Liberty News

Rush to Defend FedEx is Wrong

On June 14, 2009, in General News, by Warner Todd Huston

Folks claiming that talk-show host Rush Limbaugh speaks for conservatives are off the mark. Rush speaks to conservatives, not for them. And he speaks to them in their own language, which is why he has such a gigantic listening audience. And because he has such a gigantic listening audience of conservatives, it is especially important for other conservatives to step forward and set the record straight on those rare occasions when Rush gets one wrong.

So it is with Limbaugh’s recent criticism of a bill which would change the way FedEx Express receives special treatment under the nation’s labor laws. Claims by FedEx to the contrary, this bill isn’t a “bailout” for UPS so much as it’s an elimination of a corporate welfare subsidy for FedEx. But first, let me stipulate two points:

(1) FedEx is a great American success story. It brought innovation and technology into the marketplace and invented the overnight shipping industry long before Al Gore invented the Internet.

(2) Unions suck. Big Labor generally stands for paying every employee the same amount of money even if one worker does a great job and another one sleeps all day. I believe labor unions are a doorway to socialism in the United States and if I had my way, I’d outlaw all of them – especially government workers unions, and super-especially teachers unions. So I’m no union “symp.”

OK, with that out of the way, here’s a list of all the companies whose commercial truck drivers are covered under the National Labor Relations Act (NLRA):

UPS, Old Dominion Freight Line, Knight Transportation, DHL Ground, YRC Worldwide, JB Hunt, Schneider National, Con-way, Swift Transportation, Landstar System, Werner Enterprises, U.S. Express, Arkansas Best Corp., FFE Transportation, Greatwide Logistics, C.R. England, Saia, Averitt Express, Prime, CRST International, R+L Carriers, NFI Industries, Kenan Advantage Group, Covenant Transportation Group, Universal Truckload Services, Ruan Transportation, Southeastern Freight Lines, Allied Holdings, Quality Distribution, Anderson Trucking, Vitran, Heartland Express, Interstate Distributor, Celadon, Dart Transit, Western Express, Smithway Motor Express, Ryder System, Roadrunner Transportation, Comcar Industries, AAA Cooper Transportation, USA Truck, Marten Transport, Shevell Group, Central Transportation and Dynamex.

Now here’s the list of the all the companies whose commercial truck drivers are NOT covered under the National Labor Relations Act (NLRA):

FedEx Express.

I’m bettin’ you already know where I’m going with this without even knowing the specifics of the issue, don’t you?

Railways vs. Highways

Instead of being covered by the NLRA, FedEx Express drivers are covered under the Railway Labor Act. But why is this such a big deal?

As the Washington Times explained in a recent editorial, Congress long ago “recognized that certain sorts of transportation companies are the lifeblood of interstate commerce.” As such, it passed the Railway Labor Act (RLA) in 1926 to which it applied “special labor-relations rules to railroads.” Those special rules later were expanded to include airline-based businesses as well.

The RLA, the Times noted, “has provided successfully for means other than strikes to resolve labor disputes fairly and quickly, without favoring either side.” Which is another way of saying that the NLRA, by comparison, does NOT quickly and fairly resolve labor disputes without favoring one side over the other. No wonder American companies would rather not be covered under the NLRA.

Another benefit of being covered by the RLA as opposed to the NLRA, notes Business Week, is that it “carries a difficult path to unionization that requires a national vote by every worker at a company and doesn’t allow for organizing at a local terminal-by-terminal level.” That would be like trying to unionize Wal-Mart in one huge national vote rather than going store by store, one at a time.

FedEx was originally started as an airline, which is why it’s covered under the RLA rather than the NLRA. It’s also currently non-union and wants to stay that way. And who can blame them? As Whole Foods CEO John Mackey once put it, “The union is like having herpes. It doesn’t kill you, but it’s unpleasant and inconvenient.”

In any event, this is what the issue is all about, boiled down to a level that even a member of Congress should be able to understand:

Let’s say you want to ship a package overnight from New York to Los Angeles to your sister. And let’s say you call UPS to handle the transaction. A UPS driver will come to your home, pick up your package, drive it to the airport, put it on a UPS plane and fly it to Los Angeles where it will be picked up by a UPS driver and delivered to your sister.

But let’s say you call FedEx instead. Here’s how the transaction will be handled: A FedEx driver will come to your home, pick up your package, drive it to the airport, put it on a FedEx plane and fly it to Los Angeles where it will be picked up by a FedEx driver and delivered to your sister.

In other words, both companies provide the exact same, identical service in the exact same, identical manner. And yet FedEx Express’s drivers are covered under the Railway Labor Act instead of the National Labor Relations Act. It makes no sense.

Eliminating an Unfair Advantage

In an effort to eliminate this “corporate welfare” benefit which only FedEx Express currently enjoys for its package delivery drivers, Rep. James Oberstar, Minnesota Democrat, has proposed an amendment to the Federal Aviation Administration reauthorization bill – the Express Carrier Employee Fairness Amendment – to close this loophole in the law and put FedEx Express on a level playing field with its competitors. The amendment would move non-airline related FedEx Express drivers from under the Railway Labor Act to under the National Labor Relations Act where they belong.

