FEDEX
Corporation's trucking segment, FedEx Ground, has reached a
tentative US$228 million settlement with drivers of the company in
California who were classified as independent contractors instead of being
employees of the firm in the seven years up to 2007.
The
settlement agreement is still subject to approval by the United States District
Court for the Northern District of California, American Shipper reported.
FedEx vice president
Christine Richards
said the settlement "resolves claims dating back to 2000 that concern a
model FedEx Ground no longer operates".
As a result
of the agreement in principle, the company said it took a $197 million pretax
charge in its fiscal 2015 fourth quarter, which ended last month, to account
for the expense.
Investment advisor
William Blair
said in an equity research report that due to the fact FedEx no longer operates
the independent contractor model, "we do not believe there is a significant
risk of this settlement spilling over into other states; however, litigation is
admittedly not our expertise and can be difficult to predict".
Mr Blair
estimates the company's revenues will increase three per cent to $12.2 billion
in the fiscal fourth quarter of 2015. For the full fiscal 2015 year, the
investment firm projects revenues will rise four per cent to $47.6 billion.
Source :
HKSG.
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