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December 26, 2007
Massachusetts Accuses FedEx of Misclassifying Drivers

Massachusetts Attorney General Martha Coakley has fined FedEx Ground Package System $190,000, alleging that the company intentionally misclassified 13 drivers as independent contractors rather than as employees.

The Attorney General's office says FedEx Ground violated the Massachusetts Independent Contractor Law by misclassifying the drivers, failed to provide a proper pay stub, failed to provide workers' compensation, failed to pay overtime to certain drivers, and neglected to deduct and withhold state income taxes.  In addition to the penalties, the citations require FedEx Ground to rectify the violations and provide restitution to the 13 drivers.

The Massachusetts Independent Contractor Law provides that an individual performing any service shall be considered to be an employee unless: (1) the individual is free from control and direction in connection with the performance of the service, both under his or her contract for the performance of service and in fact; and (2) the service is performed outside the usual course of the business of the employer; and, (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. 

Attorney General Coakley's office commenced an investigation during the summer of 2007 after receiving a driver's complaint.  Investigators alleged that FedEx Ground intentionally violated all three prongs of the Independent Contractor Law by directing and controlling the activities of drivers and restricting the drivers' ability to deliver for any other entity.  In addition, the investigation found that the drivers are performing the core business of FedEx Ground.

The company has 10 days from receipt of the citations to inform the Attorney General's office whether it intends to appeal the citations.  An appeal would be heard before the Division of Administrative Law Appeals (DALA), an administrative agency within the Commonwealth of Massachusetts ' Executive Office of Administration and Finance.