Indecisi0n
Well-Known Member
Way too many words to read through. Can you summarize it in two sentences please?
20 State Multi District Settlement
- Thread starter bacha29
- Start date
Since it pertains to a period of several years the mount should be itemized applied to each individual year. As for an accountant outside of a few job credits employer paid health care benefit credits employer 401K contributions and I know you're not doing anything like that, accelerated depreciation, NOL carryovers, aside from that there isn't a whole lot more a true CPA can lawfully do without professional risks or consequences. Besides Social Security alone is 15.30%.
Since you work for UPS what difference does it make how brief or detailed the post is?
UPDATE: After considerable delay I managed to get through to the settlement administrator regarding the proposed settlement. If anyone is considering challenging the number of qualifying weeks you have to get a copy of that information from FedEx. If you plan to challenge the weekly dollar amount , I asked the administrator for a copy of the formula used to determine that amount. They said that they would get back to me. Yeah right. There are two key issues. The fact that the guys in the 20 states are getting barely one fourth the CA weekly amount and the fact that they are going to lump it into one year taxed as ordinary income. The claimants are clearly deserving of knowing what formula was used to determine the final weekly amount and how much was a reimbursement for taxes and insurance the contractor paid years earlier
and the years to which it was applied. I read language in the actual proposed formal agreement that will be presented to the judge that indicates that the claimants are entitled to that information. Clearly the plaintiffs counsel wasn't looking for justice for their clients but just to do it in a manner that assured that they would get money for themselves.
and the years to which it was applied. I read language in the actual proposed formal agreement that will be presented to the judge that indicates that the claimants are entitled to that information. Clearly the plaintiffs counsel wasn't looking for justice for their clients but just to do it in a manner that assured that they would get money for themselves.
Consider challenging? That will be 99.9% of the class in my state! Copy of the formula? Picture a dart board with a dart each for insurance, biz support, etc. Where it lands is what it is! Except the board for you contains numbers that are a about half or less what you should receive.
What is currently being proposed is lumping the entire amount into one tax year by placing it one 1099 which is then taxed as ordinary income which includes federal income tax both the employer and employee share of social security as well as any state and local income taxes that may also apply. It then becomes imperative that every claimant receive a copy of the formula used to reach the weekly amount that can be presented to the IRS in an attempt to minimize the tax liability. Given that the 9th U.S. Circuit Court of Appeals had already ruled in favor of the plaintiffs clearly counsel for the plaintiffs in this class action should have gone ahead and let the 7th U.S. Circuit Court of Appeals decide the matter because given the way they are handling the proposed settlement the claimants aren't going to get anything out of it anyway.
You will not need to pay the employers share of Social Security taxes. Based on the court ruling, you were an employee.
The settlement is suppose to cover whatever costs you paid that are illegal to require an employee to pay in your state. In my mind, the extra approx 7.53% of FICA/Social Security/Medicare tax you paid plus the business support package are the clearest examples of what drivers should be compensated for. And even the FICA taxes are questionable. If you were classified as an employee at the time, you would have had FICA taken out at 7.53% on your entire paycheck, instead of paying about 15% on about half your income after expenses. In my case, FICA is about a wash, but fedex got away without paying it. I was making about $30 an hour gross, and netting about $18 an hour after expenses, but before taxes. I do resent the forced overtime hours that I didn't get paid for time and a half, but in my state, when I was at fedex, it wasn't required. Part of the settlement did add OT pay, but only for drivers who worked after the law was changed. Since every state has it's own laws about what employees can and cannot pay as an employee, each state would have different amounts drivers should get.
Lawsuits are supposed to make you 'whole' and not be a windfall. But if the award in the 20 states is really below what anyone thinks is right, they should write to the settlement agents and oppose it. Luckily(?) I am in a situation where I won't be paying more that about 10% total in taxes including FICA, if being lucky means being in a low bracket because you have low income.8i
Fedex should have faced state and federal tax liabilities, but ran the case out past the statute of limitations to escape it.
I personally am going to try to amend my taxes for the years covered going back to when I started even though you normally don't need to go back more than 3-5 years. Instead of deducting expenses on schedule C, I will deduct them on Schedule A as unreimbursed employee business expenses. This may result in a tiny tax liability, or not, but will have the effect of raising my gross income for determining Social Security benefit, if the IRS allows me to amend taxes more than 10 years old. But this doesn't probably apply to most. I retired and collect Social Security now, and my benefit was based mostly on income generated at the end of my working career. I'll probably have to fight both the IRS and Social Security to get them to accept changes from that long ago, but my SS benefits would be about $60 a month higher if I had been classified correctly by fedex.
I agree completely . If the payout is based in part on our having to pay the employer share of Social Security as well as work accident insurance which a true employer would have to pay in the form of workman's comp along with scanner rentals uniforms etc. then this part should be broken out of the settlement and be tax exempt. I do see that using Sch A as a way to correct the situation if all else fails. I appreciate the help very much. The sad part about all this is that some contractors are likely to see the payout as all free cash and do nothing in an effort to minimize the tax burden which could take a big chunk of their settlement especially if they're still contracting and taking the required salary. Add the lump sum settlement on to that salary they could really get hit.
Two cases are bad for contractors- either they are in a higher tax bracket now than back then, and they pay a higher % than they would have back then
or, even worse-
that this lump sum bumps them into a higher tax bracket this year and they end up paying a higher tax rate on the settlement AND a higher rate on this years income.
