A class of current and former FedEx Ground drivers misclassified as "independent contractors" will receive an additional $9 million in reimbursements for employment-related expenses, an appointed referee ruled October 20. This award will be combined with a previous award of $5.3 million the drivers received in 2006. The award will reimburse the drivers for such expenses as truck maintenance and registration, uniforms, fuel, and liability insurance. For more information on the drivers’ lawsuit, click here.
As this case shows, employers run a substantial risk by misclassifying its employees as "independent contractors." Not only can the misclassified employees bring lawsuits (for any number of reasons, such as unpaid overtime, minimum wage violations, family and medical leave issues, and more), but state and federal tax agencies can bring collection actions seeking unpaid payroll taxes, unemployment taxes and penalties.
Concerned that your independent contractor might be a misclassified employee? The IRS has this handy information on how to determine whether the employee is correctly classified. There is even an IRS form (Form SS-8) that you can file to seek the Service’s help in determining if your employee is correctly classified. Of course, if you believe that you have misclassified employees working as contractors, it might be a good time to contact your labor and employment attorney.