From Hierarchies to Markets: FedEx Drivers and the Work contract as Institutional Marker

Judges are often called upon today to determine whether certain workers are “employees” or “independent contractors.” The distinction is important, because only employees have rights under most statutes regulating work, including wage and hour, anti-discrimination, and collective bargaining law. Too often judges exclude workers from statutory protection who resemble what legal scholars have described as typical, industrial employees — long-term, full-time workers with set wages and routinized responsibilities within a large firm. To explain how courts reach these counterintuitive results, the article examines recent federal decisions finding that FedEx delivery drivers are independent contractors rather than employees. It argues that the problem is embedded within the employment contract itself, in the law’s attempt to construe the legal relations of master and servant as a contract. The contemporary employment contract is product of a 19th century incorporation of master-servant authority into contracts for labor services. In the face of institutional disruption, the contradiction within employment between contractual equality and servitude tends to surface in the form of two doctrinal ambiguities. Both make the dominant standard for employment status irresolvable by merging contractual formation and performance. First, the attempt to fit master-servant authority in the framework of contract creates an ambiguity between the activities of bargaining over the work and carrying out the work, or between contracting and producing. Second, it makes ambiguous the relationship between a written agreement and contractual duties. The way in which FedEx organized the drivers’ work manipulated these ambiguities, which enabled the courts to maintain that features of the work that ordinarily, and under the governing legal tests, would be evidence of employment were here consistent with, or even evidence of, independent contracting. In fact, the courts transform some of the same vulnerabilities that place the drivers within the policy concerns of collective bargaining and wage and hour law into evidence of their autonomy. The attempt to encase master-servant relations in contract also destabilizes distinctions between firms and markets. The ambiguity in employment between contracting and producing exposes a tension within major economic theories of the firm: employment is the legal rationale for a firm’s centralized control over indirect, hierarchical, and multilateral relations in production; as a contract, however, employment is a direct and bilateral relationship between equal parties in a market. The FedEx decisions marshal this tension to redefine a firm, as conceptualized by major theories of the firm, as a market. Multilateral relations among drivers as they work under FedEx’s direction appear as bilateral contracts between drivers in a decentralized market. The courts conflate the impersonality of bureaucracy — in which work is embedded in sophisticated technology and a supervisory hierarchy — with the impersonality of the market. The drivers’ very fungibility as low-skilled workers performing standardized routines becomes evidence of their entrepreneurial opportunity. The article hypothesizes that the invisibility of logistics and communications technology, relative to the heavy machinery of industrial manufacturing, helped the courts to submerge the FedEx bureaucracy beneath a nexus of contracts. It critiques the decisions for rejecting theories of the firm that ground the legitimacy of the corporation in the efficient production of goods and services. The article concludes with a thought experiment showing how, using the arguments in the FedEx decisions, one could reinterpret assembly line employment as independent contracting

Optimal Multi-Unit Mechanisms with Private Demands

In the multi-unit pricing problem, multiple units of a single item are for sale. A buyer's valuation for $n$ units of the item is $v \min \{ n, d\}$, where the per unit valuation $v$ and the capacity $d$ are private information of the buyer. We consider this problem in the Bayesian setting, where the pair $(v,d)$ is drawn jointly from a given probability distribution. In the \emph{unlimited supply} setting, the optimal (revenue maximizing) mechanism is a pricing problem, i.e., it is a menu of lotteries. In this paper we show that under a natural regularity condition on the probability distributions, which we call \emph{decreasing marginal revenue}, the optimal pricing is in fact \emph{deterministic}. It is a price curve, offering $i$ units of the item for a price of $p_i$, for every integer $i$. Further, we show that the revenue as a function of the prices $p_i$ is a \emph{concave} function, which implies that the optimum price curve can be found in polynomial time. This gives a rare example of a natural multi-parameter setting where we can show such a clean characterization of the optimal mechanism. We also give a more detailed characterization of the optimal prices for the case where there are only two possible demands

