IRS Continues Audit at FedEx Ground

FedEx garnered positive headlines for its slanted disclosure that the “IRS withdrew its tentative assessment for tax and penalties” at FedEx Ground for 2002.  Shareholders, FedEx Ground drivers, state tax authorities and other interested parties were not given any more information than what FedEx wanted to leak out. The facts remain: the IRS continues its audit for 2002 and 2004 and 2005 and 2006; the federal courts are still hearing the national ERISA and state claim lawsuits; more than 30 states continue administrative and tax reviews of the employee status of FedEx Ground drivers; the Court of Appeals will consider the employee determination of the NLRB.  If the only implication of the October 22 Form 8-K is that FedEx Ground ultimately writes a smaller check to the IRS, then FedEx won a news cycle but not more than that.  We’ve uploaded the 1991 RPS vs United States of America complaint from the last time the IRS audited the “contractor model” at RPS/FedEx Ground to put some historical perspective on one day’s headlines.

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Bloomberg Tries to Quantify Misclassification Scheme

The most recent update article by Bloomberg on FedEx Ground’s misclassification scheme tries to put the analysis in terms that traders and shareholders: cold hard cash.  Specifically, the estimated amount of money around the potential liabilities and operations costs for properly classifying FedEx Ground drivers.  FedEx’s spokespodperson may dismiss this as ‘speculation’ but the FedEx lawyers in their legal disclosure forms tell the real story.

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Litigation (Archives)

FedEx Ground vs California Employment Development Dept. Division | Ground | Contractor Dispute | State Litigation | California | |

This case stems from the California Employment Development Dept. audit of FedEx Ground in 2004 where the EDD determined that FedEx Ground drivers were employees.  The EDD assessed FedEx Ground owed more than $7.88 million in back payments to California.  As of November 2006, California Unemployment Insurance Appeals Board denied FedEx Ground’s petition for reassessment; the EDD audit determination that single route drivers are employees stands and FedEx Ground has 30 days to appeal.

Tumulty vs FedEx Ground Contractor Dispute | Federal Litigation | Wage Hour | Washington | |

This case was filed in King County (WA) Superior Court in 2003 and removed to U.S. District Court for Western Washington in 2004.  The plaintiffs alleged that FedEx Ground, a staffing agency and a multi-route contractor were joint employers under the Fair Labor Standards Act and Washington Minimum Wage Act.  In March 2005, the judge issued a summary judgment that FedEx Ground was the joint employer of the plaintiffs.  The case was settled in Sept 2005.  FedEx immedeiately appealed the summary judgment to the Ninth Circuit; the appeal is pending (USCA 05-36072).

Lester vs FedEx Ground Division | Ground | Class Action | Contractor Dispute | Federal Litigation | Michigan | |

This case was filed in U.S. District Court for Eastern Michigan in 2004.  This case is a member case of the FedEx Ground/Home Multi-District Litigation case.

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