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HCMWorks Insights

FedEx CEO Opposes New Federal Regulations on Independent Contractors

Posted by Julia Fournier on 10 Nov 2015

 

Last week the chairman, president, and CEO of FedEx Corp., Frederick W. Smith, was the keynote speaker at the JOC 2015 Inland Distribution Conference held in Memphis, Tennessee. One of the biggest topics at hand was contingent workforce management solutions and the changes the federal government is making in regards to this industry.

The Contingent Workforce

During his speech he made his position against recent legislative and judicial attempts to penalize business's use of independent contractor solutions, a process many companies use as 40% of the U.S. workforce is contingent according to the U.S. Government Accountability Office, very clear. He talked not only about how they interfere with interstate commerce, but also the potential they have to undermine the responsiveness and efficiency of the supply chain overall, according to the logistics news source DCVelocity.com.

“The more rigidity you put in the supply chain, the less responsive and efficient it will be in the marketplace,” Smith said. “There is a steady drip, drip, drip of restrictive laws at the state level into what should be a contractual relationship between consenting adults.”

He argued that businesses and economies not just in America, but also around the world have grown and thrived due in large part to transport deregulation and the flexibility it provides. Smith of course has a vested interest in this area as FedEx Ground, the company's growing ground-parcel division, is staffed by a contingent workforce. This nonunion subsidiary has helped FedEx take a significant amount of business away from the market leader.

Independent Contractor Misclassification

Unfortunately for Smith, many courts and lawmakers have argued that they are in essence engaging in independent contractor misclassification as the drivers they employ to work for FedEx Ground are essentially employees that are denied benefits and protections simply because they are labeled as a contingent workforce. Like 66% of independent contractors, most of their drivers work full-time. 

While he also talked about how the economy overall is suffering from low growth, the one area that's not is e-commerce. The only challenge there is that more and more people are ordering bigger items online and it's causing difficulty in the shipping process. Perhaps the conference will serve as a recruiting tool to prospective drivers and logistics analysts as 96% of job seekers look for companies that “embrace transparency,” and Smith certainly held little back on this day.

10 Ways to Reduce Costs & Risk of Your Contingent Workforce

Tags: Independent Contractors

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