Independent contractor case sounds a loud warning.The pending class-action case against FedEx Corp. is a clarion call clarion call Noun strong encouragement to do something for companies with a network of independent contractors A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another's control except for what is specified in a mutually binding agreement for a specific job. to get their houses in order, experts say--or face potentially damaging legal action or audit charges. At issue is FedEx's policies involving independent contractors, mostly drivers for FedEx Home Delivery or FedEx Ground FedEx Ground is a shipping company headquartered in Moon Township, Pennsylvania, a suburb of Pittsburgh. Originally a small regional package shipping company called Roadway Package System (RPS), it was created to be a discount competitor to UPS. . FedEx has classified them as contractors, responsible for buying or leasing their trucks, paying for all operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , liability and workers compensation insurance, fuel, maintenance, etc. An evolving class-action lawsuit alleges that the company really has an employer-employee relationship with the drivers and should be paying them benefits, allowing business deductions Noun 1. business deduction - tax write-off for expenses of doing business entertainment deduction - deduction allowed for some (limited) kinds of entertainment for business purposes and more. Suits had been filed in at least 28 states, but have been consolidated under a U.S. District Court in Indiana, where the time-consuming process of discovery and certification of the class is expected to take place this spring and summer. Andrew Schultz, president of PrO Unlimited, a company that handles contingent labor force issues for large companies, warns that companies need to be careful about how they act in this area--and be sure that what they have in writing is reflected by policies in the field. FedEx's competitors have more of explicit "employee" relationship with their workers, he says, which--on the surface, at least--gives FedEx a huge competitive edge in terms of savings on benefits, insurance and other worker-related costs. [ILLUSTRATION OMITTED] Larger companies need to look at all their independent contractors and make a judgment on each worker as if they were being audited, Schultz argues. If they don't, he suggests, they leave themselves open to major claims by federal and state taxing authorities. The contractor issue has become "a revenue-generator for the government," he adds. More than 90 percent of completed corporate audits find at least some problem in the company's treatment of independent contractors, Schultz says. Possibilities of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. simply add to the potential financial damage. Some published reports have put FedEx's potential legal liability as high as $1.5 billion. Schultz concedes that a settlement would be likely at some point, yet the cost could still be far higher than it was for lesser cases involving Microsoft Corp., Time-Warner and IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) Corp. |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion