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 to have a truck that met its specifications. 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 U.P.S., 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. assessed it $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.
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