CHARLESTON, W.Va. -- Attorneys general from three states are threatening to sue the nation's second-largest package delivery company this week, accusing FedEx of violating labor laws by classifying drivers as independent contractors.

Attorneys General Andrew Cuomo from New York, Steve Bullock from Montana and Anne Milgram from New Jersey plan to sue FedEx Ground Package System Inc. on Tuesday unless the company "can demonstrate why litigation should not be commenced ... no later than October 27, 2009."

The lawsuit will "address widespread, long-term and unlawful employment practices engaged in by FedEx," stated an Oct. 20 letter to FedEx on Cuomo's letterhead.

By classifying truck drivers as independent contractors, rather than as company employees, FedEx avoids paying taxes, workers' compensation premiums and health benefits.

Ken Hall, president of Teamsters Local 175 in South Charleston, is a Teamsters International vice president who heads negotiations with United Parcel Service, whose drivers and warehouse workers are represented by the union.

"FedEx Ground has been cheating its workers and fleecing taxpayers for too long," Hall said. "Cuomo, Bullock and Milgram deserve credit for standing up to a powerful multinational that pads its profits by skirting state laws."

Maury Lane, FedEx's national communications director in Memphis, Tenn., said on Friday that UPS and the Teamsters are working together to hurt FedEx.

"The Teamsters and UPS hire lobbyists to file complaints against us, anonymously, about this 'contractor model.'

"They are going after our ground contracts. UPS is losing ground to FedEx. We have owner operators who own their businesses and are doing well. Some make over $1,000,000 in [annual] revenues."

Lane said the news media should not write about any lawsuit until it gets filed.

"They have not sued us. And because someone sues you doesn't mean you are wrong," Lane said. "They have not filed a lawsuit. We are in the middle of trading information."

Officials in 30 other states, including Ohio and Kentucky, also have sent letters to FedEx stating they are investigating its employee classification policies.

West Virginia Attorney General Darrell McGraw has not yet commented on the ongoing dispute.

"This is real simple," Hall said on Friday. "FedEx is not paying unemployment taxes or workers' compensation taxes. It comes down to an issue of fairness.

"Dozens of companies deliver packages in West Virginia. They all pay taxes for their employees, except for FedEx," Hall said.

Lane said the dispute is "a very complex issue going on for four or five years. It is a UPS-led assault.

"In West Virginia, 85 percent of all truck drivers are independent contractors. The people who deliver your newspapers are independent contractors. Most nurses are independent contractors. So are dentists and doctors. Why is there an attack on American small businessmen?" Lane asked.

 Cuomo's Oct. 20 letter to FedEx argues the company's drivers are not independent contractors.

"FedEx strictly controls all aspects of the work of drivers doing FedEx pick-up and delivery. Hours are strictly prescribed by FedEx; drivers have almost no discretion as to what hours they work," the letter states.

"Drivers' uniforms are mandated by FedEx, even down to the colors of drivers' socks."

Most drivers are required to buy their own trucks, but "are only allowed to use their own trucks for non-FedEx purposes if the trucks are used outside of FedEx working hours," the Cuomo letter states.

Hall said, "FedEx has received more than $1.3 billion from the federal government to provide services, including a $1 billion contract with the U.S. Postal Service.

"They are eager to take taxpayers' money for their services, but don't want to pay their fair share of taxes," Hall said. 

Last month, the Internal Revenue Service announced it plans to ask FedEx to pay $14 million in taxes, and penalties, it did not pay in 2002 for drivers providing "home delivery services," according to a Form 8-K FedEx filed with the U.S. Securities and Exchange Commission.

A federal judge in Indiana is considering 40 different class-action suits filed by drivers from 39 states about how FedEx classified them as independent contractors.

"The suits have 275 named plaintiffs," Hall said. "But they cover about 13,000 current FedEx Ground drivers nationwide and up to another 13,000 former drivers."

@tag:Reach Paul J. Nyden at pjny...@wvgazette.com or 304-348-5164.

