Will FedEx Express linking with Ground make union organizing easier for employees?

FedEx says a new link between Express and Ground won't be enough to lower the high bar for Express employees to organize, a classification opponents have long disputed.

FedEx announced Feb. 7 that FedEx Express would contract out some of its home deliveries to FedEx Ground. The move connects two companies FedEx maintains will remain apart due to their distinct, separate roles within the shipping company.

Express and Ground also follow separate labor laws. FedEx Express’ U.S. employees are covered by the Railway Labor Act (RLA), while non-Express U.S. employees are covered by the National Labor Relations Act (NLRA).

The bar for organizing a labor union under the RLA is much higher than the NLRA. The International Brotherhood of Teamsters union sees the Express and Ground link as further proof Express shouldn’t have advantageous RLA status, said spokeswoman Kara Deniz.

“We’ve been outspoken on this topic over many, many years,” Deniz said. “There’s nothing different from what this company is doing from UPS, which falls under the NLRA.”

The RLA covers transportation system employees, including those working for airlines, with the higher bar’s goal being to prevent one local work stoppage from shutting down an entire network, FedEx says. The company has been staunchly opposed to reclassification, saying it could disrupt the business's reliability.

FedEx doesn’t anticipate the new program will have any effect on Express’ standing under the RLA, said Patrick Fitzgerald, senior vice president for integrated marketing and communications at FedEx.

“The Express integrated air-ground system is precisely the type of innovative business model that the labor laws are designed to protect,” Fitzgerald said.

Express and its airplane fleet deliver packages by a certain time, while the lower-cost Ground only has to deliver packages by a certain day. However, Express does have “day definite” packages of its own that are suited to move into the Ground network while reducing business overlap, Fitzgerald explained.

UPS has disputed FedEx classification

Union presence at FedEx is minimal, outside of the Air Line Pilots Association’s representation of FedEx Express pilots. FedEx rival UPS, on the other hand, is the single largest employer in the Teamsters Union. Its drivers fall under the NLRA.

However, there is always a chance Congress could remove most FedEx Express employees — many of them delivery drivers — from RLA jurisdiction, FedEx said in its annual financial report.

That was FedEx's fear in 2009, when Chairman and CEO Fred Smith sounded the alarm bells on a proposed bill making its way through Congress that would change FedEx Express' RLA status.

“Removing FedEx Express from RLA jurisdiction could expose our customers at any time to local work stoppages that interrupt the flow of their time-sensitive, high-value shipments through our global network,” Smith said then. “Keeping our RLA classification means our customers can count on the reliability of FedEx Express.”

A UPS spokesman told Politico at the time it wanted Congress “to eliminate special treatment provided to FedEx and place FedEx Express drivers under the same labor law as all other delivery drivers in the United States.”

RLA employees must organize a class of employees nationwide, while NLRA employees can organize in local groups. Government-led mediation is required for RLA negotiations, which is not the case for the NLRA.

Smith said FedEx Express handles air shipments in a separate network tying directly into its air operation, unlike UPS. In a 2010 interview with The Commercial Appeal, he said FedEx would have to stop investing in growth at Express, including at its Memphis World Hub, if that piece of the bill passed. It didn't.

More business for FedEx contractors

Express contracting home deliveries to Ground better positions FedEx to stop organizing attempts, said Rebecca Kolins Givan, associate professor in the Rutgers School of Management and Labor Relations.

The move shifts more volume from FedEx Express drivers, who are employees, to FedEx Ground drivers, who are employed by independent service providers contracting with FedEx. Independent contractors give FedEx more labor cost flexibility when delivery demand goes up or down, and it’s "impossible" for independent contractors to organize, Givan said.

FedEx is also positioning itself as an Amazon-esque delivery operation by having more packages be handled by its independent service providers, Givan said.

“It seems FedEx is trying to compete with that model and adopt at least some of those practices to cut costs and keep up in that very competitive environment,” she said.

Even if FedEx Express drivers are handling less home delivery volume, it’s hard to see how the company continues to maintain its RLA coverage as it hands off deliveries to Ground, said Deena Merlen, an employment and labor lawyer at Reavis Page Jump LLP. Past court battles have sided with FedEx.

“Not that I have a crystal ball, but it will be very difficult not to reclassify FedEx if it is going to once again get caught up in all kinds of litigation,” Merlen said.

Max Garland covers FedEx, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-529-2651 and on Twitter @MaxGarlandTypes.