Employees, IRS challenge FedEx’s driver classifications

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in Compensation and Benefits,Employment Law,Human Resources

Current and former FedEx Ground/Home Delivery drivers are eligible to join a class-action suit that challenges the company’s long-standing practice of classifying drivers as independent contractors. The suit—which more than 27,000 drivers could join—argues that they are employees.

The U.S. District Court for the Northern District of Indiana required FedEx to include in the notices a reminder that drivers are protected from retaliation for participating in the lawsuit, and that FedEx is prohibited “even from expressing an opinion as to whether or not it is in your best interest to remain a class member.” FedEx’s second largest distribution center is in Indianapolis.

The court certified class-action status for drivers from 19 states, including Indiana. Class certification motions are pending in nine additional states and are expected to be filed in four more.

Even worse news for FedEx was recently delivered by the IRS, which tentatively determined that the drivers should be reclassified as employees. The IRS, which isn’t disposed to wait around for the courts, has drawn up a tab for more than $319 million in back taxes and penalties for the tax year 2002 alone. It now is auditing the company’s books for the years 2004 through 2006.

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