FedEx has rejected a decision by the US tax authority that drivers at its FedEx Ground parcelsbusiness are employees rather than independent contractors as unions have long claimed. This issue
has been the subject of long-running court cases in the USA.The Internal Revenue Service (IRS) decided on December 20 to classify FedEx Ground’s parcelcollection and delivery drivers as company employees for tax purposes rather than independentcontractors (“owner-operators”). It was thus seeking payment of $319 million in taxes, penaltiesand interest for 2002, and was also reviewing the situation for calendar years 2004 – 2006.
In response, FedEx announced yesterday it would be meeting with IRS officials in the springto discuss the issue, and it did not expect the matter to be resolved for some time. “We believethat we have strong defenses to the IRS’s tentative assessment and will vigorously defend ourposition, as we continue to believe that FedEx Ground’s owner-operators are independent contractorsand that no loss is probable,” FedEx stated.
The Teamsters union claims FedEx has deliberately misclassified the drivers as independentcontractors. Its president, Jim Hoffa, said: “It’s a fundamental fact that FedEx has been skirtingthe law, and the Teamsters welcome the IRS decision.” Since the $319 million fine only covered2002, FedEx could face additional penalties totalling over a billion dollars, the union claimed.
