The Wonk Room

FedEx: ‘We Are An Airline,’ Therefore We Can Take Advantage Of Our Truck Drivers

Currently, due to a legal loophole, Federal Express is allowed to operate under the Railway Labor Act, instead of the National Labor Relations Act (NLRA) that governs other companies like UPS. And as the Washington Times reported today, there is a battle brewing between FedEx and UPS, while Congress considers a change that would pull FedEx under the NLRA.

The Railway Labor Act “poses huge barriers to organizing” compared to the NLRA, and thus FedEx is not very pleased about the prospect of a change:

“We are an airline; [UPS] are a trucking outfit,” said FedEx spokesman Maury Lane. “You can’t put stop signs at 30,000 feet.”

But this is about more than just unionization. FedEx’s resistance to the change is consistent with its strategy of doing all that it can to avoid treating its drivers fairly.

For instance, FedEx constantly misclassifies its drivers as independent contractors, placing them outside of the protection of most labor and employment laws. As American Rights at Work pointed out, “by classifying nearly 15,000 drivers as independent contractors rather than employees, FedEx Ground lowers its labor costs by avoiding payroll taxes and benefits.” Its drivers are responsible for fuel and maintenance of the trucks, and are not provided with paid vacation or sick leave.

Misclassification can ultimately save employers “upwards of 30% of their payroll costs.” And because the drivers are not technically employees, they are barred from unionizing.

FedEx claims that its model “works for the company, the contractors and the customers.” But last week, U.S. District Judge Robert Miller granted a request to bring a class action suit against FedEx, by drivers “who claim they deserve benefits because the company treats them as full-time workers by mandating their clothing, hours and prices.”

In a previous ruling in a similar case, the California Superior Court decided that FedEx drivers were indeed full employees, and that FedEx’s driver agreements constitute “a brilliantly drafted contract creating the constraints of an employment relationship…in the guise of an independent contractor model.” So FedEx needs to do much better than cry “we are an airline” (whose pilots, incidentally, are represented by the Airline Pilots Association) to justify its treatment of its drivers and its resistance to fair labor law.