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FedEx Corp. is speeding toward a collision inside an Indiana federal courthouse where drivers at the company's ground-delivery unit are demanding full-time status.
The court is weighing suits filed by 150 independent contract drivers who say they are treated as full-time employees and should be paid as such. Limiting the FedEx ground-delivery unit's use of contractors may wreck its chances of gaining on larger rival UPS. The unit helped FedEx take as much as 19 percent of the ground-delivery market, while UPS has fallen from 82 percent to 70 percent in the past decade.
Losing the battle could flatten the company's model of using workers who are self-employed and don't get benefits or paid time off. Fed¬Ex may have to buy as many as 15,000 drivers' trucks for $45,000 apiece. That $630 million bill could jump even higher if health care, pension costs and back pay are added.
''Treating any particular class of workers as independent contractors is, in many ways, an all-or-nothing proposition,'' said Carey Bartell, a labor lawyer at Reed Smith in Chicago. ''If you're right, you avoid certain expense and hassle. If you're wrong, however, you can lose big.''
The FedEx cases are before a federal judge in South Bend, who will decide after a hearing later this month whether the claims of contractors from 29 states should be combined in a single lawsuit. If the suit goes forward, the court will decide if the law allows for making the jobs full-time.
FedEx spokesman Maury Lane said the drivers' trucks aren't all worth $45,000 and potential damages shouldn't be based on that amount.
The lawsuits seek unspecified damages, including back pay, the cost of buying or leasing trucks and renting uniforms and equipment.
The lawsuit is one of several disputes involving the company and the Teamsters union. On July 24, a former FedEx contract driver selected by the union went to a congressional committee to testify about working conditions.
FedEx, which has 280,000 employees, provided the court in Indiana with e-mail messages between Teamsters officials and lawyers that purport to show the unions are driving the lawsuits.
David Welker, a Teamsters' campaign coordinator for the parcel and small-package division, said there is a two-front battle for workers' rights in Congress and in court.
To obtain permission to sue on behalf of all 15,000 drivers, the workers must show their cases have common facts and legal issues. To win the lawsuit, they must prove that FedEx exerts the same amount of control over the contractors as regular employees in areas such as work schedules and appearance.
Some drivers say that by the time they deduct costs that include fuel, maintenance and paying for replacement drivers when they are sick or on vacation, they clear only about $30,000 after being paid $75,000 by FedEx.
Not all drivers favor full-time status. FedEx claims that only a fraction of the 15,000 contractors are critical of the system.
FedEx lost a similar case in California, where a state court in Los Angeles ruled that the company owes 200 drivers $5.3 million in expenses. The case is being appealed. Gannett Co. won a claim last year when newspaper carriers in Kentucky lost a bid to have the National Labor Relations Board classify them as full-time employees.
The FedEx ground unit's contractor model has broadened the company's appeal to small businesses, which historically relied on UPS, said Donald Broughton, an A.G. Edwards & Sons analyst in St. Louis.
The company's system contrasts with that of UPS, the largest employer of Teamsters union members. UPS employs its drivers full-time and owns the trucks.
''FedEx Ground can grow faster in the contractor model because capital costs are lower with contractors buying the trucks,'' Broughton said.