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11 January 2008
The US ITF-affiliated Teamsters union has welcomed a decision by the government to impose a multimillion dollar penalty on global delivery firm Fedex for illegally defining ground workers as independent contractors.
The Internal Revenue Service (IRS) last month decided that approximately 13,000 independent contractors of Fedex’s US ground delivery operations in 2002 were in fact employees. As a result, a US$319 million penalty is being imposed on the company.
Commenting on the decision, Teamsters General President Jim Hoffa said: "It's a fundamental fact that FedEx has been skirting the law, and the Teamsters welcome the IRS decision."
"It’s game over for Fedex’s independent contractor scam," he added.
Just days before the IRS decision, the Massachusetts Attorney General cited Fedex Ground for intentionally misclassifying pickup and delivery drivers as independent contractors rather than employees. This follows a decision last month by the California Supreme Court, which refused to review an appeals court ruling that single route drivers in the state were misclassified. FedEx has publicly acknowledged that regulatory and legal challenges on misclassification could hurt its stock price.
Since the US$319 million fine only covers 2002, Fedex could face additional penalties totalling over a billion dollars after the IRS completes its investigation into the company’s illegal employment practices that continue to this day.
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