FedEx to stay with contractors (US)
Top managers of FedEx Corp. said last week they have no plans for major changes in the company’s reliance on contract drivers for its ground delivery division.
“We’re continuing to operate with our independent contractors, so you have to go from that premise,” said Dave Rebholz, Chief Executive of FedEx Ground.
Rebholz joined FedEx Chief Executive Frederick W. Smith on a conference call with market analysts to underline the company’s confidence in defending the independent-contractor model against a challenge by the IRS
The IRS issued a preliminary decision last month challenging FedEx Ground’s use of contract drivers instead of making its drivers employees. The decision, which FedEx vows to fight, assessed tax penalties and interest of USD million. The IRS decision is the latest in a series of attacks, primarily through lawsuits, on FedEx Ground’s independent-driver business model.
But Smith said most FedEx Ground drivers like running their own businesses as private contractors. “There are millions of people in this country who have chosen to work for themselves,” Smith said. “I personally believe that’s what freedom is all about.”
While declining specifics on the company’s arguments, general counsel Chris Richards said FedEx will begin meeting in the spring with the IRS over its decision.
Following a legal challenge to the contractor model in California, FedEx is offering financial incentives to single-route drivers there to encourage them to give up their routes or take on multiple routes.
Top managers of FedEx Corp. said last week they have no plans for major changes in the company’s reliance on contract drivers for its ground delivery division.
“We’re continuing to operate with our independent contractors, so you have to go from that premise,” said Dave Rebholz, chief executive of FedEx Ground.
Rebholz joined FedEx chief executive Frederick W. Smith on a conference call with market analysts to underline the company’s confidence in defending the independent-contractor model against a challenge by the IRS
The IRS issued a preliminary decision last month challenging FedEx Ground’s use of contract drivers instead of making its drivers employees. The decision, which FedEx vows to fight, assessed tax penalties and interest of USD million. The IRS decision is the latest in a series of attacks, primarily through lawsuits, on FedEx Ground’s independent-driver business model.
But Smith said most FedEx Ground drivers like running their own businesses as private contractors. “There are millions of people in this country who have chosen to work for themselves,” Smith said. “I personally believe that’s what freedom is all about.”
While declining specifics on the company’s arguments, general counsel Chris Richards said FedEx will begin meeting in the spring with the IRS over its decision.
Following a legal challenge to the contractor model in California, FedEx is offering financial incentives to single-route drivers there to encourage them to give up their routes or take on multiple routes.