As far as WC, while I was still with fedex, they weren't yet requiring it. IN fact, it was the early group of us 'disgruntled' that started making them require UI and WC. In my case, two of my drivers tried to collect UI after I left, and fedex was determined to be the employer, not me. Fedex was required to pay UI and WC back taxes for those two, but just on those two drivers. Fedex didn't fight the tax because if they lost, and they would have, a legal precedent in the state would have been set. Fedex ALWAYS settles these employment cases when a loss is obvious. They stopped appealing my win of UI when it went to the state court of Appeals, where a ruling would have set a precedent the state could have enforced.
After the initial ruling for Fedex by Judge Clark a few years ago, fedex thought they had avoided a negative legal ruling, but when they lost in front of the federal appeal court, they knew they had to change their 'model' and figured they could get another 15 years from the ISP model, at a minimum.
or, even worse-
that this lump sum bumps them into a higher tax bracket this year and they end up paying a higher tax rate on the settlement AND a higher rate on this years income.
As far as WC, while I was still with fedex, they weren't yet requiring it. IN fact, it was the early group of us 'disgruntled' that started making them require UI and WC. In my case, two of my drivers tried to collect UI after I left, and fedex was determined to be the employer, not me. Fedex was required to pay UI and WC back taxes for those two, but just on those two drivers. Fedex didn't fight the tax because if they lost, and they would have, a legal precedent in the state would have been set. Fedex ALWAYS settles these employment cases when a loss is obvious. They stopped appealing my win of UI when it went to the state court of Appeals, where a ruling would have set a precedent the state could have enforced.
After the initial ruling for Fedex by Judge Clark a few years ago, fedex thought they had avoided a negative legal ruling, but when they lost in front of the federal appeal court, they knew they had to change their 'model' and figured they could get another 15 years from the ISP model, at a minimum.
Yesterday I sent a certified mail letter to counsel seeking answers to the 3 key questions regarding the proposed east coast settlement. In the letter I informed counsel that I am considering filing a formal objection to the proposed settlement and will do so if I don't receive honest answers to the the questions I raised. I pointed out among other things that counsel was more concerned with getting paid than they were obtaining justice for their clients as evidenced by the "let's just take what we can get and be done with it" type of settlement we too often see in the world today. I am however 99.99% certain that the letter will be ignored. I'll let you know if I hear something.
If you are in one of the states where settlement covers, it may actually be a good deal, depending on your states laws that control what an employer can ask employees to pay for. The business support package is almost universally going to be something an employer should pay, as is worker's comp if required by your state. Our biggest expense as fedex drivers was the vehicle expenses, and in 4 of the 5 states I've worked in, employers can require that employees use their own vehicle without direct compensation explicitly spelled out.
Since you signed a contract, you were told beforehand that your vehicle compensation was included in your pay. So fuel, maintenance, and vehicle payments would not be reimbursed as part of a settlement if it went to trial. Some things are just a matter of law, and fedex would fight tooth and nail to prevent any and every cent of any claim made in court. A settlement is a sure thing, and the only other option is a courtroom trial, and there is no way to know if we would even win on the merits of the employment status, let alone reimbursement of expenses, since we all knew ahead of time what expenses we were paying.
IN some of the 20 covered states. the offer may actually be better than what could ever be expected in a trial, and in some it would be worse. In Oregon, I think it was almost fair. My biggest complaint is that without a trial, fedex faces no penalty for the years of mis-classification. The statute of limitation has passed for most of those years for the states themselves to pursue criminal penalties or even tax penalties.
I had thought about objecting myself until I thought about it like this: If I had been correctly classified, would I have netted more income? I calculated that my earnings were usually comparable to what I would earn at $16-$18 an hour. I took my weekly pay, subtracted all my expenses including what the employer share of taxes would be, and divided by the hours I worked. All the hours of overtime were never compensated at time and a half though.
Then I thought about whether I wanted to wait another 3-4 years for a trial to take place, then if we won, for an appeal to happen, then more time while damages were determined, then an appeal on that issue.
I think that the lawyers ignored the ERISA claims for benefits we should have had since other fedex drivers doing the same thing got benefits like some retirement, 401k, paid holidays, vacations, etc. But those are federal claims, and I know that these settlements are based on state claims. I guess those erisa claims are gone for good.
Am I happy about the settlement? No, even though it kind of a windfall. I would never have taken the job had I known fedex would violate the whole concept of being an IC by demanding that I work whatever hours they demanded, and interpret the contract in terms most beneficial to them. I had a pretty sweet IC job working 4 days a week making about the same, and I was promised that I could work as little as I wanted as long as I delivered my one zip code, where I lived. Working part time right around my home was why I took the job.
For those whoare covered for all the years included in the lawsuit, even a smaller settlement can add up to a lot. I was only covered for 3 years and have been waiting ten years. I could be literally dead if it went to trial by the time it was over. But with the settlement, I can refinance my mortgage and save another nearly $100 a month, qualify for some programs to update my house and save another $50 a month on energy costs, and make my home more valuable. I can pay off the balance on my car, and save another $20 a month in interest I am paying.
There is a lot to weigh in deciding whether to object to the settlement. Based on the state laws, time frame, and benefits of a bird in the hand now, and maybe more hiding off in the bushes years from now, plus the fact that I'm hungry for a bird now, it was probably only a 55/45 decision not to object.
Thank you dmac1. I could live with the settlement if it could be structured in the way needed in order to minimize taxes. However based on what I'm hearing I believe that there will be an avalanche of objections filed over the east coast settlement. I keep you informed.
