FedEx Ground has been in legal and tax battles for years over whether or not its independent contractors are considered company employees. Late last year, the Internal Revenue Service let the company off the hook for two audits related to independent contractor status.
However, contractors can no longer organize as partnerships or sole proprietorships; they are now required to incorporate under state law. Owner-operators are also required to treat their personnel as employees, according to reports by Dow Jones Newswires.
Dow Jones, which obtained the letter to contractors, said the company issued the standards "in response to recent concerns by several states," according to the letter. FedEx confirmed what the letter said, but would not comment on which states took issue with the company's owner-operator model, Dow Jones said.
Last year, FedEx won an appeal overturning a National Labor Relations Board regional ruling regarding FedEx Ground Home Delivery terminals in Massachusetts. A jury in Washington State also agreed that the drivers were contractors in a class-action suit.
Contractors were given at least 180 days to meet the new standards, Dow Jones reports.