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The Leadership Conference on Civil and Human Rights

The Nation's Premier Civil and Human Rights Coalition

The Leadership Conference on Civil and Human Rights  & The Leadership Conference Education Fund
The Nation's Premier Civil and Human Rights Coalition

Railroaded out of Their Rights: How a Labor Law Loophole Prevents FedEx Express Employees from Being Represented by a Union

Efforts to Bring FedEx Express’ Ground Transportation Employees Under The National Labor Relations Act: The FedEx Corporation’s No-Holds-Barred Campaign in Opposition

Because RLA coverage of FedEx Express’ ground transportation employees is unfair to the employees involved and gives FedEx Express an unwarranted competitive edge in the package-delivery industry, efforts have been made to level the playing field by bringing these FedEx Express employees under the NLRA.

Such efforts have proceeded on two fronts: litigation before the relevant federal administrative agencies (the NMB and the NLRB) and action by Congress.

Litigation

In 1991, the United Automobile Workers union (“UAW”) filed a petition with the NLRB seeking to represent under the NLRA a bargaining unit of FedEx Express employees in one of the company’s geographic districts – the “Liberty District” – which included portions of Pennsylvania, New Jersey, and Delaware.31 This bargaining unit would not have been appropriate under the RLA because it was not company-wide.

In its representation petition, the UAW acknowledged that pilots, aircraft mechanics, and other FedEx Express employees who performed airline work should remain subject to the RLA. The UAW contended, however, that the employees it sought to represent in the Liberty District – truck drivers, package handlers, and other ground transportation employees – did not perform airline work, and were not “integral to Federal Express’ air transportation functions.”32

Consistent with the “deferral” process described above, the NLRB asked the NMB to determine the applicability of the RLA to the employees covered by the UAW petition.33 On November 22, 1995, the NMB issued an opinion, in which it concluded that “Federal Express and all of its employees [including the ground transportation employees sought by the UAW’s petition] are subject to the Railway Labor Act.”34 In reaching this conclusion, the NMB began with the fact – which was not disputed by the UAW – that Federal Express is “a common carrier by air” within the meaning of the RLA,35 and it ruled that by virtue of such coverage, all of the employees sought by the UAW’s petition before the NLRB were subject to the RLA.36 The Act’s definition of an employee of an air carrier, the NMB noted,

includes every air pilot or other person who performs any work as an employee or subordinate official of such carrier or carriers, subject to its or their continuing authority to supervise and direct the manner of rendition of his service.37

That definition, the NMB stated, does not limit RLA coverage to air carrier employees who fly or maintain aircraft. Rather,

%its coverage extends to virtually all employees engaged in performing a service for the carrier so that the carrier may transport passengers or freight.38

The NLRB agreed with the NMB that the FedEx Express ground transportation employees sought by the UAW petition were covered by the RLA, and in turn not subject to the NLRA. Accordingly, in an opinion dated May 30, 1997, the NLRB dismissed the UAW petition, bringing to a close six years of administrative agency litigation.39 The analysis that was used by the NMB and the NLRB in reaching this conclusion suggests that RLA coverage of FedEx Express’ ground transportation employees is dictated by the language of the RLA itself, and that it would be necessary for Congress to amend the statute in order to change coverage.

Congressional Action

While the administrative agency litigation was pending, activity related to the labor law coverage of FedEx Express also was taking place in Congress. On December 29, 1995, the Interstate Commerce Commission Termination Act, which abolished the 108-year-old Interstate Commerce Commission (“ICC”), was signed into law.40 This Act contained a number of conforming amendments, one of which removed the term “express company” from the coverage provision of the RLA.41 Although it has been suggested that removal of the term was a technical error, it was more likely intentional, reflecting the fact that the Railway Express Agency (“REA”) – the express company that prompted inclusion of the term in the original 1926 enactment – had gone out of business more than two decades earlier.42 The Congressional Research Service agreed. After analyzing the history of the deletion, it stated “[s]ince the [RLA] coverage had been triggered by federal regulation of express companies, it appears logical and necessary to …. preclude ostensible coverage of nonexistent express companies [referring to the REA].”43

FedEx Express had relied on the RLA’s specific reference to an express company to argue that all of its operations, not just its airline operations, were subject to the RLA. Although, as indicated in the litigation discussed above, FedEx Express also relied on the language in the RLA that extended the act’s coverage to all of the employees of “every common carrier by air,” the litigation was at the time still pending and the outcome uncertain. The 1995 removal of the “express company” classification at the very least created an ambiguity in FedEx Express’ status, and FedEx sought to reinstate the language.

