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.

What is an Independent Contractor?



Independent Contractors function like a consultant or small business owner does, with full control over their work. They are their own boss. They can decide when they want to work and what their daily activities will be. If they want to take a day off or hire someone else to finish the job for them, they can. If they are engaged by by another business to perform a job, the other business has only the right to control the end result. The Independent Contractor has full authority to determine how that end result will be achieved. For example, a business may engage an Independent Contractor to custom-design some computer software to be used in their business. The business can specify what they want the program to do, but the Independent Contractor is free to decide when he or she is going to write the code, what programming language they will use, whether they will engage an assistant to help write code, and so on.

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