August 15, 2007: BNA Labor Report: Delivery drivers are employees entitled under state law to reimbursement for work-related expenses, despite their description as independent contractors in an operating agreement they signed with FedEx Ground Package System Inc., a California appellate court ruled Aug. 13 (Estrada v. Fedex Ground Package Sys. Inc., Cal. Ct. App., No. B189031, 8/13/07).

Writing for a three-judge panel of the California Court of Appeal, Justice Miriam A. Vogel observed that "the parties' label is not dispositive and will be ignored if their actual conduct establishes a different relationship." The court also upheld the certification of the case as a class action but sent it back to the trial court for a recalculation of the reimbursable expenses and a reduction in the amount of attorneys' fees to be paid by FedEx.

Anthony Estrada and Jeffrey Morgan sued FedEx under the California Labor Code for reimbursement of their work-related expenses. The trial court certified a class of 209 current and former drivers who performed pickup and delivery services for FedEx on a full-time basis in a single work area. The court found that the drivers were employees and ordered FedEx to reimburse some of their expenses--totaling roughly $5 million--and ordered FedEx to pay the drivers' costs and attorneys' fees, totaling roughly $12.3 million.

In this third appeal, the appeals court considered FedEx's challenges to the trial court's finding that the drivers are employees, the trial court's class certification order, its reimbursement awards, and its attorneys' fee award.

The trial court had found that, for purposes of determining the drivers' right to reimbursement for their expenses, the drivers are employees within the meaning of California Labor Code Section 2802. Subdivision (a) of Section 2802 provides that an employer must indemnify his employee for all necessary expenditures incurred by the employee in discharging his duties. The statute fails to define "employee," so the appeals court looked to the common law, observing that "the essence of the test is the control of details" over the manner in which the worker accomplishes the work.

Justice Vogel analyzed the nonnegotiable "Pick-up and Delivery Contractor Operating Agreement" that each FedEx driver must sign. The agreement specifically identified the driver as an independent contractor rather than an employee. It set forth the parties' "mutual business objectives" and stated that the method of reaching these objectives was within the driver's discretion.

Drivers were required to lease a scanner, purchase or lease a truck meeting FedEx's specifications, mark the truck with the FedEx logo, and pay all costs for the truck. Frequently, drivers relied on a "business support package" from FedEx to fund this equipment, the cost of which they repay by deductions from their weekly "settlements" or paychecks.

However, the court said, the drivers were subject to strict oversight. They were expected to wear a FedEx uniform. Terminal managers supervised and trained them. They worked full time under hours set by FedEx and were forbidden to refuse a delivery. Each driver received an annual progress review. The appeals court concluded that "the drivers look like FedEx employees, act like FedEx employees, are paid like FedEx employees, and receive many employee benefits" and therefore were FedEx employees within the meaning of Labor Code Section 2802.

The court added, "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair, supports the trial court's conclusion that the drivers are employees, not independent contractors." Based on these facts, the appeals court rejected FedEx's contention that drivers were independent contractors.

Justice Vogel also upheld the trial court's certification of the class, noting that common issues predominated.

The appeals court also ordered the trial court to revisit the issue of the actual amounts to be awarded to the drivers for their expenses. At trial, there had been a misunderstanding between the parties' lawyers as to whether actual receipts for expenses, such as gasoline and maintenance costs, were required or whether spreadsheets would suffice. The appeals court said FedEx would "obtain a windfall if it was not required to reimburse the drivers for provable expenses that had been part of the case from the beginning."

The appeals court also ordered the trial court to allow reimbursement for the drivers' work accident insurance premiums, which had been disallowed because they were erroneously characterized as "workers compensation."

Attorneys' Fees

Estrada had requested $619,691 in costs and $6,789,325 for attorneys' fees, a total of $7,409,016, plus a 2.0 multiplier as compensation for delay and contingency, for a total of $14,818,032.

The trial court reduced the fee by 18 percent and gave Estrada a total of $12,373,875 for costs and fees, citing the years of intensive litigation involving enforcement of an important right that conferred a significant benefit on a large class.

The appeals court upheld Estrada's right to recover the fees but found the amount "excessive." It ordered the trial court to reduce the amount, noting that the same facts cannot be used to justify both the award and the multiplier. Even though the amount of the fee ultimately is within the trial court's discretion, it must be reasonable, Justice Vogel wrote.

The court also considered several issues raised on cross-appeal by the drivers. It rejected their contention that the trial court should have allowed them to prove their expenses by lay testimony and by expert analysis based on an economic model. The appeals court said such estimates and educated guesses are allowed where damages cannot be proved although here they could easily be proved by receipts and records. It also upheld the trial court's rejection of the drivers' contention that FedEx should reimburse them for the cost of leasing or purchasing their delivery trucks.

