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Contractor decision costs FedEx $319 million as class action grows

by on
in Employment Law,Human Resources

Official class notices were sent out in June to 27,165 present and former FedEx delivery drivers in the multidistrict lawsuit challenging the company’s independent contractor model.

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

The U.S. District Court for the Northern District of Indiana required Indianapolis-based 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.”

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

Ouch!

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