Mr. Smith flexes his muscle in Washington

FedEx Corp. chairman Frederick W. Smith has always had good friends in the U.S. Senate. Those with long memories may remember the near-unconditional support given to Smith and FedEx by former Sen. Jim Sasser (D-Tenn.) in the 1980s and 1990s, for instance.

In mid-July, the Senate again stepped up to the plate for Smith by introducing bipartisan legislation that did not contain a provision that would have made it easier for unions to organize workers at the corporation's FedEx Express unit.

The provision, which had been included in the version passed by the House of Representatives in May, would have brought FedEx's express operations under the jurisdiction of the National Labor Relations Act (NLRA)—the same law that covers rival UPS Inc.—instead of the Railway Labor Act (RLA), which today covers FedEx Express employees. The NLRA, which permits workers to be organized at a local, terminal-byterminal level, is considered a much easier path to unionization than the RLA, which requires that workers at a company be organized as a single unit.

The language that would have reclassified FedEx Express's operations under a different labor law was introduced by Rep. James L. Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee. Currently, all FedEx Express employees are covered by the RLA, a 1926 law that governs labor relations in the airline and railroad industries, whether they're air-based workers (like pilots) or workers who aren't directly involved in aircraft operation and maintenance (like loaders or delivery truck drivers). Oberstar's provision would have permitted the RLA classification for only those express carrier employees who are pilots and airplane mechanics, and perform the type of work governed under that law. He said the provision would "remove the disparity in current law" between the express operations of FedEx and UPS.

Clash of the titans
Though he has won provisional Senate support—at this writing, the bill had not been voted out of the Senate Commerce Committee, where it was introduced—Smith is taking no chances. On June 9, FedEx rolled out an online campaign called "Brown Bailout" warning of the dire consequences of bringing FedEx's express operations under the jurisdiction of the NLRA. A change in labor classification could result in a "hidden package tax" of more than $5 billion and deprive businesses of rush deliveries and consumers of needed medicines, among other potential disruptions, FedEx said.

On its Web site, FedEx warned that representation under the NLRA would give unions the power to call job actions within a city or a region, creating a ripple effect across the FedEx network and leading to delays of time-sensitive deliveries to and from the affected area.

UPS spokesman Malcolm Berkley says FedEx Express is the only company in U.S. transportation whose drivers, sorters, and loaders are covered by a labor law designed for airline workers instead of ground-service employees. He believes it is only fair that FedEx workers be subject to the same rules that govern their counterparts at UPS. "We think that if you do the same work, you should be covered under the same law," he says.

FedEx has been virtually non-union since its founding in 1972, with only its pilots today represented by organized labor. FedEx already has more than 100,000 non-airline employees who are eligible to be covered under the NLRA but who remain non-unionized.

Berkley says FedEx's campaign is based on a "bogus premise" that a change in union classification will trigger a dramatic shift in FedEx's labor structure, affect its operations, and drive up its labor costs. He notes that thousands of FedEx employees who for decades could have been organized under the NLRA have chosen not to be represented by organized labor.