When Sleazy Companies Shortchange Their Workers, It Can Get Expen$ive
Three cheers for the IRS! As hated as they are, sometimes they end up doing the jobs of our government “regulators,” using the term loosely.
The IRS has ruled that FedEx is no longer entitled to receive hundreds of millions of dollars worth of welfare payments. These handouts were being given by FedEx workers to their bosses.
Here's how the scam worked: 13,000 FedEx employees were reclassified as “independent contractors.” The IRS ruled that this classification was incorrect, and that FedEx illegally “saved” $319 million in taxes in 2002. The IRS is still auditing FedEx for 2004 through 2006.
The Teamsters Union — who's been pushing this case — thinks FedEx could ultimately owe the IRS a billion dollars.
Companies save a fortune when they redefine their employees as “independent contractors.” A company doesn’t have to pay workers’ compensation, unemployment or disability taxes, Social Security or Medicare taxes to an independent contractor. Independent contractors also aren't subject to minimum wage laws and they have no government guarantee of a safe work environment.
It must have seemed like the best of both worlds for FedEx: they could keep their workers straitjacketed with a million company regulations, and then wiggle out of paying their fair share of taxes by calling them “independent contractors.” Fun’s over, Assholes.
If you want to decide whether these FedEx workers are employees or independent contractors, take the “DUUHH” test: they use FedEx equipment, they wear FedEx uniforms and they work under strict FedEx rules. Independent contractors???
cross-posted at Bring It On!