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Employees, IRS challenge FedEx’s driver classifications

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in Compensation and Benefits,Human Resources

Present 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.

An Indiana district court certified class-action status for drivers from 19 states, including New Jersey. Class certification motions are pending in nine additional states and are expected in four more.

Worse news for FedEx: The IRS has tentatively determined that the drivers were 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.

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