Thursday, January 3, 2013

Texas says FedEx misclassifies drivers, FedEx fighting back

FedEx  is suing the Texas Workforce Commission after it ordered the company to pay unemployment insurance taxes for its drivers.

As Teamsters well know, FedEx misclassifies many of its drivers as “independent contractors” and claims it doesn't have to pay the unemployment insurance tax.

The Dallas Morning News says the company was ordered to pay about $1 million from 2005 until now  to cover the unemployment insurance tax. FedEx argues that its “independent contractor” relationships are legitimate and the contractors are themselves paying unemployment insurance taxes.

The lawsuit was filed Dec. 21. The State of Texas denied all allegations, arguing that it is immune from the lawsuit. The newspaper reports,
Memphis-based FedEx accuses the state of double dipping by attempting to collect unemployment taxes from both the company and from its hundreds of independent contractors across the state. 
The lawsuit, which was filed Dec. 21, is garnering a lot of attention from other major corporations that use independent contractors in the state, including AT&T, TimeWarner Cable and energy retailers. 
“This case is being watched very closely by a lot of major companies, workers and the state because there’s a lot of money involved,” said Richard Carlson, who teaches employment law at the South Texas College of Law. 
“The courts have struggled with this debate for about 100 years and have gone back and forth on whether some workers are contractors or employees,” Carlson said. “These cases are very close calls and are extremely fact-intensive...”
Attorneys general in New Jersey, New York and Montana announced in October that they would sue FedEx if the company doesn’t reclassify 12,000 of its drivers as employees. Those states say they are owed tens of millions of dollars in payroll taxes.
Stay tuned...