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Massachusetts Attorney General Cites FedEx Ground


Fedex Watch, December 19, 2007

Massachusetts Attorney General Martha Coakley cited FedEx Ground for intentionally misclassifying 13 pickup and delivery drivers as independent contractors rather than employees.

Coakley also fined FedEx Ground $190,000 in penalties and ordered the company to fix the employment status and pay the 13 drivers restitution. There are more than 400 drivers for FedEx Ground in Massachusetts, and the AG's office released a press statement today saying the investigation is ongoing.

FedEx has 10 days to appeal the citations to a state administrative law agency. The AG's office began investigating FedEx this summer after receiving a driver's complaint over his employment classification.

"I applaud the just actions taken by Massachusetts Attorney General Martha Coakley in targeting the scofflaw FedEx Ground," said Teamsters General President Jim Hoffa.  "FedEx Ground has for too long passed unnoticed as it calls its drivers ‘independent' but illegally controls them like employees.  But FedEx Ground is running out of places to hide.  This action in Massachusetts is another nail in the coffin of FedEx's illegal business model."

FedEx Ground and its subsidiary FedEx Home Delivery have lost a series of court decisions, labor board determinations and state agency rulings which found the two companies to be misclassifying its drivers as contractors.  Most recently, the California Supreme Court refused to review a California Court of Appeal ruling that found single route drivers in that state to be misclassified.  The California Supreme Court action ended seven years of litigation and let stand the civil judgment that drivers were company employees.

"FedEx has broken the law here in Massachusetts and the company finally got caught," said Teamster Local Union 25 President Sean O'Brien.  "FedEx Ground drivers in Massachusetts are standing up to this company and winning.  We are proud to welcome the drivers in the Wilmington, Mass., terminal as brothers and sisters in Local 25."

FedEx Home Delivery drivers in Wilmington, Mass., voted to join Teamster Local Union 25 and in Hartford, Conn., voted to join Teamster Local Union 671.  FedEx has refused to bargain with Local 25 the legally-certified collective bargaining agent; the company has appealed to the U.S. Court of Appeals District of Columbia Circuit to contest this certification.




Last Call: FedEx shares fall on IRS bill

Thomson Financial  - December 24, 2007


NEW YORK (AP) - Shares of FedEx (NYSE:FDX) Corp. slipped in light trading Monday, as investors reacted to the company's disclosure late Friday it might have to pay $319 million in back taxes related to an ongoing disagreement in how the package delivery company's workers are classified.

In a filing Friday with the Securities and Exchange Commission, FedEx said the IRS has concluded that FedEx drivers, which are currently considered independent contractors, should be considered company employees. As contractors, the drivers do not receive benefits and are prevented from organizing under federal labor laws.

FedEx said the IRS plans to assess the tax penalties and interest relating to an audit in 2002. The issue is under audit for 2004 and 2006 as well, FedEx said in the filing.

Bear Stearns (NYSE:BSC) analyst Edward Wolfe said he believes the company to fight the IRS on the issue 'tooth and nail' and suggested a resolution might still be years away.

Wolfe said it's unlikely Memphis, Tenn.-based FedEx will be forced to pay the entire $319 million penalty. But he noted the IRS ruling compounds the contractor problem for the company.

FedEx already has several lawsuits pending against it, Wolfe said, and has been pressured by several state attorneys general and the Teamsters union to change its model.

FedEx shares fell $1.89, or 2 percent, to $92.40 in afternoon trading. Shares have traded between $91.10 and $121.42 in the past year.



 

 

 

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