New York Attorney General Andrew Cuomo has filed suit against FedEx, alleging that the company's decision to label its delivery drivers "independent contractors," rather than "employees," deprives them of a range of benefits to which they would otherwise be entitled, in violation of state labor laws.
The suit, filed in New York state court on Thursday, says that FedEx "has the power to control, and does in fact control, almost all aspects of its drivers' work," including "hours, job duties, routes, and even clothing ... The drivers are clearly perceived by the public to be employees."
The suit goes on to point out that drivers are required by FedEx to buy or lease their own trucks and secure their own insurance plans.
Suit follows Montana settlement
Coincidentally enough, FedEx agreed on Wednesday to settle a similar suit brought by Montana's attorney general. Under that agreement, FedEx will pay $2.3 million to cover the costs of unemployment insurance, including insurance that was previously purchased by drivers themselves.
Despite Cuomo's claim that his suit was spurred solely by negotiations that "broke down," a cynic might wonder whether the Montana settlement was enough to convince him of the likelihood of winning his own case. Indeed, Montana Attorney General Steve Bullock had framed his suit in terms strikingly similar to those used by Cuomo.
"This is a basic issue of fairness," Bullock said of the Montana case. "Every worker in Montana deserves the fundamental protections provided by law, and no employer can deny those protections by misclassifying employees as independent contractors."
But, then again, by Bullock's own admission, his settlement did relatively little for drivers. As little as $100,000 of the $2.3 million settlement will pay drivers for their own unemployment insurance costs; the rest will reimburse various Montana agencies that are still owed taxes on that insurance. And, critically, FedEx will not be required to reclassify its "independent contractors" as "employees."
"This settlement does not provide any assurance that we won't be back fighting a year from now," Bullock told ABC News. "One thing we do know, it's not going to be the degree of control that the state found they've been exercising over these guys the last few years."
An ongoing issue
One thing is for sure: this is an issue that FedEx has been fighting for years, and it doesn't look likely to go away anytime soon.
According to an August filing with the Securities & Exchange Commission (SEC), at least 30 class action suits have been filed over the dispute to date.
A private lawsuit brought by FedEx drivers got mostly tossed from court in June, with a federal judge in Indiana ruling that the workers -- who were seeking full benefits, including medical, dental, and retirement plans -- had to exhaust internal company remedies before seeking the courts' assistance.
Cuomo smacks down FedEx's political attack
No matter what happens, the issue is sure to provide fodder for countless attorneys general to come, an angle that FedEx sought to play up in responding to Cuomo's suit.
Rather than issue the typical boilerplate statement denying liability and predicting that the suit will be laughed out of the courts, FedEx used the filing as an opportunity to attempt to discredit Cuomo, who is hoping to become New York's Governor-elect on November 2.
"It is disappointing that in the midst of his campaign for governor Attorney General Cuomo would choose to destroy that many jobs in New York," said FedEx spokesman Maury Lane, adding that the suit is "a real assault on the American working class."
Cuomo's office shot back with equal force.
"Any suggestion that the Attorney General's office handling of this case is improper is absurd," said Cuomo spokesman John Milgrim in a statement. "This office and a group of other states had been negotiating with FedEx for months. The case was filed, as was a similar case by Kentucky, when those discussions broke down."
FedEx, it could be noted, is not exactly throwing its political stones from a house made of anything solid. Longtime CEO Frederick W. Smith is a high-profile Republican who was touted as a potential Secretary of Defense for George W. Bush in 2000, and as a possible running mate for John McCain in 2008.