Using bricolage to facilitate emergent collectives in SMEs

Starting a new business is often done in a realm of improvisation if resources are scarce and the business horizon is far from clear. Strategic improvisation occurs when the design of novel activities unite. We conducted an investigation of so called ‘emergent collectives’ in the context of a small and medium-sized enterprise (SME). Emergent collectives are networks of information nodes with minimal central control and largely controlled by a protocol specification where people can add nodes to the network and have a social incentive to do so. We considered here emergent collectives around an enterprise resources planning (ERP) software and a customer relation management (CRM) software in two open source software (OSS) communities. We investigated how the use of bricolage in the context of a start-up microenterprise can facilitate the adoption of an information system (IS) based on emergent collectives. Bricolage is an improvisational approach that allows learning form concrete experience. In our case study we followed the inception of a new business initiative up to the implementation of an IS, during a period of two years. The case study covers both the usefulness of bricolage for strategic improvisation and for entrepreneurial activity in a knowledge-intensive new business. We adopted an interpretative research strategy and used participatory action research to conduct our inquiry. Our findings lead to the suggestion that emergent collectives can be moulded into a usable set of IS resources applicable in a microenterprise. However the success depends heavily on the ICT managerial and technological capabilities of the CEO and his individual commitment to the process of bricolage. Our findings also show that open ERP and CRM software are not passing delusions. These emergent collectives will not take over proprietary ERP and CRM software all of a sudden, but clearly the rules of the game are slowly changing due to the introduction of new business models. The study contributes to the research of OSS as emergent collectives, bricolage and IS adoption in SMEs

U.S. Multinational Services Companies: Effects of Foreign Affiliate Activity on U.S. Employment

This working paper examines the effect that U.S. services firms’ establishment abroad has on domestic employment. Whereas many papers have explored the employment effects of foreign direct investment in manufacturing, few have explored the effects of services investment. We find that services multinationals’ activities abroad increase U.S. employment by promoting intrafirm exports from parent firms to their foreign affiliates. These exports support jobs at the parents’ headquarters and throughout their U.S. supply chains. Our findings are principally based on economic research and econometric analysis performed by Commission staff, services trade and investment data published by the Bureau of Economic Analysis, and employment data collected by the Bureau of Labor Statistics. In the aggregate, we find that services activities abroad support nearly 700,000 U.S. jobs. Case studies of U.S. multinationals in the banking, computer, logistics, and retail industries provide the global dimensions of U.S. MNC operations and identify domestic employment effects associated with foreign affiliate activity in each industry

Development of a protocol for maintaining viability while shipping organoid-derived retinal tissue.

Retinal organoid technology enables generation of an inexhaustible supply of three-dimensional retinal tissue from human pluripotent stem cells (hPSCs) for regenerative medicine applications. The high similarity of organoid-derived retinal tissue and transplantable human fetal retina provides an opportunity for evaluating and modeling retinal tissue replacement strategies in relevant animal models in the effort to develop a functional retinal patch to restore vision in patients with profound blindness caused by retinal degeneration. Because of the complexity of this very promising approach requiring specialized stem cell and grafting techniques, the tasks of retinal tissue derivation and transplantation are frequently split between geographically distant teams. Delivery of delicate and perishable neural tissue such as retina to the surgical sites requires a reliable shipping protocol and also controlled temperature conditions with damage-reporting mechanisms in place to prevent transplantation of tissue damaged in transit into expensive animal models. We have developed a robust overnight tissue shipping protocol providing reliable temperature control, live monitoring of the shipment conditions and physical location of the package, and damage reporting at the time of delivery. This allows for shipping of viable (transplantation-competent) hPSC-derived retinal tissue over large distances, thus enabling stem cell and surgical teams from different parts of the country to work together and maximize successful engraftment of organoid-derived retinal tissue. Although this protocol was developed for preclinical in vivo studies in animal models, it is potentially translatable for clinical transplantation in the future and will contribute to developing clinical protocols for restoring vision in patients with retinal degeneration