Independent Contractors & Fed Ex
Fed Ex in Hot Water over Misclassifying Drivers as Independent Contractors
In July of 2010, Massachusetts Attorney General’s Office announced that it had reached an agreement with Fed Ex to settle wage and hour claims that the company had been misclassifying its drivers as independent contractors rather than properly classifying them as employees. By treating its ground drivers as independent contractors, Fed Ex failed to pay state payroll taxes, worker’s compensation, and unemployment assistance premiums to deserving workers which violates the Massachusetts Independent Contractor Law. This case comes off the heels of similar lawsuits from the state of Montana, and Kentucky suing Fed Ex for driver misclassification.
Fed Ex Agrees to Pay $3 Million
Fed Ex denied any liability in settling the case and has agreed to pay 3 million dollars to settle the charges in Massachusetts, after settling for 2.3 million in Montana for the same offense.
In October of 2010, New York Attorney General Andrew Cuomo announced the state of New York is filing suit against Fed Ex for New York labor laws violations alleging that by misclassifying its drivers as independent contractors, Fed Ex’s Home Delivery unit fails to provide its drivers the rights afforded to “employees” under New York labor laws. These rights include overtime pay compensation, unemployment insurance, worker’s compensation, and wage payments.
What is an Independent Contractor? And How Fed Ex Drivers are NOT Independent Contractors
An independent contractor is not subject to anyone’s control, for they work independently as their “own boss” so to speak. Therefore, Cuomo’s allegations that “FedEx has the power to control, and does in fact control, almost all aspects of its drivers’ work” including “hours, job duties, routes, and even clothing” are direct statements defining an “employee” rather than an independent contractor.
It looks as if Fed Ex will be paying even more millions to settle this case and is learning all too well the ramifications of employee misclassification.