FedEx defends business model for independent contractors

MEMPHIS, Tenn. (AP) -- Top managers of the FedEx Corp. said they have no plans for major nationwide changes in the company's reliance on contract drivers for its ground delivery division.

Dave Rebholz, chief executive of FedEx Ground joined FedEx chief executive Frederick W. Smith on a late afternoon conference call Thursday with market analysts.

They underlined the company's confidence in defending the independent-contractor model against an IRS challenge.

The IRS issued a preliminary decision last month challenging FedEx Ground's use of contract drivers instead of company employees.

The decision, which FedEx vows to fight, assessed tax penalties and interest of $319 million.

Smith said most FedEx Ground drivers like running their own businesses as private contractors.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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