CHARLESTON, W.Va. -- Attorneys general from three states are threatening to sue the nation's second-largest package delivery company this week, accusing FedEx of violating labor laws by classifying drivers as independent contractors.

Attorneys General Andrew Cuomo from New York, Steve Bullock from Montana and Anne Milgram from New Jersey plan to sue FedEx Ground Package System Inc. on Tuesday unless the company "can demonstrate why litigation should not be commenced ... no later than October 27, 2009."

The lawsuit will "address widespread, long-term and unlawful employment practices engaged in by FedEx," stated an Oct. 20 letter to FedEx on Cuomo's letterhead.

By classifying truck drivers as independent contractors, rather than as company employees, FedEx avoids paying taxes, workers' compensation premiums and health benefits.

Ken Hall, president of Teamsters Local 175 in South Charleston, is a Teamsters International vice president who heads negotiations with United Parcel Service, whose drivers and warehouse workers are represented by the union.

"FedEx Ground has been cheating its workers and fleecing taxpayers for too long," Hall said. "Cuomo, Bullock and Milgram deserve credit for standing up to a powerful multinational that pads its profits by skirting state laws."

Maury Lane, FedEx's national communications director in Memphis, Tenn., said on Friday that UPS and the Teamsters are working together to hurt FedEx.

"The Teamsters and UPS hire lobbyists to file complaints against us, anonymously, about this 'contractor model.'

"They are going after our ground contracts. UPS is losing ground to FedEx. We have owner operators who own their businesses and are doing well. Some make over $1,000,000 in [annual] revenues."

Lane said the news media should not write about any lawsuit until it gets filed.

"They have not sued us. And because someone sues you doesn't mean you are wrong," Lane said. "They have not filed a lawsuit. We are in the middle of trading information."

Officials in 30 other states, including Ohio and Kentucky, also have sent letters to FedEx stating they are investigating its employee classification policies.

West Virginia Attorney General Darrell McGraw has not yet commented on the ongoing dispute.

"This is real simple," Hall said on Friday. "FedEx is not paying unemployment taxes or workers' compensation taxes. It comes down to an issue of fairness.

"Dozens of companies deliver packages in West Virginia. They all pay taxes for their employees, except for FedEx," Hall said.

Lane said the dispute is "a very complex issue going on for four or five years. It is a UPS-led assault.

"In West Virginia, 85 percent of all truck drivers are independent contractors. The people who deliver your newspapers are independent contractors. Most nurses are independent contractors. So are dentists and doctors. Why is there an attack on American small businessmen?" Lane asked.

 Cuomo's Oct. 20 letter to FedEx argues the company's drivers are not independent contractors.

"FedEx strictly controls all aspects of the work of drivers doing FedEx pick-up and delivery. Hours are strictly prescribed by FedEx; drivers have almost no discretion as to what hours they work," the letter states.

"Drivers' uniforms are mandated by FedEx, even down to the colors of drivers' socks."

Most drivers are required to buy their own trucks, but "are only allowed to use their own trucks for non-FedEx purposes if the trucks are used outside of FedEx working hours," the Cuomo letter states.

Hall said, "FedEx has received more than $1.3 billion from the federal government to provide services, including a $1 billion contract with the U.S. Postal Service.

"They are eager to take taxpayers' money for their services, but don't want to pay their fair share of taxes," Hall said. 

Last month, the Internal Revenue Service announced it plans to ask FedEx to pay $14 million in taxes, and penalties, it did not pay in 2002 for drivers providing "home delivery services," according to a Form 8-K FedEx filed with the U.S. Securities and Exchange Commission.

A federal judge in Indiana is considering 40 different class-action suits filed by drivers from 39 states about how FedEx classified them as independent contractors.

"The suits have 275 named plaintiffs," Hall said. "But they cover about 13,000 current FedEx Ground drivers nationwide and up to another 13,000 former drivers."

@tag:Reach Paul J. Nyden at pjny...@wvgazette.com or 304-348-5164.