FedEx Fined for Misclassifying Employees as Independent Contractors
The Internal Revenue Service has fined FedEx $319 million for misclassifying employees as Independent Contractors. For years, FedEx has treated its drivers at FedEx Ground as Independent Contractors despite several rulings that found the drivers to be employees of FedEx.Why do Businesses Misclassify Employees?
The most common reason to misclassify workers is to save money. Businesses cheat workers out of workers' compensation and unemployment benefits by classifying them as Independent Contractors. Businesses also avoid having to pay their half of Social Security and Medicare taxes, forcing workers to pay the full 15.3 percent themselves. Independent Contractors are also excluded from protection under many federal laws, such as the Civil Rights Act, minimum wage laws, occupational safety and health laws, discrimination laws, and so on. Businesses may also misclassify workers in hopes of avoiding workers organizing for union representation. Federal law only recognizes an employee's right to union representation, not an independent Contractor's. To secure union representation, workers must first prove that they are employees.
- 1. FedEx Fined for Misclassifying Employees as Independent Contractors
- 2. Why do Businesses Misclassify Employees?
- 3. What is an Independent Contractor?
- 4. What is an Employee?
- 5. Why are FedEx Drivers Ruled as Employees?
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