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Coakley fines FedEx Ground for saying
drivers were contractors
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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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