FedEx Breathing Easier In Fight Against UPS, Teamsters, Pelosi – Maybe

Back in January, we posted an update on the lobbying war between FedEx and UPS over the question of regulating the former under the National Labor Relations Act as opposed to the Railway Labor Act it currently falls under. Developments this week merit a progress report on the fight.

FedEx is, at its core, an airline. Some 80 percent of its deliveries are made using air transport. As such, it was classified for regulation under the RLA because that law was written to govern labor relations in industries and firms crucial to the nation’s economic infrastructure – which includes railroads and airlines. Under the RLA, workers seeking to unionize must do so on a company-wide basis – they can’t do it locally, because with a sensitive, integrated network like a railroad or an airline has a local strike or work action could cause national disruptions. Most of FedEx’s drivers are actually independent contractors, and they like it that way.

The NLRA, on the other hand, governs UPS since it is, at its core, a trucking company. While FedEx’s packages go by air 80 percent of the time UPS’s packages are delivered over the road in 80 percent of cases. And while the RLA dictates that unions may organize a firm’s employees only on a company-wide basis the NLRA allows local organization. As such, while the only unionized FedEx employees are its pilots (who constitute just 5,000 of some 280,000 employees) most of UPS’s employees are members of unions with the Teamsters having the bulk of those.

Last May, the House of Representatives passed a 268-page gallstone of a bill to reauthorize the Federal Aviation Administration. In that legislation, a seemingly-innocuous 200-word provision in Section 806 which (per Congressional Research Services):

Amends the Railway Labor Act to extend coverage only to certain express carrier employees who are in positions eligible for certification under FAA rules and perform duties for such a carrier that are also eligible for such certification. Subjects all other express carrier employees to the National Labor Relations Act.

This was widely understood to apply to FedEx, and it set off a battle royale between FedEx on one side and UPS and the Teamsters on the other. The Senate has yet to pass the FAA reauthorization bill because of its ongoing paralysis with respect to Obamacare, and the FAA has been funded on a continuing resolution for a year. That continuing resolution expires at the end of the month, so this week the Senate bill has finally come up for debate. The Senate bill as it’s currently written does NOT have a Section 806 shifting FedEx to the NLRA.

This is where it has gotten a little interesting. After spending some $10 million in lobbying efforts last year in trying to protect its business model from being exploded by federal law, FedEx CEO Fred Smith put out the word that if his employees get reclassified he’ll pull out of a deal to buy 15 new planes from Boeing and cease planned investments in his air fleet. And Republican Sen. Bob Corker, who hails from Tennessee and as such is looking out for his Memphis-based constituent, has put a hold on the Senate bill in an effort to make sure the reclassification isn’t part of it.

Yesterday, Corker dropped his hold – ostensibly because he’s satisfied that FedEx isn’t getting skewered on the unionization gambit:

Laura Herzog, Corker’s press secretary, said the Tennessee Republican lifted the hold on the FAA Reauthorization Act “since it appears the controversial FedEx provision will not be included in the final Senate legislation.”

Corker and fellow Tennessee Republican Lamar Alexander have been in intense negotiations to keep the provision out of the Senate bill,  Alexander is fairly confident that it won’t be in the final legislation:

“I’ve met with both the Republican and Democratic Senate leaders, and we’re going to work to pass the Federal Aviation Administration reauthorization bill,” Alexander said late Wednesday. “At the same time, I’m going to do everything in my power to make certain that the final legislation doesn’t include a provision that changes labor laws simply to penalize FedEx.”

So far it looks like FedEx, Corker and Alexander can take it easy, right? Probably. But not so fast.

The Democrat who put Section 806 into the House bill was James Oberstar of Minnesota. Yesterday, Oberstar’s spokesman said he’s not giving up on the provision.

“Mr. Oberstar is not going to give up on this easily,” said his spokesman, Jim Berard. “We’ll just have to see when it goes to conference.”

“Chairman Oberstar wants workers who are doing essentially the same jobs to be treated the same way under labor law.”

And when Corker gave up his hold on the Senate bill, he didn’t just do it because Harry Reid gave him a guarantee in writing that Section 806 was getting deep-sixed. He also did so after getting hot-boxed by the surviving relatives of a bunch of plane-crash victims whose loved ones would presumably be alive today but for the FAA reauthorization bill and a few tighter regulatory provisions it contains (yes, government-by-sob-story is alive and well in D.C. Surprised?).

Corker’s meeting was a real mess, so much so that a true cynic can immediately smell the rat of hidden agendas at work:

Before the families’ meeting with Corker’s chief of staff Todd Womack, Robin Tolsma of Buffalo, whose husband died on Flight 3407, expressed the group’s frustration.

“My husband always had this saying: ‘Do the right thing even when no one is looking,'” she said. “It’s time for the senator to do the right thing because now everyone is looking.”

Jennifer West, whose husband, Ernie, died in the crash, said a Corker staffer told her that FedEx would be “devastated” if the labor provision of a House bill that FedEx is trying to kill made it into law.

“That really infuriated me because I thought ‘devastated?’ Talk to me about devastation. Everyone in this room is devastated. My 3-year-old daughter is devastated because she doesn’t have a daddy anymore,” West said.

Kevin Kuwik, an Ohio State basketball coach whose career started at Christian Brothers University in Memphis and whose girlfriend was killed in the crash, said delaying public safety over one company’s concerns was “ludicrous.”

“Essentially, what this says is that Tennessee is more important than the other 49 states,” he said. “It’s why people are frustrated with Washington.”

Like Oberstar’s spokesman says, we’ll see what happens in conference. But there’s one wrinkle behind this fight which nobody is talking about, and that’s the fact that beyond just trying to saw off FedEx’s superior business model UPS is also looking for someone else who can share its burden of paying for the Teamsters’ corrupt and underfunded pension fund, which had a hand in almost putting trucking giant YRC Worldwide into bankruptcy last year. The more companies the Teamsters can unionize the less desperate they are to hold off disaster with that fund – and with YRC’s near-miss bankruptcy fresh in their minds, UPS certainly isn’t going to give up on this issue, either.



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