Moon-based FedEx Ground may have to pay the state of California millions of dollars in unpaid employment taxes and contributions.

A spokesman for FedEx confirmed that the California Employment Development Department issued an assessment against the company in the summer of 2004. The state audited FedEx because it believed that the company incorrectly considered many of its California drivers to be independent contractors rather than employees.

FedEx would not confirm the amount of the assessment, but the law firm of Leonard Carder LLC, which represents plaintiffs in a class-action suit against FedEx, pegged it at $7.8 million. That sum covers unemployment insurance, disability insurance and employment taxes for a three-year period ended in mid-2004.

FedEx said it has appealed the ruling, which only became public when appeal hearings began two weeks ago.

The company's use of independent contractors has become increasingly contentious in recent years, drawing efforts by the Teamsters to organize workers in Massachusetts and lawsuits from drivers in Pennsylvania, Tennessee, California and elsewhere.

Drivers filing the suits argue FedEx skirts worker protection laws by refusing to hire them as employees eligible for overtime pay, health insurance, workers' compensation and other benefits. They also seek to be reimbursed for back operating expenses and lost benefits.

FedEx Ground has countered that the number of suits represent a fraction of workers and that most of its nearly 15,000 drivers prefer owning their own trucks and manage their work load. It also says many owner-operators earn six-figure incomes.