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Attorney General Patrick C. Lynch has formed a working group with officials from seven other states to make sure that FedEx Corp., based in Memphis, Tenn., follows state laws involving the proper classification of workers.
The group sent a letter Wednesday to FedEx "to express our common concerns regarding the proper employment classification of FedEx Ground drivers." FedEx Ground Package System, one of FedEx's primary operating companies, generally provides ground delivery of small packages.
In a statement, Lynch said, "Misclassifying employees [as independent contractors] is a way for a company to shirk its obligations to its employees and the protections to which they are entitled." Misclassification, he said, would also allow a company to avoid paying the taxes it owes and gain an unfair advantage over its competitors.
"By joining with my colleagues in other states, we've signaled our willingness to work with FedEx Ground to make sure workers are protected under state laws and that the company -- not taxpayers -- are providing the benefits these workers deserve," Lynch said.
Other states involved in the group are Iowa, Kentucky, Missouri, Montana, New Jersey, Ohio and Vermont.
Ken Hall, Teamsters International vice president and director of the union's package division, said, "Federal and state agencies are taking action to make sure FedEx doesn't skirt the law and pays its fair share. Thanks to officials like these attorneys general, FedEx and CEO Fred Smith won't be allowed to profit from this scheme at the expense of its work force and the American taxpayers."
FedEx Ground is currently the subject of investigations by 30 states to determine if the company is misclassifying workers as independent contractors through its owner-operator model, the union said. Also, more than 45 class-action lawsuits have been filed against the company in state and federal courts over the misclassification issue, the union said.
In a statement issued Thursday night, FedEx spokesman Maury S. Lane said, "We are happy to work with the attorneys general to answer any questions they may have. The right of FedEx Ground independent contractors to own and operate their businesses has been repeatedly validated, most recently by the U.S. Court of Appeals for the D.C. Circuit. We are confident that our discussions with the AG's will be productive."
A federal appeals court in April ruled that FedEx Ground did not break federal labor laws when it refused to negotiate with a union that was bargaining on behalf of some of its workers who want to be classified as employees instead of independent contractors, the Associated Press reported.
In December, FedEx said it would pay $26.8 million to settle a case in California. The California Appeals Court had ruled that about 200 contractors who operated in the state were employees, not independent contractors, the Associated Press reported.
A Rhode Island General Assembly commission on Wednesday said that the state loses millions of dollars each year in state income tax and other taxes because some employers incorrectly classify employees as independent contractors. The commission did not name employers.
