FedEx's Campaign of Distortion

We are about to find out yet again whether we are a nation of laws or men. The U.S. Senate will be voting perhaps as early as Tuesday on the FAA Reauthorization Act, including whether House-passed Section 806 will remain part of the bill. FedEx and its CEO Fred Smith have railed against Section 806 for several years now, claiming that it will lead to unionization of their Express division and endless labor strife, affecting the entire U.S. economy. These claims are all self-interested bluster, of course.

Section 806 is really about equal application of the laws of our country to all similarly situated businesses -- which should rise or fall in the marketplace based on their competitive abilities, not favoritism by the Congress. But perhaps we are after all a nation of CEOs: the current recession has exposed the out-of-bounds thinking and actions of many CEOs of large banks and corporations, which is too often aimed at manipulating the legal and political processes for personal and corporate gain.

In this case, FedEx and Smith have carried on a shameless campaign of lies and intimidation seeking to exclude Section 806. They have falsely labeled their main rival in the package delivery industry, UPS, as seeking a "brown bailout" for supporting Section 806, thus turning the English language on its head. In fact, it is FedEx Express that has been "bailed out" for the last 15 years by special interest language passed in 1996.

FedEx Express truck drivers are the only drivers in the nation's package delivery industry covered under the Railway Labor Act, instead of being properly governed by the National Labor Relations Act. Section 806 puts an end to this misclassification and places all delivery drivers under the same law, the NLRA. FedEx Express drivers are in the same industry, do the same work, and should be covered by the same law as all other package delivery drivers in the country.

In spite of FedEx's claims that it will be easier for the Teamsters to unionize its drivers if they are placed under the NLRA, the issue here is not about unionization or how easy or difficult that might be, or what the results might be. The question again is whether success in business should come through market-driven competition or whether success should be the result of political influence and legislative favor.

Since FedEx is consistently rated one of the very best companies for which to work, there is little likelihood that an organizing drive by the Teamsters will be successful. FedEx employees are overwhelmingly satisfied with their current non-union status. This situation is shown by two important facts: (1) over 120,000 FedEx employees are currently covered by the NLRA and not one is unionized; and (2) the comments of many FedEx employees on Section 806 appear on various web sites covering the issue and only a tiny minority appears to favor unionization.

Ironically, the only FedEx employees who are unionized are its pilots, who are covered by the RLA. Thus even if some Senators dislike labor unions, their fears of the potential unionization of FedEx if Section 806 is passed are unfounded. In any case, liking or disliking organized labor is not an appropriate ground to void the basic constitutional principle of equal treatment under law.

How does misclassification of its drivers under the RLA give FedEx an unfair competitive advantage? Simple. FedEx uses that status to woo customers on the grounds that it is "strike-proof." Presumably this strategy/business practice is very profitable because FedEx is spending vast sums of money to defend its current special interest status.

Its deceptive "Brown Bailout" campaign ads now blanket the Internet, exploiting that medium's lack of Truth-in-Advertising standards to disseminate patently false content. Meanwhile, editorial pieces by Smith, other FedEx officials, and friendly journalists and business owners offer misleading and sometimes hysterical reasoning for the special treatment of FedEx Express drivers. Among them:

• FedEx makes a big deal out of the fact that it was founded as an airline, and UPS as a trucking company. The correct response is, "So what?" Both companies have evolved considerably during their respective existences, and both use a combination of airplanes, trucks, and other vehicles, including boats, to carry out their businesses. What should matter is their entire business structure today, not 40 or 100 years ago. Incidentally, UPS was founded in 1907 as a foot messenger service. Should its drivers therefore be held only to pedestrian traffic regulations and be free to ignore both the RLA and the NRLA, which came a generation later?

The Senate is duty-bound to see that American law is applied fairly and uniformly. It should eliminate the 1996 special interest provision handing FedEx a carve-out, stop holding up an FAA Reauthorization bill containing many important air travel safety provisions - some the result of the Colgan Air disaster, and get the measure to the President's desk before the August recess. Neither transportation safety nor fundamental American legal principles should be held hostage to the campaign of distortion being carried on by Fred Smith and FedEx. The Senate should defeat any filibuster effort and pass Section 806 into law.

Kevin L. Kearns is president of the U.S. Business and Industry Council, and serves as the director of the Same3 Coalition, a group formed in 2009 to support federal legislative efforts to create fair competition in the trucking industry.