FedEx Ground Could Be Out Nearly $100 Million from Recent Employment-Related Legal Actions and Tax Assessments

6/20/2006 8:00:00 AM


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To: National Desk, Business Reporter

Contact: Beth Ross, 415-771-6400

SACRAMENTO, Calif., June 20 /U.S. Newswire/ -- California's Employment Development Department (EDD) has found that FedEx Ground/Home Delivery, a subsidiary of FedEx Corporation (NYSE:FDX) owes the state nearly $8 million in back employment taxes after finding that thousands of its contracted drivers are actually employees who have been wrongly classified as independent operators and required to pay their own expenses, including employment taxes. The decision increases to nearly $100 Million the amount FedEx Ground has been either assessed or ordered to pay since December in damages as a result of challenges to its employment practices.

The California EDD finding applies to a three-year period ending in mid-2004, so the total amount of taxes owed the state may be significantly higher than the $7.888 million assessment. Its ruling is being appealed by FedEx before the California Unemployment Insurance Appeals Board, which resumes public hearings July 11 in San Bruno. In determining its assessment, the EDD concluded that the FedEx Ground drivers in California are subject to the complete and authoritative control over the manner and means by which they operate. Its ruling was consistent with California court decisions finding that the drivers are entitled to benefits as if they were classified as employees like other FedEx workers, including pick-up and delivery drivers. California is believed to represent approximately 20 percent of FedEx Ground's national business.

"The EDD finding validates the position of drivers in California -- and we think ultimately nationally -- that FedEx should be required to contribute to the state unemployment compensation, provide workers compensation, disability, and other employment benefits that protect these working men and women and their families," said Lynn Rossman Faris, the Oakland, California-based lawyer who represents drivers there and in the nationwide class-action lawsuit. "We think these recent cases only scratch the surface of what ultimately could cost the company hundreds of millions of dollars." Besides the California tax assessment, the following are recent cases decided since last December in which the misclassification of workers has been a significant issue:

-- Estrada v FedEx Ground, $5.3 Million State Superior Court award (plus $12.5 in court-imposed fees) for misclassifying California drivers as independent contractors.

-- Wieber v. FedEx Ground, $7.35 million awarded to a Portland, Oregon driver who was defrauded and unjustly terminated.

-- Issa v. FedEx Ground, $61 million awarded two California- based, Lebanese-American drivers for ethnic discrimination and harassment while maintaining a hostile workplace.

-- Vincent v. FedEx Ground, $3.75 million California jury verdict in a personal injury case in which the plaintiff demonstrated that the FedEx Ground driver was an agent of the company and not an independent contractor.

Faris also noted that earlier this month a Federal judge upheld the ERISA count in the nationwide class-action suit which is being litigated before the U.S. District Court in South Bend, Indiana. For further information, visit http://www.fedexdriverslawsuit.com.

http://www.usnewswire.com/

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/© 2006 U.S. Newswire 202-347-2770/

Good luck with that one!

ha, ha

Only in Cali. That will get overturned.

Is the whole country of Lebanon itself worth $61 Million?

Hmmm... Although, Brownstain, I'd say that's about how much you make a year flying an A380 for UPS, am I right?

Probably need that in Lebanon for the government employees' payroll - just like the Palestinians recently did - millions were brought back into the country in suitcases -

If it can happen to FedEx it can happen to UPS. Then BT would be furloughed, broke without a job, and have to take a job at American Eagle as a first year FO.

But regional pilots should NEVER lower themselves to THAT pay! HHmmmppff.... ::sticks up nose:: (just an immitation of BT)

Don't worry, BT will have to put up with first year FO pay when he gets his first airline job in 10 years. Last I checked, they don't hire 14 year olds.

Our drivers are employees, FedEx ground's aren't. That's what the whole things about.

100 Million is chump change to FedEx.

Their stock will definately take a hit.