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US misclassification clampdown to hit Fedex
10 March 2010
Fedex could face tough penalties as a result of a US federal and state authority clampdown on employers attempting to misclassify permanent employees as contractors. The move is part of efforts to collect unpaid taxes to help deal with huge budget deficits; it is understood that the federal government estimates it will recover some US$7 billion over a ten-year period.
A number of companies - Fedex is reported to be among them - have sought to save on costs by misclassifying employees as independent contractors, avoiding social security and medical and unemployment insurance payments. Independent contractor status leaves workers vulnerable – they are frequently paid less than the minimum wage, do not benefit from overtime payments and can fall outside anti-discrimination legislation. In addition, contractors do not receive unemployment insurance if they lose their job or compensation if they are injured.
The ITF-affiliated Teamsters union has campaigned for the authorities to take action against Fedex, which it is understood has been employing drivers on an independent contractor basis. Last July, drivers' request to take collective court action on behalf of Fedex drivers in Arizona, Georgia, Louisiana, Nevada, North Carolina, Ohio, Oregon and Utah was granted by attorneys general; earlier that month attorneys general from Iowa, Kentucky, Missouri, Montana, New Jersey, Ohio, Rhode Island and Vermont demanded that Fedex adhere to state employee classification laws. Last October, New York, New Jersey and Montana attorneys general threatened to take legal action against Fedex Ground for misclassifying its drivers.
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