Conservatives continue to find themselves split in the fight between FedEx and UPS over a bill to place FedEx Express drivers under the same law as every other package delivery driver. And many who are on the FedEx side are there simply because FedEx is non-union and, hey, conservatives don’t like unions, right?
But this isn’t about unionization. This is about the government treating two package delivery companies – both of which use air and ground transportation to provide their services – equally by placing their operations under the same federal labor laws. That’s it.
On its new anti-UPS website, FedEx claims the proposed change would “force the world’s most efficient airline to operate under trucking rules that have never applied to airlines.” But is FedEx Express an airline….or a package delivery company?
When FedEx was originally founded it was deemed an airline because it flew important documents from one city to the next which would otherwise take days, weeks or months if delivered via the speed and efficiency of the government’s postal service. As such – and using the same kind of government logic which named the agency in charge of everything outdoors the Department of Interior – its employees were placed under the Railway Labor Act (RLA).
The fact that this set of labor laws was created with choo-choos in mind before Al Gore invented massive air transportation indicates that a serious re-write of this law is long overdue, but that’s an issue for another day.
In any event, FedEx Express drivers – again using the kind of logic which only makes sense in government – were place under the same choo-choo law which governs airlines. And they’ve remained under this classification even as the company shifted heavily into the package delivery business after Al Gore invented the fax machine, making expensive overnight document delivery less of a necessity.
So along comes a bill (H.R. 915) which would keep FedEx Express’s actual airline employees under the Railway Labor Act while moving its non-flying truck drivers over to the National Labor Relations Act (NLRA) with all the other non-flying truck drivers in the package delivery industry. FedEx is objecting because of the special anti-unionization benefits the company currently enjoys under the Railway Labor Act.
I fully understand WHY FedEx doesn’t want to give up this special government benefit, but that doesn’t mean it’s right.
Bear in mind we’re not talking about FedEx employees and support personnel who fly packages around the country here. We’re talking about drivers delivering packages AFTER they’ve arrived by air. And we’re not talking about driving the packages from the plane to a warehouse next to the airport. We’re talking about delivering the packages from the plane right to the door of your home or office.
More on that in a second, but first let’s take a look at the top 20 U.S. airlines and their employees.
According to the Bureau of Transportation Statistics for 2007, American Airlines – which has the largest number of pilots and co-pilots of any airline – has zero “Transport Related” employees (truck drivers). United, Delta, Southwest, USAirways and Continental have zero truck drivers. Northwest has 165 truck drivers and Mesa has 4. But Express Jet, Sky West, American Eagle, Jet Blue, Comair, Airtran and Alaska have zero truck drivers. Heck, even UPS has zero truck drivers in its own airline operation.
But FedEx lists 86,979 truck drivers.
Huh? Why does FedEx – which is claiming to be an airline in order to be covered under the Railway Labor Act – have 86,810 more truck drivers in its “airline” operation than all of the other top 20 U.S. airlines put together? Obviously something ain’t kosher here.
To continue enjoying its special benefit under the law, FedEx Express is claiming that its drivers are “integrated” into the air operation and, therefore, employees who drive packages around town after they arrive at the airport should be considered airline employees.
Now think about that for a minute. The argument here is that both FedEx and Delta are airlines – only one moves passengers and the other moves packages. But once Delta moves its passengers from one airport to the next, those passengers find non-airline modes of ground transportation, such as taxis, to get from the airport to their final destination. While few can fly from one city to another, plenty can drive from the airport to, well, anywhere.
What FedEx is essentially claiming is that it has “integrated” a taxicab operation for packages into its air operation and that the taxicab operation should be treated like Delta rather than treated like Yellow Cab. That’s absurd. Calling a ground transportation company an airline doesn’t make it one. A rose by any other name and all that.
FedEx Express’s argument that its drivers are airline employees just doesn’t fly. Unless FedEx Express’s 86,979 express delivery drivers suddenly become Peter Pans and begin flying your packages right to your front door and then fly off to the next door – think Flight of the Bumblebee – they ought to fall under the same federal law as every other express delivery driver in the industry.
Equality under the law. Why, it’s as American as….well, FedEx.