Justice Robert M. Mallano and Judge Frank Y. Jackson joined in this opinion.

Estrada and the other plaintiffs were represented by Lynn Rossman Faris of Leonard Carder LLP in Oakland, Calif.; Beth Ann Ross of Leonard Carder LLP in San Francisco; and Ellen Lake of Oakland, Calif. FedEx was represented by James M. Nelson of Seyfarth Shaw LLP in Sacramento, Calif.; Robert M. Schwartz of O'Melveny & Myers LLP in Los Angeles; Chris Hollinger of O'Melveny & Myers LLP in San Francisco; and Jonathan D. Hacker and Walter Dellinger of O'Melveny & Myers LLP, Washington, D.C.

Text of the court decision may be accessed by clicking here.

August 3, 2007: by Thomas L. Gallagher, for Traffic World: UPS reached an agreement in principle with the Central States Pension Fund establishing conditions for a potential UPS withdrawal from the multi-employer pension plan.

The controversial decision to remove 42,000 workers covered under the plan would set the stage for establishing a jointly administered Teamster pension plan for UPS employees. Such an agreement must first gain acceptance by the Teamsters National United Parcel Service Negotiating Committee and ratification by the members.

The Teamsters committee said they will not accept a proposal for UPS to withdraw from Central States unless they are satisfied that it would be in the best interest of all Teamsters who are participants in that Fund, not just the UPS employees.

Specific terms of the agreement have not yet been disclosed.

"While we await official notification of the terms of the settlement, we continue to evaluate the effect on the future of Central States," said James P. Hoffa, chairman of the committee and president of the union.

A dissident group within the International Brotherhood of Teamsters is calling for organized resistance to any withdrawal from the Central States Fund. Teamsters for a Democratic Union said a pension pullout by the union's largest employer would undermine the retirement security of all Teamster members.

The group compared Central States with two jointly administered programs in New York and New Jersey, where UPS has successfully pushed for pension cuts. "Both the New York and New Jersey funds have underperformed compared to the Central States Fund," said TDU in a statement.

Loss of contributions to Central States would also gravely weaken it and endanger the benefits of 100,000 non-UPS Teamster members still covered, said TDU.

July 30, 2007: Under pressure from gay rights groups and New Jersey Governor Jon Corzine, UPS announced that it will offer spousal health and other benefits to union-represented workers in New Jersey who are in civil unions.

The policy change comes after UPS was criticized for excluding International Brotherhood of Teamsters-represented employees from receiving spousal health care benefits for their civil union partners. The Atlanta-based package delivery company initially had denied spousal benefits for these employees in same-sex civil unions because they allegedly were not "married" under New Jersey law.

UPS argued that the civil union law was not the same as a legal "marriage" and therefore it was not able to offer the benefits to IBT-represented employees because the benefits provided in the collective bargaining agreement were limited to "spouses."

Nationwide, nonunion UPS employees and managers and their same-sex partners are eligible for benefits because UPS offers domestic partner benefits, but domestic partner benefits are not included in the current collective bargaining agreement between UPS and IBT.

"Based on an initial legal review when New Jersey's law was enacted, it did not appear that a 'civil union' and 'marriage' were equivalent," Allen Hill, UPS's senior vice president for human resources, said in a July 30 statement. "Over the past week, however, we have received clear guidance that at least in New Jersey, the state truly views civil union partners as married. We've heard that loud and clear from state officials and we're happy to make this change."

In announcing the decision to provide benefits, UPS acknowledged pressure from New Jersey officials, including Corzine, who had pushed the company to change its policy. On July 20, Corzine sent a letter to UPS urging the company to reconsider its decision and explaining that under New Jersey law, same-sex couples who enter civil unions have the same status as married couples (142 DLR A-6, 7/25/07 ).

In his letter, Corzine said the civil union law's statutory language "makes plain that New Jersey law intends that civil union partners be viewed as spouses under all facets of New Jersey law and that a reference to 'spouse' in a legal context, including in a contract, embraces civil union partners."

When UPS initially denied health benefits to Teamsters-represented employees, the company told workers that New Jersey law did not preempt the Employee Retirement Income Security Act and therefore the definition of "legal spouse" under the collectively bargained plan could not be altered to include civil unions. The letter also stated that the company could not unilaterally change the benefits because it was bound by the collective bargaining agreement.

But Victor Palumbo, secretary-treasurer of IBT Local 177, told BNA July 23 that there was "nothing holding them back if they want to improve the package of benefits. The contract doesn't allow them to decrease the benefits without negotiation with us, but they can improve benefits anytime they want. They can improve them unilaterally."

Representatives of Local 177 were unavailable for comment July 30 and a spokeswoman for the international union deferred all questions to the local.

