| DATE |
TITLE |
| December 21 |
IRS Audits FedEx Ground, Penalties Assessed at $319 MILLION for 2002From FDX Corp’s 10-K of December 21, 2007: “On December 20, 2007, the Internal Revenue Service informed us that its audit team had concluded an audit for the 2002 calendar year regarding the classification of owner-operators at FedEx Ground. The IRS has tentatively concluded, subject to further discussion with us, that FedEx Ground’s pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of $319 million plus interest for 2002. Similar issues are under audit by the IRS for calendar years 2004 through 2006. We believe that we have strong defenses to the IRS’s tentative assessment and will vigorously defend our position, as we continue to believe that FedEx Ground’s owner-operators are independent contractors. Given the preliminary status of this matter, we cannot yet determine the amount or a reasonable range of potential loss. However, we do not believe that any loss is probable.”
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| December 21 |
FedEx Warns Investors and Ground/HD DriversFor the first time, FedEx Corporation publicly said regulatory and legal challenges to its employment classifications could result in costs detrimental to its stock price. FedEx Corporation said that FedEx Ground “anticipates continuing changes to its relationships with its contractors, which are expected to increase the cost of operations, and it is reasonably possible that such cost increases could be material.” That one sentence speaks volumes to both investors and FedEx Ground and Home Delivery drivers.
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| December 19 |
Mass AG Cites and Fines FedEx Ground $190,000Teamsters General President Jim Hoffa: “I applaud the just actions taken by Massachusetts Attorney General Martha Coakley in targeting the scofflaw FedEx Ground. FedEx Ground has for too long passed unnoticed as it calls its drivers ‘independent’ but illegally controls them like employees. But FedEx Ground is running out of places to hide. This action in Massachusetts is another nail in the coffin of FedEx’s illegal business model.”
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