Senate passes FAA Reauthorization Act; labor classification differences between FedEx and UPS linger

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WASHINGTON—The United States Senate recently passed the $34.5 billion Federal Aviation Administration (FAA) Reauthorization Act that will secure FAA funding through September 30, 2011. This followed a vote by Congress to extend the House version of this bill for three months through June 30—the most recent in a series of extensions for this bill, which expired in 2007.

The FAA bill has received considerable attention in recent months due to a labor-related difference between FedEx and UPS over the House and Senate versions.

At the heart of this difference is that the House version calls for “express carrier employee protection” and has the potential to change the labor status for FedEx Express from Railway Labor Act (RLA) to the National Labor Relations Act (NLRA) that applies to UPS employees. Should this bill be signed into law, many industry experts contend that it will make it less challenging for the Teamsters Union to organize FedEx Express workers.

In the House version, an amendment would enable the RLA to clarify that employees of an “express carrier” can only be covered by the RLA if they are employed in a position that is eligible for certification under FAA’s rules such as mechanics or pilots, and that they are actually performing that type of work for the express carrier. It added that all other express carriers would be governed by the NLRA.

In the Senate vote, the House provision was not included, a move that FedEx viewed as a positive.

“We are encouraged that the United States Senate passed an FAA Reauthorization bill that is focused on modernizing our air travel system and enhancing important safety provisions that we support, including an increase in co-pilot training requirements,” said Maury Lane, FedEx director of media relations, in a statement. “To their credit, the Senate has rejected efforts to include an ill-conceived 230-word bailout provision inserted by UPS lobbyists into the House bill that would change how FedEx Express has been regulated since its founding 38-years ago.”

Lane added that this is an important bill that should advance without extraneous labor provisions, “and we continue to believe that UPS should abandon its bailout quest that puts the interests of UPS ahead of the public.”

In literature for its campaign—dubbed—FedEx says that this amendment amounts to a “bailout to UPS,” adding that it would force FedEx to operate under a law not designed for airlines and express companies. FedEx has previously defended this position by explaining that UPS and FedEx are “fundamentally different companies,” with UPS shipping 85 percent of its parcels on the ground and FedEx primarily functioning as an airline, flying 85 percent of its packages in the air.

UPS spokesman Malcolm Berkley said that the only “bailout” occurring is not one for UPS but one that FedEx has been enjoying for the last several decades, as its drivers are the only ones in the country covered by the RLA.

“The term bailout is not accurate,” said Berkley. “The issue at hand is the treatment of drivers under the law—the application of law as it applies to drivers. And right now there is only one company with its drivers covered under the law differently than all other drivers in the U.S. and that’s FedEx. If you want to talk about special treatment and about being bailed out, that is where that is.”

“The change in the legislation really does nothing for UPS, although UPS contends that they have to operate under different laws than FedEx, which is unfair,” said Jerry Hempstead, principal of Hempstead Consulting.

“This is really a battle with organized labor that FedEx has been fighting since deregulation in 1979,” added Hempstead. “However, FedEx can’t say that they are battling organized labor. That will not sell to the current administration or the population at large; but if they paint it as a battle with the big bad corporate giant UPS then they can get an ear and some sympathy.” 

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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FedEx · News and Analysis · Shipping · UPS · All Topics
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