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FedEx ISP Payroll Glossary

Clear, plain-English definitions of the terms FedEx Ground contractors run into every week — from per-stop pay and the 6th day bonus to “back into rate” overtime and the weekly settlement statement. Each term links to the in-depth guide that covers it.

Last updated June 2026

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The FedEx ISP Model

FedEx ISP (Independent Service Provider)
A FedEx ISP, or Independent Service Provider, is an independent business that contracts with FedEx Ground to deliver and pick up packages in an assigned area using its own drivers and vehicles. Under the ISP model the contractor is the legal employer of its drivers — who are W-2 employees — and is responsible for payroll, taxes, insurance, and compliance. FedEx requires each ISP to operate at a minimum scale, generally at least five routes or roughly 500 stops per day.
Read the complete FedEx ISP Payroll Guide →
CSA (Contracted Service Area)
A Contracted Service Area (CSA) is the specific geographic territory a FedEx ISP is contracted to service under its agreement with FedEx Ground. Each CSA defines the routes, stop volume, and service requirements the contractor must cover. Many contractors own and operate multiple CSAs, and FleetWage is priced per CSA per week.
See the CSA Management Guide →
Settlement Statement (Weekly Settlement)
A settlement statement is the weekly report FedEx provides to a contractor detailing the revenue, stops, packages, charges, and adjustments for a CSA. Contractors use it as the source data to reconcile what they earned and to calculate what each driver is paid. Turning the settlement statement into accurate driver paychecks — accounting for stops, bonuses, and deductions — is the core weekly payroll task FleetWage automates.
How settlement data becomes payroll →
Stop
A stop is a single location where a driver delivers or picks up one or more packages. Stop counts are the primary unit of work in FedEx Ground operations and the basis for per-stop pay, and routes are often described by their average daily stop count.
Model stops in the payroll calculator →
Worker Classification (W-2 vs 1099)
Worker classification determines whether a driver is treated as a W-2 employee or a 1099 independent contractor. Under the FedEx ISP model, drivers are employees of the contractor and must be paid as W-2 employees with payroll taxes withheld — there is no legitimate path to paying ISP delivery drivers as 1099 contractors. Misclassification exposes the contractor to back taxes, penalties, and wage claims.
Compliance & classification rules →

Pay Structures

Per-Stop Pay
Per-stop pay is a driver pay model that pays a set dollar amount for each delivery or pickup stop completed, rather than an hourly wage or flat salary. Daily pay equals the stop count multiplied by the per-stop rate, often using tiered thresholds where stops above a cutoff pay a higher rate. It is one of the most common ways FedEx ISP contractors pay drivers because it ties pay directly to route volume.
Per-stop pay formulas & examples →
Daily Rate (Day Rate)
A daily rate, or day rate, pays a driver a fixed amount for each day worked regardless of the number of stops or hours. It is simple to administer but does not remove the contractor's obligation to pay overtime — day-rate drivers who work more than 40 hours in a week are still owed FLSA overtime on top of the daily rate.
Overtime on day-rate pay →
Tiered Pay (Pay Thresholds)
Tiered pay is a per-stop structure where the rate per stop changes once a driver crosses a defined stop threshold. For example, the first 120 stops in a day might pay one rate and every stop beyond that a higher rate, rewarding drivers on denser routes. Setting thresholds correctly is a common source of payroll errors when calculated by hand.
Single- and multi-tier examples →
6th Day Bonus
A 6th day bonus is additional pay a FedEx ISP gives a driver who works a sixth consecutive day in a single workweek, on top of their normal per-stop or daily pay, often used during high-volume periods such as peak season. It is separate from FLSA overtime, and because it is non-discretionary it must be included in the driver's regular rate when calculating overtime.
6th Day Bonus Pay Explained →

Overtime & FLSA Compliance

Back Into Rate
“Back into rate” describes the FLSA half-time method of paying overtime to drivers paid by per-stop or day rate rather than by the hour. Because these drivers have no stated hourly wage, the employer divides total weekly pay by total hours worked to derive — or “back into” — a regular hourly rate, then pays an additional half of that rate for each hour over 40. The regular rate changes every week as stops and hours change, which makes this one of the most error-prone parts of FedEx ISP payroll.
FedEx ISP Overtime Rules →
FLSA (Fair Labor Standards Act)
The Fair Labor Standards Act (FLSA) is the federal law that sets minimum wage, overtime, and recordkeeping requirements for most U.S. employees. For FedEx ISP contractors it governs how overtime must be calculated for drivers — including per-stop and day-rate drivers — and is the basis for the regular-rate and half-time overtime rules.
Labor-law compliance for ISPs →
Regular Rate of Pay
The regular rate of pay is the hourly figure used to calculate overtime under the FLSA. It is not simply the base wage — it must include most non-discretionary pay such as per-stop earnings, attendance bonuses, and 6th-day bonuses, divided by total hours worked. Overtime is then paid based on this blended regular rate, which is why bonuses can quietly increase what an ISP owes in overtime.
How the regular rate is calculated →
Half-Time Overtime
Half-time overtime is an FLSA method that pays an extra one-half of the regular rate for hours over 40, used when a driver's pay does not vary with a fixed hourly wage — such as per-stop or salaried fluctuating-hours arrangements. It contrasts with the standard time-and-a-half (1.5×) method, and applying it correctly requires recalculating the regular rate each week from actual pay and hours.
Half-time vs. time-and-a-half →
Motor Carrier Exemption
The Motor Carrier Exemption (FLSA Section 13(b)(1)) can exempt certain drivers from federal overtime if they operate qualifying vehicles in interstate commerce under U.S. Department of Transportation jurisdiction. Many FedEx Ground delivery drivers do not qualify — for example, those operating smaller vehicles under 10,001 lbs may fall under the Small Vehicle Exception and remain owed overtime — so contractors should not assume the exemption applies. Misapplying it is a frequent source of overtime liability.
When the exemption does and doesn't apply →

Operations & Economics

Network 2.0
Network 2.0 is FedEx's initiative to consolidate its Express and Ground delivery networks into a single integrated operation. For contractors it changes route structures, stop mixes, and the package types they handle, with direct effects on driver workload and pay. It is one of the most significant operational and economic shifts currently facing FedEx ISPs.
Profitability under changing economics →
Fuel Surcharge
A fuel surcharge is an adjustment tied to fuel prices that FedEx includes in a contractor's settlement to help offset fuel costs. Because it fluctuates with diesel and gas prices, it is a moving variable in a CSA's weekly economics, and contractors track it alongside fuel-card spending to understand true fuel cost per route.
Fuel cards for FedEx contractors →
General Rate Increase (GRI)
The General Rate Increase (GRI) is FedEx's annual adjustment to its shipping rates, typically announced late in the year and effective in early January. While the GRI applies to shippers, it flows through to contractor settlement economics, which is why ISPs review margins and driver pay at the start of each year.
Annual margin planning →
Peak Season
Peak season is the high-volume delivery period from roughly Thanksgiving through Christmas, when stop counts and package volumes surge. Contractors typically add drivers, offer peak and 6th-day bonuses, and adjust schedules to handle the load while keeping overtime under control — and retaining drivers through January is a recurring peak-season challenge.
Retaining drivers through peak →

This glossary is general education for FedEx ISP contractors, not legal, tax, or payroll advice. Rates, thresholds, and labor laws change — verify current figures with the linked guides or a qualified advisor before acting.

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