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Coakley fines FedEx Ground for saying drivers were contractors

Boston Herald, December 20, 2007

(by the Associated Press) - The Massachusetts attorney general fined FedEx Corp.'s ground delivery unit more than $190,000 Wednesday, alleging the company illegally classified 13 drivers as independent contractors rather than employees.

Attorney General Martha Coakley said the drivers' contractor status violated the state's Independent Contractor Law, and unfairly deprived them of benefits such as health care, workers' compensation and, in some cases, overtime pay.

By not hiring the drivers as employees, Pittsburgh-based FedEx Ground Package Systems Inc. also deprives Massachusetts of tax revenue by not deducting and withholding taxes from employee pay checks, Coakley alleged.

Maury Lane, a spokesman for FedEx Ground's Memphis, Tenn.-based parent, FedEx Corp., said the company believed the drivers were properly classified and planned to appeal the citations. In addition to penalties of more than $190,000, Coakley ordered the company to pay restitution to 13 drivers.

Coakley's office began investigating over the summer after receiving a driver tip. It eventually identified at least 13 drivers the state believes were misclassified, said Harry Pierre, a spokesman for Coakley. Coakley's office is continuing to investigate FedEx Ground, which has more than 400 contract drivers in Massachusetts.

Those drivers' annual pay averages about $85,000, Lane said. Lane said Coakley's action "will have a chilling effect" on the ability of employers to hire independent contractors for tasks as diverse as driving trucks and practicing medicine.

While some FedEx drivers have embraced their contractor status, others have fought to be classified as employees in lawsuits brought in dozens of states. In October, a federal judge in Indiana approved class-action status for a lawsuit filed on behalf of about 14,000 drivers.

FedEx's contractor drivers own trucks and routes and pay all operating costs. They can hire employees to drive for them and can potentially earn more than they would as FedEx employees.




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