FedEx has agreed to pay $26.8 million to settle a California court case over the status of its USparcel delivery drivers. Meanwhile, FedEx Freight is the latest company business to announce higher
rates for 2009.FedEx agreed at a hearing on December 5 to make the payment to settle a lawsuit affectingabout 200 FedEx Ground drivers in California over whether they are company employees or independentcontractors. The drivers won a 2007 appeals court verdict ruling that they are full-time employeesand therefore entitled to payment for operating costs and health benefits. FedEx said thesettlement was designed to end the case but insisted it did not set a nationwide precedent.
This is the latest development in a long-running dispute over the legal status of FedExGround drivers. Under the business model of the US ground parcel delivery company, about 13,000drivers are classed as self-employed contractors. About 50 individual lawsuits have beenconsolidated into one single ongoing federal court case in Indiana. In October, the US InternalRevenue Service withdrew a $319 million tentative assessment of tax and penalties against FedExGround covering the 2002 calendar year over this issue.
Meanwhile, it was announced that FedEx Freight and FedEx National LTL will implement 5.7%general rate increases effective January 5, 2009. FedEx Freight is the company’s regionalless-than-truckload (LTL) regional delivery business, while FedEx National LTL is the long-distancetrucking operator. The increase will apply to interstate and intrastate traffic, as well as certainshipments between the US and Canada and Mexico.
FedEx Express has already announced a 6.9% rise effective January 5, while FedEx Ground willincrease rates by 5.9% on the same date.
