Who Hijacked Our Country

Thursday, February 21, 2008

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!

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Anonymous Anonymous said...

Uhhh! I keep reading this and I can't find the part where Fed Ex gets off with a slap on the wrist and when fines are discussed they ask the Fed Ex chair "how much change do you have in your pocket?

That and/or the fine will be tax deductible


February 21, 2008 at 4:00 PM  
Blogger J. Marquis said...

Good for the IRS. I think unions and working people in general are gonna be in much better shape after the Dems take control in November.

February 21, 2008 at 5:46 PM  
Blogger Tom Harper said...

Erik: Yeah, it'll probably end in one of those 2 scenarios. I know FedEx is appealing the IRS' decision. But for now it's enjoyable to watch them squirm.

J: Yup, sometimes the IRS actually comes through. Unions and working people need to make a comeback. It's been a rough 7 years.

February 21, 2008 at 5:57 PM  
Anonymous Anonymous said...

FedEx Contractors have purchased their businesses and have created great private businesses. When did it become illegal in this country to be an entrepreuner? Your facts are wrong gentlemen. Learn the truth and not the fodder the teamsters are handing out.

February 21, 2008 at 6:28 PM  
Blogger Tom Harper said...

Anonymous: Did you even read the article linked in the post? These "independent contractors" drive FedEx trucks, wear FedEx uniforms and are under their bosses' thumbs. That does not an independent contractor make.

February 21, 2008 at 6:41 PM  
Blogger Randal Graves said...

Oh, Tom, didn't you ever think they ENJOY being subject to those rules, that they VOLUNTEERED? You lefties are always babbling on about civic volunteerism and helping your fellow men, and the best to way to help your fellow men is to increase the bottom line, rising tide and all that.

February 22, 2008 at 6:27 AM  
Blogger Tom Harper said...

Randal: Ah yes, that rising tide that lifts all yachts; how could I forget. Now that I think about it, these employees, I mean "independent contractors," must be just bursting with patriotic pride while they're letting themselves be squelched for the good of America.

February 22, 2008 at 11:56 AM  
Anonymous rockync said...

As a real estate broker, I work as an independent contractor. My time is my own. As a nurse, I work part time every other weekend in order to keep my license active. I don't get benefits, but I'm an employee because my time is not my own. They take out taxes, etc. These are the rules and everyone should have to abide by them.

February 22, 2008 at 6:06 PM  
Blogger libhom said...

If corporations put as much money and time into improving their products and services as they do into screwing over their employees, they would be much more profitable.

February 22, 2008 at 6:27 PM  
Blogger Kitchen Window Woman said...

FedEx misplaced our Michigan Xmas tree, lied, and brutalized it. I had to fight with them for a week before they got it to us. It was in town the whole time. When we finally got it 18 inches was missing off the top and the needles were dropping. We Charlie Brown-ed it but the aggravation was bad for blood pressure.

BTW - Blackwater USA run by twinkie militarist and Christian warrior, Eric Prince, also employs "independent contractors". Comforting, isn't it? Let's hope the IRS goes after Blackwater next!

February 22, 2008 at 7:21 PM  
Blogger Tom Harper said...

Rockync: Exactly. "Employee" and "independent contractor" are two different things. I've had both of those types of jobs (as I'm sure most of us have had), and there's no way to confuse the two. For the company, it's the best of both worlds to have their employees labeled as "independent contractors" so they aren't subject to any government protections and yet they're tightly controlled by company rules. For the employees it's the worst of both. I'm glad the IRS finally saw through this scam.

Libhom: That's so true. Nordstrom and CostCo are 2 companies I can think of that are supposed to be great to work for. Good pay and benefits, high employee morale -- and as far as I know, both of those companies are doing pretty well. Being anal retentive doesn't pay, but too many business people haven't figured that out.

KWW: I've heard a lot of stories just like that about FedEx and UPS; shipping companies in general I guess. And if an item gets damaged or lost, the shipping company says it's the manufacturer's fault and the manufacturer says it's the delivery company's fault. So the 2 companies just keep pointing the finger at each other and the customer ends up with the shaft.

February 22, 2008 at 7:40 PM  
Blogger Miss Kitty said...

For once, I'm cheering on the IRS. If only people would take a look at the billion$ in welfare handouts given to big corporations, as opposed to the just-a-few-billion (if that) in welfare given to people, they'd see who's REALLY scamming the government.

February 23, 2008 at 12:21 PM  
Blogger Tom Harper said...

Miss Kitty: I think you're right; those able-bodied lazy welfare recipients who pay for their steak and whiskey with food stamps are a drop in the bucket compared to the tax dollars being mooched by large corporations. Redefining their employees, using offshore tax shelters -- these companies are saving billions of dollars, and the cost gets passed down to us.

February 23, 2008 at 2:46 PM  
Blogger LET'S TALK said...

I was not aware of this Tom, I can see that they will be slapped with a $319 million tax bill. That is not including back taxes and the way IRS compound interest daily.

How could they think that this would fly this long and continue to get away with this type of scheme?

February 24, 2008 at 9:13 PM  
Blogger Tom Harper said...

Let's Talk: It's nice to see a large corporation finally get penalized for their sleazy actions. It's ironic that it took the IRS to do the job of our "regulatory" agencies. Now if they'd only crack down on companies that use offshore tax havens. That used to be called tax evasion.

February 24, 2008 at 11:33 PM  
Blogger LET'S TALK said...

Great point Tom!

February 25, 2008 at 2:46 PM  

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