Featured Engagement: Economics of Contracting in the U.S. Package Delivery Industry

Vega Economics was retained by Fedex, an American ground package delivery company, as a defendant, in several cases in which it was sued for allegations involving federal Fair Labor Standards Act.

Plaintiffs in these cases were package delivery drivers who have worked for an independent service provider (“ISP”) that contracted with the defendant, and they alleged that Fedex failed to pay mandatory overtime compensation for their hours worked in excess of forty hours per week.

Vega's expert analyzed and provided opinions on the economics of contracting in the U.S. package delivery industry, the broader economy, and its economic implications for individuals employed to drive for ISPs. Some of the key opinions included:

• ISPs are for-profit corporations that make independent profit-maximizing decisions regarding employment, capital equipment, and operations; therefore, ISPs independently determine whom they employ and in what capacity.
• The outsourcing of they types of contracts at issue in this case are fundamental to the efficient organization of business throughout the U.S. economy. 
• Making the defendant a second employer would be contrary to the ISPs’ contractual arrangements with defendant, increase transaction costs, and ultimately create fewer jobs. 

As part of the support work, Vega reviewed the contracts between the defendant and ISPs as well as declarations made by the authorized officers of some of the ISPs. Download the full report below. 

Fedex Report