FedEx Lawsuit and the Use of Independent Contractors

Interesting article on MSN Money on a lawsuit between express delivery company FedEx and the IRS.  The suit is over the employment status of FedEx's fleet of drivers.  FedEx classifies them as independent contractors - the IRS claims they are really FedEx employees. 

The issue is money. The IRS claims it loses billions of dollars in payroll taxes due to under-reporting by contractors.  FedEx sees the use of contract drivers as a way to save money and make their operation more efficient. 

The suit has huge implications because: (1) companies of all sizes are increasingly using contract workers; and (2) a growing number of people are choosing to work as independent contractors. 

This used to be much simpler issue from the standpoint of the independent contractors - they almost always wanted to become full-time employees.  Unlike contractors, full time employees have half their social security paid for by the company, receive benefits and, generally speaking, have a more secure employment relationship.

But more people are looking for contract work.  They are seeking the flexibility and work/life balance advantages contract work brings.  Many believe their contract wage rate coupled with the additional freedom more than make up for lost benefits.  They also feel that being independent is actually more secure these days than working for a company. 

The suit has major implications on the use of contractors by both large and small businesses.  If the IRS wins it will be mcuh harder for corporations to use contractors.  This, of course, it will impact the growing number of independent workers who are choosing contract work relationships. 

It is a lawsuit - and issue - worth following. 

Comments

[Lawsuit Cash]

Such a case reminds us a lot.The job and the business changes have great relations.

[Anita Campbell]

I agree, Steve, this is an issue worth following.

It used to be that having a "good job" was key to security. But when corporate loyalty went out the door, the only security became your own skills and abilities -- and your ability to market them.

Many professionals have chosen to market them through individual contractor status where they control the growth and expansion of their skills, rather than getting pigeonholed in a job where your skills may become valuable only to that single employer -- an employer who may have to let you go in a round of cost-cutting or because its business changes.

Anita