FedEx May Have to Overhaul Business Model
August 24, 2008 – 11:57 pmA lawsuit filed by Federal Express drivers against the company they work for has some guessing that FedEx could be forced to overhaul its business to survive. At issue is whether FedEx drivers (which FedEx insists are independent contractors, not employees) are really employees, or if they are private business owners i.e. independent contractors. There is also the possibility that if the cour ruling does not go FedEx’s way, it could cause a severe financial hardship for the company, as the IRS may then move in to seek more than $2.2 Billion in unpaid payroll taxes - from a company that had $1.1 billion in net income for fiscal 2008.
Of course, this possible demise of FedEx must be music to UPS’s ears. With the recent woes at DHL (a company that is widely expected to substantially exit the US market and/or scale back operations at some point in the future) a demise of FedEx could return UPS to the glory days of monopoly, having only to compete with the Post Office for business, a position it enjoyed for some time and prospered under.
One Response to “FedEx May Have to Overhaul Business Model”
Need to point out that this all refers to the FedEx Ground Corp. - only one of many FedEx operating companies, and does NOT include the regular FedEx drivers for the flagship company, FedeX Express - they are and have always been ‘employees’.
By Steve G on Aug 25, 2008