Teamsters State California Audit Determines FedEx Owes $7.8 Million to the State
Posted on: Tuesday, 20 June 2006, 15:00 CDT
WASHINGTON, June 20 /PRNewswire/ -- A California audit has found that FedEx Ground and FedEx Home Delivery owe the state $7.88 million in back tax payments. The audit found that unemployment insurance coverage was wrongly paid by drivers and not by the employer FedEx Ground. The California audit of FedEx Ground covered the years 2002 to 2004 and included more than 2000 drivers.
The figure and audit report were cited in a series of appeal hearings of the California Unemployment Insurance Appeals Board beginning on June 7, 2006. FedEx is appealing the audit conclusions.
The issue over the employee classification of drivers at FedEx Ground and FedEx Home Delivery is the subject of administrative review and litigation across the country.
The California Employment Development Department audit determined that the company's single route drivers were employees -- not "independent contractors" as claimed by FedEx.
State auditors who testified at the appeal hearings cited many examples of FedEx Ground control over the drivers -- such as control over clothing, control over vehicle condition, control over package delivery techniques, control over equipment and control over daily package volume -- as factors to determine an employer-employee relationship.
The FedEx Corporation in its 2005 Annual Report (Form 10-K) with the Securities and Exchange Commission stated, "FedEx Ground is involved in numerous purported class-action lawsuits and other proceedings in which the threshold issue is whether some or all of FedEx Ground's owner-operators are in fact employees, rather than independent contractors. Adverse determinations in these matters could, among other things, entitle certain of our contractors to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax liability for FedEx Ground."
Multiple state authorities are reviewing FedEx Ground compliance with state laws on wage and hour rules, workers' compensation, unemployment insurance, and income taxes. A group of drivers is pursuing a national class action lawsuit that claims FedEx failed to offer pay, benefits and leave due employees under both federal and state laws.
The judge in that case recently ordered that Employee Retirement Income Security Act claims by drivers' in all states for benefits from FedEx Ground would remain in the suit. The California audit determination supports the drivers' charges that FedEx Ground and Home Delivery pick-up and delivery drivers are wrongly classified and are employees.
The International Brotherhood of Teamsters efforts at monitoring FedEx bad practices can be found at http://www.fedexwatch.com/.
International Brotherhood of Teamsters
CONTACT: Galen Munroe of International Brotherhood of Teamsters,+1-202-624-6904
Web site: http://www.teamster.org/http://www.fedexwatch.com/
Source: PRNewswire
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