On Tuesday the Attorneys general from New York, New Jersey and Montana issued a letter of warning to FedEx regarding its current independent contractor driver model.  If FedEx would not abandon its current independent contractor model for home delivery drivers they would be forced to bring suit against the shipping giant. 

The letter contained harsh accusations like “blatantly misclassifying its drivers”; FedEx Ground has denied these individuals the employment rights guaranteed by law. Practices which would support the allegations of worker misclassification and cited by the AG’s; the work performed is a core competency of FedEx Ground, drivers integrated into business functions of the company, determines the hours drivers work, how they load and deliver packages, and limits the drivers ability to compete other employment. The inability to work for the competition clearly creates financial dependency on Fed-Ex similar to that of an employee.  

More than 1,000 drivers would be impacted by the changes should FedEx cave in under the pressure from this powerhouse. FedEx must respond with a decision by October 27, 2009 a deadline that is fast approaching.  Should Fed-Ex disregard the letter the AG’s will have little choice but to file suit. The AG’s are confident they would win the suit based on its findings during the investigation of FedEx worker practices. According to the AG’s there is more than enough evidence of worker misclassification. 

The suit is being called a “multistate effort” and this is not the first time this issue has come up with Fed-Ex. Earlier this year in June attorneys general from six other states wrote to FedEx Ground, demanding changes to the existing driver model. States are teaming up forming a task force in hopes of pressuring FedEx Ground to change its driver business model.

 Worker classification is complicated and can be very costly when you get it wrong.  All too often employers try to go it alone and navigate the rules. The end often results in a sizeable payout and bad publicity.

Cintas Corporation blames the union citing the suit was merely its way of pressuring it to allow worker unionization. The union’s opinion “After six long years of delay tactics and needles posturing by Cintas, drivers will finally receive just compensation for overtime work,” said Workers United’s president, Bruce Raynor.

At a time when the retail industry is losing its choke hold on the average fashonista/shopaholic aka the American consumer trendsetter H&M workers received a pay hike instead of a pink slip. This news is a refreshing change from the regular reports of economic doom and gloom making headlines every evening.  However the news of a pay hike does not come without a hitch. 

Last month Union leaders negotiated wage increases and other benefits for more than 1,000 workers at H&M clothing stores in Manhattan. The package H&M workers received comes complete with a guaranteed 3 percent pay increase the first year, wage negotiations the second and third year and a provision for extra, merit-based increases each year. On top of that the contract calls for a union representative on site every day to remind employers it’s a new era. The Union is hailing this victory as an example of the power of collective bargaining. Retailers won’t be on this celebratory gathering attendee list I guarantee it!

The win comes at a time when Congress and President Obama are under tremendous pressure to back the proposed Employee Free Choice Act (EFCA) legislation. If passed union representatives have vowed to increase its membership in the U.S. by 20 percent each year.

The H&M uion win is clearly just the shot in the arm union leaders needed to encourage all workers to hang on. Just when it looked as if the EFCA bill was about to die on the vine the union showed up and watered it… 

Colorado is paving the way for other states trying to halt an employer practice that has become a pandemic in the United States. An illegal practice of intentionally misclassifying workers as a cost cutting measure to avoid payroll taxes, benefits and other employer obligations spurned one states representative to take action. Gov. Bill Ritter decided Wednesday to show offending employers in his state how serious he is about catching would be tax cheats. Ritter signed legislation that contains fines up to $5,000 for each misclassified employee for the first offense, and up to $25,000 per employee for subsequent offenses. “We must do everything we can to help those who are struggling, to keep Coloradans in their jobs and to keep families in their homes,” Ritter said. According to the GAO tax authorities lose $4.7 billion a year.

To make up for the deficit governmental officials are picking the low hanging fruit; the independent contractors and employers who use them. General consensus among the federal and state tax task force is that misclassified workers are a guaranteed revenue stream.   Collecting on those unpaid bills will be a huge undertaking but the reward is a strong motivator for uncovering companies who have improperly classified workers. Under Colorado’s new law, the Department of Labor and Employment has been tasked with conduct a statewide sweep of employers to help refill the states empty coiffeurs.

Well, it won’t be long now until other states get on the tax deficit band wagon with Colorado and the IRS.  After all states like California, New York and Massachusetts are known for cracking down on employer misdeeds.

The bill is designed to release the strangle hold the National Labor Relations has on the voting process and remove employer oversight of the process. Goal of the bill is to create a more efficient system where employees are free to form, join, and participate without reprisal from an employer.

If  it passes employers will need to know and adhere to the new rules of the Union game. Under the new law, workers would be able to decide whether to hold a secret ballot vote on union formation after a majority of employees have signed union authorization cards, or to have the union certified based on the cards alone. Under the current rules, employers have the power to make that decision. This bill is organized labor’s number one legislative priority, and heavily opposed by employers in specific industries in the business world.

Union officials are prepared to spend millions of dollars and countless hours to ensure the bill becomes law. Applying a bit of pressure on Congress and with the support of President Obama it is likely to sail through sooner rather than later this year. Although many observers predict Obama’s focus is on the economic crisis delaying action on the bill, some say that’s simply wishful thinking.

The legislative wheel turns very slowly and which of the remaining labor bills will become law is anyone’s guess.  President Obama must make good on a few campaign promises and soon.  Of the remaining labor bills awaiting his signature most likely to pass this year is the EFCA. Passage of the bill will satisfy the Union by adding more than 1 million new members to its rolls each year.

According to the New York Law Journal, in an informative and well written article last week, the stakes are higher than ever and the shell game has ended.  This noteworthy article provides a year in review of the topic and references several important events surrounding the issue.

The new act is strongly supported by the teamsters  (roughly 1.4 million of them) and is sponsored by Democratic Reps. Rob Andrews of New Jersey, Lynn Woolsey of California, Mike Michaud of Maine and George Miller of California