Despite opposition from unions, other package-delivery companies, and members of Congress sympathetic to labor – as well as charges of special interest legislation – FedEx and its political allies persevered in their efforts. Indeed, FedEx’s political allies tried to attach riders to some six separate bills without getting the reinstatement provision adopted. Eventually, Senator Ernest Hollings, D. S.C., reintroduced the provision as a rider to the Federal Aviation Administration (“FAA”) reauthorization bill in conference committee.44 The FAA reauthorization bill, which enjoyed extensive support apart from the FedEx provision, was to reauthorize the FAA and approve various airport security measures. Despite the fact that neither the Senate nor House versions of the bill contained the reinstatement provision, the conference committee approved it.45 The conference bill then went back to the House, where it was passed, substantially along party lines.46

When the measure was before the Senate for final passage, Senator Edward M. Kennedy, D. Mass., led an effort to block the legislation through a filibuster. During the debate, Sen. Kennedy declared:

Federal Express is notorious for its anti-union ideology, but there is no justification for Congress becoming an accomplice in its union-busting tactic.47

Sen. Russ Feingold, D. Wis., was equally pointed in his comments, stating that:

This provision is designed exclusively for this single company, Federal Express, to allow it to impose special barriers to block unionization efforts among employees who transport cargo by truck … Federal Express, and my colleagues who support their provision, understand how much more difficult it would be for Federal Express’s truck drivers to unionize if they have to organize all of their employees nationwide as opposed to being able to form local unions.48

After four days of debate, FedEx was able to obtain enough votes to end the filibuster. The bill then passed, definitively establishing that FedEx Express was an “express company,” and that its ground transportation employees were for that reason alone subject to the RLA. FedEx pulled out all the stops in its effort to obtain this legislative change, and, after it succeeded, observers noted the company’s extraordinary legislative access and political power. “I was stunned by the breadth and depth of their clout up here,” declared Sen. Feingold.49 “The sky’s the limit for Federal Express when it wants to get its own customized regulatory protection made into law,” said Joan Claybrook, President of Public Citizen.50 In a report on FedEx’s victory, The New York Times concluded that the company “has become one of the most formidable and successful corporate lobbies in the capital.”51

It is hard to quarrel with these assessments, inasmuch as the reinstatement provision was impossible to defend as anything other than special interest legislation. And, indeed, FedEx’s congressional supporters made little attempt to defend the provision on its merits. Thus, Sen. Hollings – who introduced the provision as a rider to the FAA reauthorization bill in conference committee – openly acknowledged that he did so based largely on his gratitude to FedEx for using its aircraft to fly hay to his home state during the droughts a decade earlier.52 Rep. Bud Shuster, R. Pa., who in 1996 was chairman of the House Transportation and Infrastructure Committee and a member of the conference committee who voted to approve the provision, was quoted by the media as saying “I have been instructed by my leadership to accept this.”53

In sum, by 1997 it had been established that the ground transportation employees of FedEx Express were covered by the RLA on two separate grounds – as employees of an “express company” by virtue of the rider to the FAA Reauthorization Act adopted by Congress on October 3, 1996, and as employees of a “common carrier by air” by virtue of the decision issued by the NLRB on May 30, 1997.

After reinserting the term “express company” into the RLA in 1996, Congress did not deal with the labor law coverage of FedEx Express for more than a decade. In 2007, Rep. James Oberstar, D. Minn., introduced a rider to the FAA Reauthorization Act of 2007. This rider – which was titled the “Express Carrier Employee Protection” Amendment – sought to amend the RLA to remove FedEx Express ground transportation employees from the coverage of the RLA and make them subject to the NLRA.54 Unlike the action that was taken by Congress in 1995, the Oberstar amendment did not simply remove the “express company” classification from the RLA, because that would not have achieved the desired result: in light of the May 30, 1997, NLRB decision (and the November 22, 1995, NMB opinion on which it was based), the FedEx Express ground transportation employees would remain subject to the RLA as employees of a “common carrier by air.” Accordingly, Rep. Oberstar’s 2007 amendment took a more refined approach.

The Oberstar amendment retained RLA coverage for an “express carrier,” which was defined to mean any company “whose primary business is the express shipment of freight or packages through an integrated network of air and surface transportation,”55 a definition that would include FedEx Express, UPS, and most other major package-delivery companies. But under the amendment, not all employees of an express carrier would be covered by the RLA.


