Mont. AG reaches $2.3M settlement with FedEx

Keith Loria Oct. 20, 2010, 2:53pm


HELENA, Mont. (Legal Newsline) - Montana Attorney General Steve Bullock announced on Wednesday that he has reached a $2.3 million settlement with FedEx Ground for allegedly failing to pay proper unemployment insurance for its drivers.

Bullock's suit alleged that drivers were misclassified as independent contractors by the company and that FedEx Ground, a subsidiary of FedEx Corporation, owed the state unemployment taxes, penalties and interest on the drivers' behalf.

Bullock also alleged that drivers had very little control over their own business, were treated as employees and did not meet the qualifications to be independent contractors under Montana law.

"This is a basic issue of fairness," Bullock said. "Every worker in Montana deserves the fundamental protections provided by law, and no employer can deny those protections by misclassifying employees as independent contractors."

Under terms of the agreement, FedEx Ground will pay $2.3 million to reimburse Montana for its alleged losses and any unemployment insurance coverage already paid by drivers will be reimbursed directly to them. The remaining money will enter the state's general fund.

FedEx Ground admitted no wrongdoing in agreeing to the settlement, but agreed to implement a new pickup and delivery model in Montana. The company will also engage in good faith negotiations with other states that have charged similar accusations.

"This is a nationwide problem and it deserves a nationwide solution," Bullock said. "I'll continue to work with my colleagues across the country to make sure that FedEx Ground's drivers-and all workers-are provided the rights and protections they deserve."

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