FedEx Ground issues new standards for independent contractors

FedEx Corp. has notified its estimated 12,000 independent contractors nationwide that they soon must comply with some new business standards to continue as delivery drivers. The use of independent contractors by FedEx’s ground division has long been the target of complaints and legal action by critics, who contend the company has improperly classified employees to save money.

Under the standards FedEx issued last week, its independent contractors must be incorporated under state law instead of being organised as partnerships, sole proprietorships or similar designations. The standards also include a requirement that independent contractors treat their personnel as employees.

The requirements are “in response to recent concerns by several states,” according to a letter FedEx sent to its independent contractors on Thursday that was obtained by Dow Jones Newswires.

Patrick Fitzgerald, a spokesman for FedEx Ground, confirmed the contents of the letter but declined to cite the specific states that raised concerns or elaborate on the nature of the concerns.

Last year, however, a number of states threatened legal action against FedEx, accusing the company of violating labor laws by improperly classifying drivers.

The new standards issued by FedEx appear aimed at sharpening the status of independent contractors as businesses separate from FedEx, although Fitzgerald declined to elaborate on the company’s reasoning.

“This was strictly a business decision based on concerns from the states,” he said. “We stand behind the business model and applaud the entrepreneurial spirit of the contractors.”

FedEx Ground previously has tinkered with its independent-contractor model, moving to so-called “independent service providers” in Maryland and New Hampshire that operate larger territories and negotiate independent agreements with FedEx, rather than agreeing to a standard contract.

Thursday’s letter said contractors will have at least 180 days to comply with the new standards. Early adopters who demonstrate they meet the standards by the end of February 2011 are eligible for “monetary incentive,” the letter states.