Rockefeller opposes change to FedEx labor classification

The chairman of the Senate Commerce Committee said he will not support legislation that contains language reclassifying the air unit of FedEx Corp. under a different set of labor laws, comments that deal a blow to organized labor, FedEx's chief rival, and his counterpart in the House of Representatives—all of whom have been pushing aggressively for the change.

Sen. Jay Rockefeller (D-W.Va.) told Dow Jones Newswires late Thursday that there isn't enough Senate support to assure passage of the controversial provision and make it part of legislation to fund operations of the Federal Aviation Administration (FAA). The language, which would require most employees at FedEx Express to be governed by the National Labor Relations Act (NLRA) rather than the current Railway Labor Act (RLA), is contained in the version of the FAA funding bill passed last year by the House of Representatives. It is not included in the version that subsequently passed in the Senate.

"I know perfectly well if I put that in the bill ... it's not going to pass," Rockefeller was quoted by Dow Jones as saying. Rockefeller told the news service that he personally supports the provision.

Rockefeller's views are significant in that he chairs the Senate committee where the FAA funding bill originated. He is also a member of the political party considered to be more sympathetic to the agenda of organized labor. The Teamsters union has been a vocal proponent of the reclassification.

The controversial language, originally proposed in the House by Rep. James L. Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, would require all FedEx employees except for pilots and aircraft mechanics to be covered under the NLRA, a law that governs labor-management relations in virtually every U.S. industry, including trucking. FedEx has been treated as an airline since its inception, and its express operations are governed by the RLA, which covers workers in the airline and railroad industries.

The reclassification would enable FedEx Express workers to organize at the local level instead of nationally as one bargaining unit. The change would make it easier to unionize portions of FedEx Express's workforce, which is a key factor in the Teamsters' support of the provision. Teamster officials did not return an e-mail request for comment.

Jim Berard, the chief spokesman for the House committee, said Oberstar and Rockefeller met on June 16 to discuss the FAA funding legislation. However, Oberstar did not disclose whether Rockefeller discussed the FedEx provision, according to Berard.

Up-Hill battle?
Despite yesterday's setback, there are no indications Oberstar is backing off from the fight. The two versions of the FAA funding bill are currently being reconciled by House-Senate conferees, with a final version expected sometime around July 4. Berard said that Oberstar will try to get the provision included in the reconciled version, and that his hand will not be forced by the possibility of a filibuster—a procedural tactic to block a vote—by Republican Senators Lamar Alexander and Bob Corker, both from FedEx's home state of Tennessee.

"Oberstar is not going to be deterred by threats from the Senate," Berard said.

Resistance from the Senate may not be Oberstar's only challenge, however. At this time, House support for the Oberstar measure does not appear to be unanimous. Rep. John L. Mica (R-Fla.), the committee's ranking member, was quoted April 4 on the C-Span television network as saying that "many in the House opposed [the provision] on both sides of the aisle. Let's take the controversial things and put them aside and move forward with this bill."

Mica's comments may reflect some lawmakers' concerns that the FedEx provision jeopardizes the passage of a "clean" FAA long-term funding bill and is preventing the federal government from moving ahead on appropriating badly needed funds to modernize the nation's air traffic control system.

Long-standing dispute
The labor issue has long been a source of controversy in the industry. UPS Inc., FedEx's chief competitor, supports the provision, arguing that workers like drivers or sorters who have nothing to do with airline operations should not be covered under a labor law reserved for rail and air carriers. UPS's own operations are covered under the NLRA; in the early 1990s, the Atlanta-based giant sought its own reclassification under the RLA, but its request was rejected by both the National Labor Relations Board—which oversees the NLRA—and then by a federal appeals court.

FedEx opposes any change to its labor classification, saying the courts have ruled that its air and ground operations are part of one fully synchronized airline, and that one could not exist without the other.

The Memphis-based company has warned that any local work stoppages could have an adverse ripple effect across its entire system, compromising the reliability of its delivery network and forcing it to spend billions of dollars to implement contingency plans, costs that would ultimately be borne by shippers and consumers.

FedEx Chairman and CEO Frederick W. Smith, who has little tolerance for organized labor, has made this a "line in the sand" issue. He has threatened to withdraw a multibillion dollar order for as many as 30 Boeing 777 freighters should the final bill contain language requiring the change in labor classification.

A question of equity
Meanwhile, the debate over the FedEx provision has extended beyond the transportation and congressional realms. The Leadership Conference on Civil and Human Rights, a group co-founded in 1950 by the legendary black labor leader A. Philip Randolph, has issued a report sharply critical of the status quo, saying it continues to deny FedEx Express employees their rights to organize.

In the report, titled "Railroaded Out of Their Rights," the group said, "what is at stake here is not simply the technicalities of federal labor law or competition between FedEx Express and other package-delivery companies. The issue is about equity—the right of almost 100,000 FedEx Express employees to be treated fairly and to have the same opportunity" as other express companies to seek appropriate union representation.

Maggie Kao, a spokeswoman for the group, said it has long-standing ties with organized labor. She added, however, that the report was produced with no input from any trade union or corporation.

This is not the first time the group has crossed swords with FedEx. A report released in 2009 attacked FedEx's policy of treating drivers at its FedEx Ground parcel unit as independent contractors, a strategy that the group charged excludes those workers from coverage under labor and antidiscrimination laws.

FedEx has been in legal and tax battles for years over whether its ground parcel drivers should be considered company employees or independent contractors.