FedEx Class Action Defense In Labor Law Class Action Lawsuits Braces For Impact Of IRS Ruling That FedEx Ground-Delivery Personnel Are Employees Rather Than Independent Contractors
Corey Dade of The Wall Street Journal reports today that the Internal Revenue Service has dealt a blow to FedEx in connection with labor law class action claims. Dade reports that the IRS “has determined that the roughly 13,000 independent contractors for Fed Corp.’s U.S. ground-delivery business in 2002 were, in fact, employees and assessed the company $319 million in back taxes and fines.” The article, based on information disclosed by FedEx in a filing with the Securities and Commission, characterizes the IRS ruling as “the most significant blow to an embattled model whose low operating costs have been critical to [its] rapid growth.” But FedEx has been hit with scores of lawsuits, including several class action suits alleging labor law violations. FedEx will reportedly appeal the IRS ruling, so the impact of the ruling on pending lawsuits is uncertain.
Corey Dade’s article, entitled “IRS Deals FedEx Setback on Classification of Workers,” may be found on page A4 of the December 22, 2007 edition of The Wall Street Journal.