WHEN Jean Capobianco was diagnosed for the
second time with breast cancer, her doctors ordered a mastectomy. She
first contracted the disease three years earlier and suffered through
seven months of chemotherapy. After her cancer came back, her husband
walked out on her. "He told me he wasn't sexually attracted to me
anymore," she said.
For more than a decade, Jean
and her husband had been a truck-driving team, driving hazardous waste.
Now, with husband and truck gone, her career as a long-haul driver was
gone as well.
After she recovered, Jean started looking for work.
She spotted a help-wanted ad from Roadway Package Systems, which said
it was looking for independent contractors to deliver packages.
"I needed a job," said Jean. "They tell you, 'You'll make all this money working for yourself.' "
soon discovered that her new employer had embraced a controversial
strategy to squeeze down costs by millions of dollars each year: it
insisted that Jean and the other drivers were independent contractors,
not employees. The I.R.S., New York and many other states are
investigating this strategy, convinced that many companies use it to
cheat their workers and cheat on taxes.
Jean arrived at the
Roadway terminal in Brockton, Mass., at 6 each morning and spent the
next 90 minutes loading 100 to 140 packages into her truck. She usually
left the terminal around 7:30 a.m. and returned after 6 p.m.
had to leave her job for two years when she suffered a severe back
injury while lifting a package. Before she could return to work, FedEx
Ground, which had acquired Roadway, required her to purchase a truck.
The list price was $37,800, with Jean having to make 60 monthly
installments of $781.12 and a final, one-time payment of $8,000.
In Jean's view, it was ludicrous for Roadway and FedEx to call the drivers independent contractors.
told what to do, when to do it, how to do it, when to take time off,"
Jean said. "You have to wear their uniform. You can't wear your hair
certain ways. You have to deliver every single thing they put on the
Jean called it "a great deal for FedEx. They don't have
to pay for trucks, for the insurance, for fuel, for maintenance, for
tires," she said. "We have to pay for all those things. And they don't
have to pay our Social Security."
By some estimates, this arrangement saves FedEx $400 million a year, giving it a significant cost advantage over U.P.S.,
which treats its drivers as regular employees. Moreover, FedEx Ground
has sought to rebuff a Teamster organizing drive by arguing that its
15,000 drivers have no right to unionize because they are independent
"These drivers are more like business people,"
said Perry Colosimo, a FedEx Ground spokesman. "They can set their own
hours. They can buy routes. They can develop their business."
30 lawsuits, FedEx Ground drivers have argued that they are employees,
not independent contractors, and that the company should therefore pay
for their trucks, insurance, repairs, gas and tires. In one lawsuit, a
California judge ruled that FedEx Ground was engaged in an elaborate
ruse in which FedEx "has close to absolute control" over the drivers.
Last December, FedEx acknowledged another setback: the I.R.S. ordered
it to pay $319 million in taxes and penalties for 2002 for
misclassifying employees as independent contractors. FedEx could face
similar I.R.S. penalties for subsequent years. FedEx said it would
To attract drivers, FedEx Ground often runs ads claiming
that its drivers earn $60,000 to $80,000 a year. Many drivers say those
ads are deceiving. Gross income can exceed $60,000, but Jean, echoing
many drivers, said she had to pay nearly $800 a month for her truck,
$125 a week for gas, $55 a week for business equipment, $4,000 a year
for insurance policies, plus outlays for tires, maintenance and
repairs. Some years, Jean calculated, her net pay was just $32,000,
amounting to $10.25 an hour.
Many drivers find it hard to walk
away because they have invested so much in their trucks. If they leave,
they might still be stuck with years of monthly payments and the final
payment of $8,000.
One morning in August 2004, Jean doubled over in pain. Three days later, her doctor informed her she had ovarian cancer.
doctor told me to stop working immediately," Jean said. She not only
finished her route that Friday but worked the following Monday and
Tuesday as she struggled to find someone to cover her route. Her
terminal's two replacement drivers demanded unrealistic amounts, she
said. "They knew they had me over a barrel."
On Aug. 21, 2004,
surgeons removed a large, malignant tumor and did a hysterectomy. The
next week the doctors told her she had Stage 4 cancer that had spread
to her lungs. She would need chemotherapy through late December.
had twice beaten breast cancer, and she was intent on beating this,
too. She fully expected to return to her job in January, and called
FedEx Ground's headquarters to request a leave of absence. Weeks later,
a letter arrived saying she was terminated.
"I was crazy with anger," she said.
and with no income, Jean stopped making payments on her truck. She had
already paid more than $40,000 on it, but now she was powerless to
prevent it from being repossessed.
"Ten years of beating my brains out for them, and they throw me away like I was a piece of garbage," Jean said.
Ground officials said they had sympathy for Jean but had to terminate
her under company rules, because she was no longer covering her route
and she hadn't found a replacement driver.
said they were free to terminate her because in FedEx's view she was an
independent contractor and therefore not protected by the Americans
With Disabilities Act. That law requires companies to make reasonable
accommodations to keep employees who have cancer or other disabilities.
Jean has sued FedEx, asserting that it violated the act.
this day, I still can't understand how they can get away with it," Jean
said. "You work for a company for 10 years and you give 150 percent. I
used to go above and beyond. And then I get sick, something totally out
of my control. And then to get fired."
