Worker Classification Litigation on the Rise—An Analysis of the Ninth Circuit's FedEx Case and Its Lessons for Tax Practitioners

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

Abraham Lincoln reportedly asked, “If you call a dog's tail a leg, how many legs does a dog have?” His answer was, “Four. Calling a dog's tail a leg does not make it a leg.” Similarly, when businesses classify workers, they must consider a variety of factors. Simply labeling a worker as an independent contractor is insufficient and may expose the business to potential worker classification audits by both state and federal agencies. In this article, using the Ninth Circuit's FedEx Ground case as a guide, Bruce Ely and Sims Rhyne discuss salient issues for businesses and their tax advisers when classifying workers.