David Buckel, an attorney for two individual UPS employees who were challenging the company's decision to deny benefits, told BNA July 30 that other companies should follow UPS's example when it comes to interpreting employment policies when it comes to differing definitions of marriage under state laws.

"UPS demonstrates for the rest of the employment sector that federal law--like ERISA--does not require an employer to discriminate," said Buckel of the gay legal advocacy group Lambda Legal in New York. "UPS deserves credit for explaining that it was wrong in how it applied the New Jersey law."

Buckel said as more states provide legal domestic partnerships and civil unions instead of marriages to same-sex couples, employers would continue to grapple with how to define terms like "spouse" and "married" in all sorts of employment situations, including leave policies and other benefits.

July 27, 2007: Watch the video that shows how our union won 10,000 full-time jobs, record pension increases and labor’s biggest victory in decades.

Next month, we will celebrate the 10-Year Anniversary of the 1997 UPS Contract Victory—labor’s biggest win in 25 years.

“America’s Victory: the 1997 UPS Strike” reveals the keys to our union’s success—and the strategies we need to put in place to win today.

• Mobilizing Members: Our union’s year-long contract mobilization united Teamsters and paved the way to victory.
• Building Public Support: Our union built public pressure on UPS and won community support that forced image-conscious UPS to meet our demands.
• No Settling Short: UPS’s chief demanded that our union accept the company’s “Last, Best and Final Offer”—but we won record gains by refusing to settle short.

Watch the video that shows how our union can make UPS deliver the contract we deserve in 2008.

Contact TDU if you would like a copy of this video on DVD to show at your UPS building or to other Teamsters.

UPS released its second quarter results today. The company reported a 7.2% increase in earnings per share, and 10.5% jump in LTL revenue.

To read the UPS press release, click here.

July 18, 2007: Some defenders of management’s pension proposal claim that a $4 billion withdrawal liability payment from UPS would fix Central States and safeguard members’ benefits. Unfortunately, that’s just not true.

Find out why at www.MakeUPSDeliver.org

July 13, 2007: National negotiations with UPS again went nowhere this week, and are now temporarily suspended. Bargaining in some supplemental areas is scheduled for the week of July 16.

Read the full story at MakeUPSDeliver.org

July 12, 2007: Master contracts are the foundation of our union’s power. Will Hoffa let that foundation crumble? And what can concerned Teamsters do about it?

Master contracts cover about 25 percent of Teamsters, but they set standards for the majority. They are the foundation of Teamster power.

Jimmy Hoffa Sr. understood this principle and built up our national contracts. Is Hoffa Jr. giving up on the master contracts that were his father’s greatest legacy?

Just look at the warning signs that are flashing at us right now.

UPS. The Hoffa administration claimed early bargaining would deliver stronger pension and health benefits. But top officials are leaking that Hoffa may go along with UPS’s proposal to break up the Central States Pension Fund.

CARHAUL. The Hoffa administration has allowed 3,300 carhaulers, nearly 40 percent of Teamsters covered by the contract, to have their wages slashed to 17.5 percent below union scale—and frozen for years. This has happened even as billionaire Ron Burkle has taken over 60 percent of the industry.

FREIGHT. Freight division leaders openly question whether Hoffa has given up on this core industry. ABF’s CEO is promoting a scheme to bust out of Teamster pension plans and set up a company pension, or even just a 401(k).

DHL. IBT insiders report that Hoffa will allow DHL out of the National Master Freight Agreement.

UPS FREIGHT. Over a year ago Hoffa claimed a national cardcheck agreement would soon unionize 15,000 UPS Freight employees. Now management is playing hardball and attacking our union—and union officials in freight are concerned that Hoffa will give up Teamster standards to get the company under a contract.

UPS CARTAGE. Hoffa’s so-called “master” contract leaves substandard wages in place and no protection against subcontracting.

Master Contracts:Fact From Fiction

A true master contract uses our union’s national power to raise all Teamsters up to the highest level.

What the Hoffa administration calls a “master contract” is any contract that covers multiple locations, even if there’s no Teamster pension, the wages vary by location, and the conditions are inferior to our national standards.

Hoffa’s “master contracts” mean drastically lower wages (carhaul, UPS Cartage), undercutting our national standards (DHL and UPS Freight), and potentially even busting up our pension plans (UPS, freight, and UPS Freight).

Rank and File Can Make a Difference

Our Right to Vote on contracts gives members the power to prevent Hoffa from selling out our national contracts. But rank-and-file Teamsters need to be informed and united to use the power in our hands.

In carhaul, members nearly voted down Hoffa’s massive givebacks, but we fell just 2 percent short. With just a little more rank-and-file involvement, a 17.5 percent wage cut could have been prevented.

Do you want to be part of a movement to defend our contracts and rebuild our union’s power? Or do you want to sit on the sidelines?

