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Hoffa: Congress Can Close a Major Loophole

Congress will soon decide whether to close a loophole that lets one Fortune 500 company evade the labor law that its 46 competitors must follow.

[IMGCAP(1)]Twelve years ago, a few last-minute words inserted back into a must-pass bill strengthened FedEx’s hand and gave the company an unfair advantage. No other freight or package delivery company received such a favor. Not Celadon, not Old Dominion Freight Line, not USA Truck, not Southeastern Freight Lines, not Western Express, not Heartland Express, not UPS, not any of them.

They are all covered by the National Labor Relations Act in their dealings with truck drivers belonging — or considering belonging — to a union. The FedEx loophole, though, puts many of that company’s truck drivers under the Railway Labor Act. The RLA, intended to cover airline and railroad workers, presents far more legal obstacles to forming a union than does the NLRA.

FedEx has long tried to swell profit by bleeding its work force, skirting both the law and common decency in the process. Through manipulation and deception, the company has for years managed to deprive its workers of the basic protections of employment and labor laws.

The company’s exemption from the NLRA makes it easier to bully employees who want to join a union. But it isn’t the only questionable tactic that FedEx employs.

FedEx calls its ground and home delivery drivers “independent contractors,— though by all measures they are employees. The company has been sued in 20 states for misclassifying its workers as contractors. On June 25, eight state attorneys general put FedEx on notice in a letter that they were concerned the company was skirting its obligations to pay employment taxes and abide by proper employment laws.

The story of how FedEx snagged a special loophole from Congress is an oft-told tale of special treatment for the well-connected and powerful. It’s a tale of a favor granted to a giant corporation that hurts working people, a favor that the public doesn’t find out about until it’s too late.

FedEx had long sought favors from Members of Congress, donating heavily to their political campaigns, flying them around the country on its corporate jets and appointing them to its board when they retired.

In October 1996, Senators were rushing to adjourn so they could campaign for office back home. But first they had to finish a bill that funded airports — something they all wanted to pass.

Just before the Senate recessed, FedEx lobbyists managed to add the words “express carrier— back into the bill. That meant that FedEx’s labor relations for all of its FedEx Express employees would be governed by the RLA.

FedEx claimed that its FedEx Express unit is an airline and should be treated as such under labor law. That is nonsense. The FedEx Express unit has more than 100,000 domestic full-time and part-time employees. Only 7,700 FedEx Express workers fly or fix airplanes. Of the remaining 90,000 non-management workers, about 45,000 are package and delivery drivers, 3,000 are truck and ground mechanics, and about 42,000 are loaders, unloaders and sorters. They should all be covered under the NLRA, as are their counterparts at FedEx Express’ competitors.

Sen. Edward Kennedy (D-Mass.) recognized the injustice and took to the Senate floor. “Federal Express is notorious for its anti-union ideology, but there is no justification for Congress becoming an accomplice in its union-busting tactic,— he said.

The bill passed anyway.

FedEx CEO Fred Smith went so far as to threaten to intentionally cripple another American company if FedEx was forced to operate on a level playing field with its competitors. At a Congressional hearing in May 2009, Smith told legislators that he would cancel a $10 billion order with Boeing for a new fleet of planes should the company’s loophole be taken away by Congress. Canceling this order will not only create hardship for Boeing, it will also result in devastating job losses for the economy at this critical time when workers across the country are struggling to hold on to good-paying jobs.

It is well past time for Congress to establish a single set of rules for workers in the freight and package delivery industry. Fortunately, Congress now seems inclined to restore fairness to the industry. The House in May voted overwhelmingly to apply one set of rules to all express delivery companies. The International Brotherhood of Teamsters is urging the Senate do the same so FedEx Express will have to treat non-airline workers the same way all of its competitors do — under the NLRA.

Predictably, FedEx is mounting a multimedia campaign to keep its special loophole. FedEx claims that the effort to impose a single set of rules on freight and package delivery companies is a bailout for its main rival, UPS. According to that logic, “up— is really “down.—

UPS doesn’t need a bailout. Last year it earned $3 billion. During the most recent quarter, UPS outperformed FedEx in almost every possible measure — while paying good wages and retirement and health care benefits to the 250,000 Teamsters that it employs.

The Senate should resist the pleadings of FedEx lobbyists and do the right thing for all workers in the freight and package delivery industry.

James P. Hoffa is general president of the International Brotherhood of Teamsters.

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