And here’s where conservatives such as Rush Limbaugh have inadvertently gotten themselves on the wrong side of this issue.

Let’s face it: Conservatives don’t like unions….or herpes either. So a move by a Democrat congressman in a Democrat Congress being led by a Democrat president which might make it easier for Big Labor to take over a non-union company like FedEx – and do to it what Big Labor has done to the American auto industry – would understandably result in a reflexive response by conservatives to oppose the bill.

However, this isn’t about Big Labor. It’s about treating similar workers in different companies equally under the same law. As it stands, FedEx enjoys an unfair competitive advantage over its rivals because FedEx Express drivers are covered under a more protective law which doesn’t cover a single one of its competitors.

And the company, great American success story that it is, isn’t as pure as the driven snow here. FedEx hasn’t exactly been shy about using this competitive advantage to poach customers from rivals in the marketplace. For example, whenever UPS and its union drivers approach contract negation time, here’s the general sales pitch FedEx delivers to UPS’ customers:

“You know, UPS drivers could go out on strike again soon. And if they do, we might not be able to handle all the additional deliveries from UPS customers. However, if you switch your account from UPS to FedEx today, you’ll become one of our existing customers and won’t be affected by the UPS strike. We’ll continue to deliver your packages on time and you won’t have to worry about a thing. Just sign here.”

Frightened customers who can’t afford to have their deliveries adversely impacted by a union strike at UPS are often scared into switching over to FedEx. That’s an unfair advantage not enjoyed because FedEx has been successful in discouraging its drivers from wanting to join the union, but because the law artificially does this for them.

FedExcess: A History of Law-Bending

And abusing legal loopholes in labor laws such as this isn’t something new to FedEx. The company for years has been trying to exempt many of its drivers from other employment laws which everyone else are subjected to, as well.

For example, even though their drivers drive FedEx trucks, wear FedEx uniforms and identify themselves as FedEx representatives, FedEx maintains these folks are “independent contractors” and not employees. The IRS and the Second Court of Appeals in California disagree.

According to an Appeals court ruling last year, the FedEx drivers “look like FedEx employees, act like FedEx employees, are paid like FedEx employees and receive many employee benefits.” As such, the Appeals court ruled that FedEx drivers are employees, not independent contractors, concluding that “if it looks like a duck, walks like a duck, swims like a duck, and quacks like a duck, it is a duck.”

The dangerous thing here is that FedEx’s attempts to abuse and circumvent the law regarding independent contractors puts all legitimate independent contractor relationships in jeopardy with Congress and the IRS. In this regard, FedEx is a rogue company whose efforts to use the law to gain an unfair advantage over its competitors put all American businesses in jeopardy. So while the conservative inclination to rush to FedEx’s defense is understandable, it is, at least in this case, misplaced.

Of course, a better field-leveling solution to all of this would be to repeal all non-life threatening labor laws completely and eliminate unions altogether. But we all know that ain’t gonna happen. So in the interest of fairness, it only makes sense that drivers who provide the exact same service be covered under the exact same labor relations law.

Pulling Out all the Stops to Stop Fairness

FedEx is fighting this field-leveling proposal tooth-and-nail, spending a FedEx jumbo jet full of cash on K Street lobbyists and a misleading advertising campaign which – at least as far as some conservatives are concerned – has been successful. FedEx founder and CEO Fred Smith is “chicken littling” Congress, conservatives and FedEx customers into believing that if the law is changed it will automatically raise his company’s operating costs and chase away customers.

Of course, many of those customers are probably former customers of competitors whom his company scared into joining the FedEx family in the first place, but whatever.

“FedEx is preparing to spend millions of dollars trying to convince Congress that a FedEx driver delivering a package is somehow different than a UPS driver delivering a package,” explains UPS spokesman Malcolm Berkeley. “Their packages aren’t delivered by airplanes and we don’t believe FedEx can fool Congress about that.”

Don’t be so sure. After all, we ARE talking about Congress here. Some of those people ain’t exactly the brightest bulbs on the Christmas tree.

Taking no chances, FedEx’s Smith has also resorted to what can only be characterized as economic blackmail, recently threatening to cancel a $10 billion purchase of several dozen Boeing 777 airplanes if Congress moves his drivers from the Railway Labor Act to the National Labor Relations Act.

But here’s the thing: Rightfully moving FedEx Express drivers from the RLA to the NRLA doesn’t mean the unions will automatically take over FedEx. As UPS notes, FedEx currently has 100,000 other employees who are already covered under the NRLA and they haven’t unionized.

Indeed, as long as FedEx treats its drivers well and makes a compelling case to its employees that unionizing the company would put the company at risk – you know, like Chrysler and GM – then there’s every reason to believe it could remain non-union, as it should be, even though it would now be governed by the same set of rules as everyone else.

Conservatives such as Rush Limbaugh who are jumping in bed with FedEx in opposition to this much deserved labor law change should be careful and look beyond the surface of this issue. Otherwise they could end up like the young man who thought he married a virgin only to find out after the fact that his lovely new bride, so virtuous-looking on the outside, had been ridden more times than Secretariat. Caveat emptor.

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