FedEx Corp. on Thursday, Jan. 10, reiterated its confidence in the company’s ability to continue to grow its FedEx Ground business, gain market share and provide excellent service to customers as it responds to a tentative assessment by the Internal Revenue Service regarding the classification of its owner-operators at FedEx Ground as employees and not general contractors.
“FedEx recognizes its ground-contractor model faces challenges on several fronts,” said Frederick W. Smith, chairman, president and chief executive officer of the Memphis, Tenn.-based company. “We continue to aggressively address these issues, and we have strong defenses to these challenges.”
FedEx has announced that — in response to the IRS assessment Dec. 20 regarding the classification of its owner-operators at FedEx Ground — it is preparing to meet with the IRS audit team to review the assessment and to provide an initial response. FedEx expects that the meeting will occur in the spring and that a final resolution will not occur for some time. FedEx also alleged that some media reports concerning the matter have been inaccurate.
“We continue to believe that FedEx Ground’s owner-operators are properly classified, and the business remains fundamentally strong,” Smith said. “It is business as usual at FedEx Ground.”
The Teamsters blasted Smith’s assessment. “In defending FedEx Ground’s indefensible and illegal contractor model, FedEx managers and Fred Smith have lost all credibility,” said Teamsters General President Jim Hoffa. “FedEx Ground already changed their model in California because they lost in the state court there. FedEx Ground’s model is being challenged in state courts, in federal courts, at the National Labor Relations Board, by the IRS and now we learn by state tax authorities. FedEx can only hope to delay judgment day. FedEx should live up to the law and acknowledge that their Ground drivers are employees in short order.”