#1 by James Moore on June 20th, 2009
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Something you failed to mention was Fedex ground drivers are actually independent contractors not employee’s. Fedex ground, formally RPS, have allows been a company that paid their drivers as independents. They each own their own truck and their contract is based on the numbers of packages they deliver. This was never a problem for UPS when the company was called RPS because there was no name recognition. That is one of the primary purposed behind Fedex acquiring the business. Frankly UPS has been getting their butts kicked while Fedex continues to expand their business. Kinko’s/Fedex is another example of this expansion. Maybe it’s time for UPS to think outside the brown box. I am not a Fedex employee or contractor.
#2 by DGHarrison on June 21st, 2009
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All the reasons why FedEx should be dumped from the RLA notwithstanding, I still support any company that has the balls to thumb their noses at unions. On the other hand, FedEx’s cozy relationship with the U.S. Postal Service is, for me, a major strike against them. I believe it is an unfair advantage that FedEx is able to operate from inside USPS facilities. Odd, too, that an non union operation is even allowed access to facilities operated by one of the biggest unions in the country.
#3 by chuckmuth on June 22nd, 2009
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Actually, I’m VERY well aware of FedEx’s abuse of the independent contractor law and wrote about it over a year ago. You can check it out HERE and HERE. And considering all the red ink FedEx is bleeding over at FedEx/Kinkos, I’m not so sure you want to be using that as an example of business genius.
#4 by James Moore on June 23rd, 2009
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I like the fact that you’re able to hyperlink your response to your past articles, very helpful.
I agree Fedex needs to operate like an employer or contractor but should not blur the lines and be allowed to wander the line. You can’t have your cake and eat it too. I do respect Fedex’s right to operate as a contractor and subcontract the delivery to independent contractors. It’s no different than what the USPS does with mail routes in rural areas of the country. Fedex drivers are more like franchisees than independent contractors. Under the guidelines spelled out by the IRS there are many franchisee businesses that treat their franchisees more like employees than “owners”.
Who didn’t lose money in the 4Qtr of last year? Personally I would have never bought Kinko’s. All someone has to do is go into one and try and find someone that knows what the heck they are doing. I think the people working in Kinko’s would be better off offering tattoo’s and piercings than printing and copies. Joking aside, the Fedex stores have been successful and proof of that is UPS purchase of Mailbox Etc.
I am interested in running for state assembly where should I start?
#5 by Phil Jordan on June 24th, 2009
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James, just to clarify – UPS purchased Mail Boxes Etc. (now The UPS Store) BEFORE FedEx purchased Kinkos. Also, FedEx Kinkos (now FedEx Office) has never made a profit – you can check their 10K and annual statements online. As of the last operating quarter they’ve bled just over $1 billion (yes, with a “b”). That’s not 4Q 2008. That’s the last fiscal year. You want to really do some fun research, compare FedEx and UPS’s financials. Balance sheets, credit ratings, debt to earnings, etc. FedEx is leveraged to the hilt.
#6 by FedEx 4 Life on June 29th, 2009
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The point is simple: Customers pay FedEx Express to ship their packages from point A to B – point B being the ultimate destination. You’ve outlined a great business plan for the next generation passenger airline. : )
#7 by Keith Helms on June 30th, 2009
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If this reallt is’nt about unionization why not move ups to to the rla instead of the other way around. Problem solved
#8 by Eddie Nogoy on July 2nd, 2009
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Why not let the FEDEX drivers vote on the issue ? They must have their say because it’s their livelihood that’s being decided upon. Same work should be governed by the same law.
#9 by CM on July 2nd, 2009
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James – your actually off base here. This has nothing to do with the Fedex Ground drivers, only the Fedex Express drivers that are covered under the RLA. The Fedex ground units are currently goverened under the NLRA. Yes, you read that correctly and let me repeat that that:
The fedex ground drivers are currently governed by the NLRA not the RLA
#10 by Jeff on July 6th, 2009
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Oh James…with all due respect, you might want to make sure that you have your facts straight before staking a run for an assemblyman. First, FedEx Kinko’s has NEVER turned a profit. When it was just Kinko’s, they did in fact turn a profit. Nevertheless, it was Fred Smith’s mistake of paying $1B for it–it was never worth that much. As for UPS Stores (or Mailboxes, Etc.), they are all independent franchises–a much smarter business model with streamlined services. Moreover, take a look at the latest w/ eight AG’s going after FedEx’s owner-operator model. Bottom line: Those who operate the trucks lose (no benefits, workmen’s comp insurance, UI, employee protection laws); States lose (UI, State payroll taxes, etc); Feds lose (Taxes) and so on.
I am an HR professional who isn’t so much pro-union, but I certainly am for parity amongst two exact businesses when it comes to laws.