Gov. Cuomo is expected to sign into law next month a bill that will require “independent contractor” truck drivers used by shipping firms and other companies be classified as employees.
The bill, backed by the Teamsters union, was originally aimed at positioning FedEx’s 3,500 New York drivers and drivers’ helpers so they could be unionized.
But Albany being Albany, a strange twist happened to the bill on the last day of the legislative session in June: The “Fair Play Act,” as the bill is called, will affect most every company in the state except FedEx.
“You first look at the bill’s language and you say great,” said Harold Lichten, an employment law expert. “But then you look at the exclusion…”
FedEx’s ubiquitous purple-and-black-shirted drivers and driver’s helpers are not employees of the shipping giant but rather non-union independent contractors who earn roughly $750 for a 60-hour week — with few benefits.
Drivers’ assistants earn about $450 a week.
The “Fair Play Act” would require workers who take work direction from a company, dress in a company uniform and work solely for that company to be considered employees.
But crafted into the final version of the bill is an exception for companies that pay an independent operator that buys its own routes and then purchases or leases its own trucks and hires workers.
And guess what? FedEx Ground fits that exception.
At UPS, which is unionized, drivers earn roughly $35 an hour — about $1,400 a week — and they receive benefits. UPS has to pay Social Security taxes as well.
Lichten estimates that FedEx’s successful Albany lobbying campaign will save the shipping giant $35,000 a year per employee by saving it Social Security taxes, vehicle repairs, unemployment taxes and overtime. That comes out to $122 million a year, just in New York.
In the year ended May 31, FedEx earned $1.6 billion.
FedEx Ground’s 3,500 drivers and drivers’ helpers are employed by roughly 500 independent contractors. Each rings up average annual revenues north of $310,000 — from which they pay for the truck, maintenance, drivers and their helpers. “I’m aware that Federal Express is peddling the language [that is in the exclusion]. I don’t know of any state that adopted this provision,” Lichten said.
A FedEx spokeswoman declined to comment on how much the company would save because of the changes to the bill, but said “Fair Play Act” was the result of “a collaborative effort that addresses the state’s concerns while clearly recognizing that legitimate business entities should be free to operate as independent contractors.”
“We support the state’s bipartisan efforts to create an environment that encourages entrepreneurism and reflects the governor’s commitment to keeping New York open for business,” the spokeswoman added.
Ironically, while the bill saves FedEx lots of cash, it will cost the company’s smaller rivals more, Lichten said.
The think tank Drum Major Institute estimates there are 29,500 New York truckers working as “independent operators” who might be considered employees under the bill.
Many are small operators who haul freight from the city’s two ports in Red Hook and Staten Island, while others carry trash from Sanitation Department transfer stations to landfills.
Others could deliver bread to stores or deliver other goods, sources said.
Bill sponsor Keith Wright, a Democratic Assemblyman from Harlem, said getting the bill passed wasn’t easy as FedEx and the Teamsters fought like crazy.
“It was the Thrilla in Manila,” the lawmaker said, alluding to the erix 1975 heavyweight boxing match between Muhammad Ali and Joe Frazier.
This year marked the second time the bill was introduced in Albany. Last year, without the changes that exempted FedEx, the legislation went nowhere.
This year, with the FedEx changes, it passed on June 21 by a 113-17 vote in the Assembly and by 61-2 in the Senate.
George Miranda, president of Teamsters Joint Council 16, said the bill has been “a priority for the Teamsters.” The union has seen membership fall to about 150,000 from 200,000 over the last two years.