UPS Vs FedEx Ground

Website design By BotEap.comThe race between UPS and FedEx Ground to win most of the market is as hot and fast as NASCAR’s Dale Jarrett in the UPS car and Jason Leffler driving the FedEx car.

Website design By BotEap.comMore than competition between companies, it is a struggle between two business models. A company hires employees with benefits and protections under the law. The other company saves up to 30% by classifying its drivers as independent contractors (IC), who they say run their own business.

Website design By BotEap.comWhich delivery man is an employee? What is an independent contractor? They both wear uniforms. They both drive trucks stamped with the company’s colors and logos.

Website design By BotEap.comAnswer: FedEx Ground has an independent contractor model and UPS only hires employees.

Website design By BotEap.comBy offering attractive benefit packages and high salaries, UPS maintains that employee satisfaction and loyalty results in a higher level of service for its customers. FedEx Ground responds that its path motivates drivers to work harder and smarter for profit.

Website design By BotEap.com“The business model we use is good for our contractors,” said Fred Smith, FedEx CEO. “That’s what freedom is all about. We have provided that business opportunity for thousands of contractors to own, grow and expand their own business.”

Website design By BotEap.comDrivers with multiple contracts or routes can earn more than $ 100,000 and even hire their own employees. They are independent, self-directed and unsupervised. If customers are happy, FedEx is happy. No boss looks over their shoulder telling them what to do, they are their own boss.

Website design By BotEap.comThe downsides include no benefits, overtime pay, sick time, vacation, or insurance, and drivers pay for everything: truck, gas, maintenance, supplies, uniforms, insurance. Social Security benefits at retirement will be less because taxes are not collected while you work as a CI. The amount of freedom is also not much when drivers really have only one customer: FedEx.

Website design By BotEap.comAnnette Craig, of King of Prussia, Pennsylvania, worked 16 to 18 hours a day on a route through some high-crime Philadelphia neighborhoods. She did not earn overtime as an IC and was also not eligible for workers’ compensation after she was hit by a car while delivering for FedEx. The company terminated his contract weeks later and then repossessed his company-financed truck. Now homeless, she is staying with a cousin and friends while her daughter lives with her family in Florida.

Website design By BotEap.comWorking at UPS as an employee also has its pros and cons. Drivers have job security, good benefits, and a Teamsters union contract and collective bargaining. The company pays for gas, maintenance, insurance and all other expenses, the average tenure is more than 16 years and almost all drivers are hired within the company.

Website design By BotEap.comEverything is strictly programmed and controlled, for better and for worse. One rule of thumb is that drivers returning to the truck should pull out the ignition key and hold it with their teeth down, saving a second or two when starting the truck.

Website design By BotEap.comOn the downside, salaries exceed $ 70,000 and it can take four to twelve years to get a job as a driver after joining the company. Those union benefits also carry the possibility of a strike and work stoppage, as in 1997.

Website design By BotEap.comThe appearance that FedEx contractors are actually non-profit employees led to an investigation into FedEx labor practices in 25 states and a class action lawsuit covering drivers in 20 states. FedEx said it could have to pay $ 319 million in back taxes and penalties to the IRS for worker misclassifications in 2002. The IRS also audited FedEx’s trucking unit from 2004 to 2006 and the potential liability could be $ 1,000. millions of dollars.

Website design By BotEap.comIn July 2004, Los Angeles County Superior Court Judge Howard J. Schwab issued a ruling that multipath contractors are legitimate contractors operating a business. However, single route contractors must be classified as employees. FedEx disagreed with the ruling, but if it stands, they will have to reclassify single route contractors into employees or change the relationship to be less restrictive and controlling, allowing drivers to be true independent contractors.

Website design By BotEap.comWhat you think? Is FedEx right to hire consenting adults in their right mind, or is FedEx wrong to prey on drivers desperate for work?

Website design By BotEap.comNext issue: More on the law, the IRS, and what this means for all workers.

Website design By BotEap.com© 2008 Bob Carstensen