Paragraph one of the Oberstar amendment limited RLA coverage to an express carrier’s employees in positions that are eligible for FAA certification, such as pilots, aircraft mechanics, and others who perform functions that are directly related to the company’s airline service. The paragraph provided that “[a]ll other employees of an express carrier shall be covered by the provisions of the National Labor Relations Act.”56 To deal with the alternate basis for RLA coverage of FedEx Express’ ground transportation employees that was relied on by the NMB and the NLRB, the second paragraph of the Oberstar amendment provided that “an express carrier shall be governed by paragraph (1) notwithstanding any finding that the [company] is also a common carrier by air.”57

The House approved the FAA Reauthorization Act of 2007 – with the Oberstar amendment to the RLA. But the amendment was not included in the Senate version of the bill,58 and efforts to reconcile the two bills were unsuccessful. The FAA Act was not reauthorized, and it has received temporary extensions since its expiration in 2007.59

In 2009, Rep. Oberstar, then chairman of the House Transportation and Infrastructure Committee, reintroduced his RLA amendment as a rider to the FAA Reauthorization Act of 2009. On May 21, 2009, the House approved the FAA Reauthorization Act – again with the Oberstar amendment to the RLA.60

Following House passage of the FAA Reauthorization Act of 2009, the matter moved to the Senate, where FedEx once again mobilized its considerable resources in an effort to keep FedEx Express’ ground transportation employees under the coverage of the RLA. In this effort, FedEx used even more aggressive tactics than it had in the past.

In June 2009, FedEx began an intensive advertising and public relations campaign, contending that the effort to cover FedEx Express’ ground transportation employees under the NLRA amounted to a government “bailout” of UPS. As part of this campaign, FedEx launched a website – BrownBailout.com (referring to the fact that “Brown” is UPS’ nickname, as well as the color of the company’s trucks and its employees’ uniforms). In an effort to capitalize on public antipathy toward the recent bailouts of leading firms in the financial sector, as well as two of the “big three” U.S. auto companies, the website claims that UPS is “quietly seeking a congressional bailout designed to limit competition for overnight deliveries.”61

But this is clearly not a “bailout” as that term is commonly understood. UPS is not seeking any federal funds or loans, and the provision in question does not offer UPS any special competitive advantage. To the contrary, it would do precisely the opposite, and create a level playing field by covering the ground transportation employees of FedEx Express, UPS, and other package-delivery companies under the same labor law – the NLRA.

Using another unorthodox tactic, FedEx, in March 2009, warned that if Congress covers the FedEx Express’ ground transportation employees under the NLRA, the company might cancel a $10 billion contract with Boeing to purchase 30 freighter planes.62 This threatened cancellation would impact not only Boeing, but also General Electric, which manufactures Boeing’s engines. Neither company had been involved in the debate about whether the NLRA should apply to FedEx Express.

After the House passed the FAA Reauthorization Act of 2009, with the Oberstar RLA amendment, and the matter was under consideration in the Senate, Fred Smith, FedEx’s founder and CEO, repeated and expanded on these threats. In a March 2010 interview, Smith warned that if the House language is included in the final version of the bill, FedEx would be forced to cut capital spending, slash the $2 billion it invests each year in FedEx Express, cancel the planned purchase of extra aircraft, and redeploy cash.63

FedEx’s assertion that these cost-cutting measures would be necessary if FedEx Express’ ground transportation employees were brought under the coverage of the same labor law that applies to similarly situated employees of other package-delivery companies reflects a line of reasoning that is clearly specious. To begin with, the scenario posed by FedEx assumes that if FedEx Express’ ground transportation employees are covered by the NLRA, they will choose to be represented by a union. To be sure, such coverage may make it easier for those employees to unionize, but it is by no means a given that they will do so. As noted in the next section of this report, FedEx has a well-established policy of union avoidance, and it can be expected to adhere to that policy regardless of the labor law that covers its employees.

FedEx’s reasoning is flawed in another respect as well. It is one thing to assume that, as a result of NLRA coverage, FedEx Express’ ground transportation employees will choose to be represented by a union, and that the union will succeed in negotiating improved wages, benefits, and working conditions. But it is quite another thing to assume – as is implicit in the scenario posited by FedEx – that a company such as FedEx Express, with its management savvy and business acumen, will simply accede to union demands that would so significantly worsen its financial condition as to impair its ability to remain competitive. This is hardly a credible scenario, and FedEx’s threats should be taken for what they are – an attempt to enlist the support of Boeing, General Electric, and other “neutral” companies as allies in the Congressional debate.

On March 22, 2010, the Senate passed its version of the FAA Reauthorization Act. The Senate bill does not include a counterpart to the provision in the House version that would bring the ground transportation employees of FedEx Express under the coverage of the NLRA.64 The existing FAA Act, which has received temporary extensions since it expired in 2007, was scheduled to expire on March 31, 2010, but a further 90-day extension has been granted, and the House and Senate now have until June 30 to reconcile the two bills. 56 It is unclear at this time what procedure will be followed in an effort to reconcile the differences in the two bills – primarily, the dispute over the Oberstar amendment in the House bill. The traditional way for the House and Senate to resolve their differences once they have each passed differing versions of the same bill is to appoint members to a House/Senate conference committee. There is some question whether that procedure will be followed in this case, or whether a less formal procedure will be used.

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