Her voice dropped off, then tears streamed down her cheeks.
inside the door of the men's room was a rack that held sweaty biking
shirts, damp bathing suits and clammy running shoes. The aroma seemed
to belong more to a high school locker room than to a corporate
headquarters. But this was the house of Patagonia, the apparel company
that prides itself on letting its employees take their play every bit
as seriously as they take their work.
At lunchtime many days,
Patagonia employees go surfing for two hours, while a half-dozen others
take a 100-minute, 27-mile bike loop in the hills overlooking the
One of the sweaty biking shirts belonged to Andy
Welling, a sales manager at Patagonia's headquarters in Ventura, Calif.
At 41, Welling is a fiend about staying in shape - he bikes several
days a week at lunchtime, and joins Patagonia's weekly pick-up soccer
game. He often makes up for his lunchtime cycling by working a few
hours at home in the evening.
Patagonia is so mellow about
flextime that the receptionist at headquarters, an 11-time world
Frisbee champion, is allowed to take three months off each summer to
run a surfing school. "I could make quite a bit more money working
somewhere else," Welling said. "But to have the quality of life and to
remain physically fit, by cycling or going surfing, you can't put a
dollar amount on it."
Welling has taken advantage of another
Patagonia offering: the child care center at headquarters. He drops off
his two boys, 5 and 3, at 9 and often has lunch with them. "Being able
to have my kids a few feet away from me all the time is fantastic,"
Welling said. "It is a bonding relationship I never would have had if I
were working somewhere else."
Patagonia is not like anywhere
else. With 1,300 workers and $275 million a year in sales, it donates 1
percent of its annual sales to environmental groups. Four days a week
at lunchtime, the company offers yoga and Pilates sessions; there are
also occasional classes on fly fishing. Each year Patagonia lets 40
employees take paid two-month internships with an environmental group.
The best spots in the parking lot are reserved for the most
fuel-efficient cars, and above dozens of parking spots are solar panels
that supply all the power for one of Patagonia's administration
Patagonia has 900 applicants for every job opening
at headquarters. It sponsors civil disobedience training for employees
who want to participate in environmental protests. Its mission
statement calls for making the best outdoor products while doing the
least damage to the environment. Its Synchilla fleece vests are made
from recycled plastic bottles.
At headquarters, 20 surfboards
are tucked under the stairs to the second floor, and employees often
work barefoot. "When you walk through the front door, we don't want you
to stop being the person you are," said Lu Setnicka, Patagonia's
director of training.
This unusual blend of work, play, family
and environmentalism grows out of the philosophy of Patagonia's founder
and principal owner, Yvon Chouinard. Born in Maine and raised in
Burbank, he felt passionate about just one activity in high school: the
Southern California Falconry Club. He learned how to rappel down cliffs
to visit falcon nests, and out of that grew a lifelong passion for
Dissatisfied with the era's soft-iron pitons
- small spikes that climbers drive into rock and attach ropes to -
Chouinard set out to produce stronger ones. He bought an anvil, taught
himself blacksmithing, and made his first pitons out of an old
harvester blade. For several years, he lived on less than a dollar a
day, selling pitons out of his car and pursuing his passions by
climbing in Yosemite and Wyoming.
As demand for his pitons
grew, Chouinard rented a metal shed in Ventura and hired a small staff.
By 1970, his company had become the nation's largest producer of
climbing equipment. During an excursion to Scotland, he purchased a
rugby shirt and concluded that the thick, sturdy shirt was ideal for
rock climbing. When he returned to California, his climbing friends
asked for shirts just like it, and soon Chouinard expanded into the
apparel business, importing rugby shirts.
As the company grew,
it had one unbending rule - the business closed whenever the waves in
the Pacific were running six feet high, hot and glassy. "Since none of
us wanted to be in business, we wanted to blur the distinctions between
work and play," Chouinard said. "That meant we had to break a lot of
rules of business."
Chouinard often jokes about his M.B.A.
philosophy: management by absence. Many years he disappeared for six
months to go ice climbing in the Alps or surfing, skiing and climbing
in South America. His was the ultimate flextime.
Chouinard has a
simple philosophy that he says ensures that employees don't abuse their
flextime. "Hire the people you trust, people who are passionate about
their job, passionate about what they're doing. Just leave them alone,
and they'll get the job done."
Shannon Ellis, Patagonia's vice
president for human resources, says the unusual flextime policies yield
increased productivity. "A lot of people recognize that what they have
here is unique, and I don't think they want to jeopardize that," she
In addition to the child care center, Patagonia offers
other family-friendly benefits like eight weeks of paid maternity and
paternity leave. It also pays 100 percent of the health insurance
premiums for its workers, even part-timers. Chouinard says this helps
attract the gung-ho outdoors types Patagonia wants - workers who test
the company's products as they climb and surf and convey their
expertise and enthusiasm to customers.
"All of these things I'm
doing are not to have a socialist birth-till-death utopia here,"
Chouinard said. "Every one of these things is good business."
Pike, who oversees Patagonia's environmental grants, said: "He's
proving Wall Street wrong. You can do the right thing and still have an
extremely profitable company."