Independent Contractor Compliance Blog

According to an article in Telegram.com, based in Worcester, Massachusetts, the state attorney general’s office announced FedEx Ground agreed to pay Massachusetts $3 million to settle claims the company misclassified its drivers as independent contractors.

The article reports that, “The attorney general said the company had gained an unfair competitive advantage by classifying the drivers as independent contractors rather than employees.”

www.telegram.com/article/20100716/NEWS/7160413

FedEx Ground is paying but says it did nothing wrong.

Even though the company denied liability in the settlement the Massachusetts Attorney General’s Office determined that the courier company underpaid payroll taxes, workers’ compensation premiums and unemployment insurance taxes because it misclassified its drivers as IC’s.

In addition, “…the settlement includes a payment for 13 drivers named in the Massachusetts Attorney General’s citation,” said Harry Pierre, spokesman for the attorney general’s office. The article reported the workers would receive $15,000 each.  Typically these settlement amounts are to reimburse the drivers for expenses and overtime.

FedEx Ground’s misclassification problems in Massachusetts and across the nation are not over yet.

FedEx Ground drivers in Massachusetts still have a lawsuit pending against FedEx Ground that is not affected by this settlement, according to the Massachusetts Attorney General’s Office.

In addition, there are at least 63 other civil lawsuits, in 40 other states, involving some 27,000 drivers not connected to the Massachusetts Attorney General’s settlement still pending, according to information from Leonard Carder LLP, an attorney connected to this case.

The courier company is still trying to find a way to make its drivers IC’s.

According to the article, “…FedEx Ground did not admit to any wrongdoing in the settlement and FedEx spokesman Maury Lane said the company will institute a new independent service provider model in Massachusetts that will allow independent delivery contractors to negotiate contracts with the company for specific delivery areas.”

Boston lawyer Shannon Liss-Riordan, who sued FedEx five years ago in U.S. District Court alleging that the company misclassified drivers as independent contractors, said the company’s plan to institute a new business model in negotiating contracts for drivers will violate the state’s independent contractor laws.

“We’ve been in touch with the attorney general’s office on this,” she said. “The attorney general has not signed off on FedEx’s new model, and we expect to challenge it.”

No job for a Weekend Warrior.

If you want to use independent contractors properly, and avoid this kind of entanglement, engage an expert like Collabrus to help you, then take their advice.