This just fresh out of the Dallas Morning News paper: Texas political leaders frequently boast about how friendly the state’s regulators are to businesses compared with the federal government and other states. In a new lawsuit, global mail and package shipper FedEx Corp. disagrees. FedEx Ground Package System is suing the Texas Workforce Commission for ordering the company to pay unemployment taxes for its drivers, whom the company classifies as independent contractors. The company says the TWC ruling could cost it $1 million from 2005 to present. In addition, Memphis-based FedEx accuses the state of double dipping by attempting to collect unemployment taxes from both the company and from its hundreds of independent contractors across the state. The lawsuit, which was filed Dec. 21, is garnering a lot of attention from other major corporations that use independent contractors in the state, including AT&T, TimeWarner Cable and energy retailers. “This case is being watched very closely by a lot of major companies, workers and the state because there’s a lot of money involved,” said Richard Carlson, who teaches employment law at the South Texas College of Law. “The courts have struggled with this debate for about 100 years and have gone back and forth on whether some workers are contractors or employees,” Carlson said. “These cases are very close calls and are extremely fact-intensive.” Texas Attorney General Greg Abbott’s office did not respond to requests for an interview, but in court documents, the state writes that it denies “each and every allegation. ”The Texas AG argues that the lawsuit should be dismissed, saying the state is immune from such litigation. But the state does not directly address any of the factual or legal arguments in FedEx’s claim. The Texas suit is not unique. FedEx is involved in more than two dozen lawsuits across the United States regarding the classification of its drivers. Most have been filed in federal court by FedEx drivers demanding they receive the benefits that come with full-time employment. Attorneys general in New Jersey, New York and Montana announced in October that they would sue FedEx if the company doesn’t reclassify 12,000 of its drivers as employees. Those states say they are owed tens of millions of dollars in payroll taxes. In the cases that have progressed in the courts, judges have tended to side with FedEx. Legal experts point out that the IRS under the Obama administration has been friendlier to the assertion that FedEx drivers are contractors, reversing a $319 million tax assessment against the delivery company in November. The FedEx lawsuit against Texas primarily comes down to a single question: How much control does the company have over the worker? In its petition, FedEx stresses how independent its drivers are. “FedEx Ground contractors are responsible for exercising significant independent discretion and business judgment to achieve the agreed upon business objectives and results,” the suit states. “FedEx Ground imposes no set work hours, routine or schedule on the contractors or their workers.” The company notes that the contractors own their trucks, that FedEx does not help them with financing equipment and that the contractors can deliver for companies other than FedEx, though not for UPS, which lists its drivers as employees. FedEx points out that the contractors create their own companies, which in turn employ the drivers. Independent legal experts familiar with the case tend to side with FedEx. “FedEx appears to meet the tests of what is legally required for independent contractors,” said Mark Shank, a partner at Gruber Hurst Johansen Hail Shank. “These FedEx contractors appear to own multiple trucks and have their own employees driving the trucks,” says Shank, who teaches employment law at SMU Dedman Law School. “I’m surprised by the position the TWC is taking in this case.” Michael Maslanka, an employment law expert at Constagy, Brooks & Smith in Dallas, says the challenge for the courts in deciding the case is how dependent the drivers are on FedEx for their livelihood. “FedEx has had pretty good success winning this issue just about every time it has come up,” Maslanka said. “The Texas Workforce ruling is the aberration.” Sutherland Asbill & Brennan litigation partners Kent Sullivan and Sean Jordan represent FedEx in the suits filed in state court in Austin. Sullivan is a former state district judge in Austin. Jordan is a former deputy solicitor general for the Texas attorney general’s office. No hearing dates in the case have been set.