Contact Teamsters for a Democratic Union today to find out how rank-and-file Teamsters can stand up for our contracts and the future of our union.

Click the links below to read more:

Save Our Pensions

UPS Freight Attacks Teamsters Union

Don't Let DHL Out of National Contract

UPS Cartage Services: Teamster Success Not Secure

July 12, 2007: The International Union has cited its agreement covering UPS Cartage Services Teamsters as a model for success at UPS Freight.

But, despite this enthusiasm and IBT Secretary-Treasurer Tom Keegel’s misstatement to the 2006 IBT Convention that UPS Cartage Services Teamsters had “secured the same wages and benefits as their UPS brothers and sisters,” Teamster standards and security in this part of the Brown Behemoth remain imperiled.

The August 2005 Addendum to the UPS National Master applies to UPS Teamsters in operations covered by local agreements with Menlo Forwarding (UPS acquired Menlo in Dec. 2004).

The August 2005 Addendum provided for 3 percent annual wage increases when local agreements expire. Some of the locally-bargained rates were very substandard, so there are former Menlo Teamsters working for UPS at substandard wage and benefit rates.

The bulk of the organizing that resulted from the August 2005 agreement brought in part-timers at the new heavy-weight hub in Louisville and five regional hubs that handle freight from shippers formally serviced by Menlo Forwarding.

A “Letter of Agreement” that was part of the August 2005 deal puts these part-timers directly into the regular UPS parcel ranks. The union delivered its high-turnover, low-wage part-time workforce.

Subcontracting Protection

The biggest hole in the August 2005 Addendum covering CSI Teamsters is the exclusion of these units from subcontracting protection. The Addendum bars these Teamsters from protection under Article 1, Section 1, 2, and 4, and Article 32 of the UPS national contract. UPS calls its Cartage Services unit a “vendor” that provides services to its nonunion carrier, UPS Supply Chain Solutions.

So, when the company moves new work through its nonunion carrier and has Teamster work done by nonunion subcontractors or nonunion UPS subsidiaries, the union has no recourse!

Early negotiations for a new supplement to replace the August 2005 Addendum have been conducted by the Union’s Cartage Negotiating Committee.

The “Brown Out” approach to early bargaining, keeping rank and file members on the sidelines, applies here as well.

But at UPS Cartage Services, this secretiveness hides a troubling disconnect. The company is preparing to integrate the operations of some of its subsidiaries including UPS Cartage Services, UPS Freight, UPS Freight Forwarding and UPS Supply Chain Solutions.

If IBT negotiators agree to a new supplement covering UPS Cartage Services Teamsters that does not address this future operational integration, these Teamsters could be rendered disposable.

July 12, 2007: On June 29, the House Transportation Committee voted to make it easier for FedEx employees to organize by passing an amendment to the Federal Aviation Administration bill that would allow FedEx Express drivers to organize under the National Labor Relations Act.

Absurdly, FedEx, the nation’s second largest trucking company, is currently treated as an “airline” under federal labor law—thanks to a provision management snuck into legislation ten years ago. FedEx is covered by the Railway Labor Act which makes it much harder for drivers and mechanics to organize.

The vote by the Transportation Committee is a step in the right direction. (UPS management thinks so too. They support the legislation). But even if legislation is passed putting FedEx under the National Labor Relations Act where it belongs, organizing this anti-union competitor is still going to be a big challenge.

A group of drivers for FedEx Home Delivery in Hartford, Conn. voted to join the Teamsters by 12-9 in an election conducted by the National Labor Relations Board last month. But the company is refusing to respect the vote.

Other elections at FedEx Home Delivery are pending while the company faces charges of retaliating against and terminating pro-union drivers.

Labor Law Reform Needed

Corporate lobbyists are blowing a lot of hot air these days on Capitol Hill about how NLRB elections are the only fair way for workers to unionize. The truth is corporations like the NLRB process because it is open to employer abuse and stall tactics that buy companies time to fire and intimidate union supporters.

That’s why the labor movement is pushing for the Employee Free Choice Act, legislation that would allow employees to unionize if a majority sign union cards.

Strong UPS Contract Will Boost Organizing

Labor law reform is important. But the number one thing we can do to inspire FedEx (and UPS Freight) workers to join the Teamsters is to win a strong contract at UPS.

After our contract victory in 1997, AFL-CIO President John Sweeney said, “You could make a million house calls and run a thousand television commercials and stage a hundred strawberry rallies and still not come close to doing what the UPS strike did for organizing.”

The 1997 strike continues to give us bargaining leverage. UPS management and shippers still fear a work disruption. That’s why the company is under pressure to settle our contract early this time around.

We need to use this leverage to win the improvements we were promised in 2002. Winning better pensions, benefits and working conditions would mean a better future for Teamsters at UPS—and it will make it easier to organize the nonunion competition.