Sanford C. Bernstein & Co. Meanwhile, FedEx, whose hopes to expand market share through a UPS strike were dashed by the tentative contract agreement, is preparing to combine FedEx Ground with the overnight-delivery division (which now goes by the redundant-sounding “FedEx Express”). Unlike FedEx Ground, FedEx Express has always employed drivers, and those jobs will likely be eliminated in the consolidation. The fissured workplace isn’t done trying to kill off UPS and the union-labor model it represents. That it’s failed thus far doesn’t mean it won’t prove a threat in the future.