Fedex Watch, December 19,
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
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
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.