Suburban Yellow Taxi Co.

SUBURBAN YELLOW TAXI COMPANY 265 Yellow Taxi Company of Minneapolis, d/b/a Subur- ban Yellow Taxi Company and Guild of Taxi Drivers and Associated Workers, Local Lodge 3025, Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees. Case 18-CA-5506 May 5, 1980 DECISION AND ORDER BY MEMBERS JENKINS, PENELLO, AND TRUESDALE On September 13, 1979, Administrative Law Judge Robert M. Schwarzbart issued the attached Decision in this proceeding. Thereafter, both the General Counsel and Respondent filed exceptions and briefs in support of their respective exceptions. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its au- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Decision in light of the exceptions and briefs and has decided to affirm the rulings, find- ings,' and conclusions 2 of the Administrative Law Judge as modified herein. 1. Both the General Counsel and Respondent have excepted to the Administrative Law Judge's finding that Respondent violated Section 8(a)(5) and (1) of the Act by closing its Suburban garage in Richfield, Minnesota, on or about August 7, 1977, to the eight commission drivers employed there and coercively transferring them to its Min- neapolis, Minnesota, facility. We find merit in these exceptions. The complaint does not allege any such violation, and the record reflects that counsel for the General Counsel emphasized at the hearing that she was not seeking a finding that Respondent un- lawfully closed the Suburban garage. Further, the General Counsel and Respondent note that the issue of the garage closing and the involuntary transfer of the drivers was resolved by a settlement agreement in a prior, related contempt proceeding. Under the settlement, Respondent agreed to make the drivers involved whole for any losses suffered by them when the Suburban garage was closed to commission drivers, and the drivers agreed to waive reinstatement to their former positions. Ac- cordingly, the Administrative Law Judge's finding The General Counsel has excepted to the Administrative Law Judge's recommendation that interest on backpay be computed at a rate other than the 9 percent requested by the General Counsel. We find no merit in the exception. See Florida Steel Corporation, 231 NLRB 651 (1977). 2 We agree with the Administrative Law Judge's analysis and finding that the taxicab drivers herein are employees within the meaning of the Act. As additional support, see our recently issued Decision in Air Tran- sit, Inc., 248 NLRB No. 140 (1980). 249 NLRB No. 35 that Respondent committed a violation of Section 8(a)(5) and (1) by the conduct just described is re- versed. 2. We also find merit in the General Counsel's exception that the Administrative Law Judge erro- neously found that August 1, 1977, was the date on which Respondent violated Section 8(a)(5) and (1) of the Act, rather than when it first refused to apply the terms of the collective-bargaining agree- ment to the lessee drivers. Respondent's leasing program commenced on March 1, 1977. The Ad- ministrative Law Judge properly concluded that the lease drivers were statutory employees, and that the Union had consented to waive its right to represent the lessees only if they were true inde- pendent contractors. Consequently, Respondent's failure to apply the labor contract to the lessees on March 1, 1977, when it instituted leasing, was il- legal, and the 8(a)(5) violation runs from that date. CONCLUSIONS OF LAW 1. Respondent Suburban Yellow Taxi Company of Minneapolis and Suburban Yellow Taxi Compa- ny are a single employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. Guild of Taxi Drivers and Associated Work- ers, Local Lodge 3025, Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees, is a labor organi- zation as defined in Section 2(5) of the Act. 3. All lease and commission taxi drivers, limou- sine drivers, baggage freight truck drivers and cab service employees, including dispatchers, order- takers, starters, and all employees who read meters, check oil and gas, wash cars, and generally service cabs, employed by Respondent at its Minneapolis and Richfield, Minnesota, facilities, excluding office clerical employees, mechanics, professional em- ployees, guards and supervisors, as defined in the Act, constitute a unit appropriate for purposes of collective bargaining within the meaning of Section 9(b) of the Act. 4. At all times material herein, the Union has been the collective-bargaining representative of the employees in the above appropriate unit within the meaning of Section 9(a) of the Act. 5. By withdrawing recognition from, and by re- fusing to continue to recognize and bargain with, the Union as the collective-bargaining representa- tive of Respondent's lessee drivers at the Suburban garage in Richfield, Minnesota, since March 1, 1977, Respondent has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 266 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 6. The aforesaid unfair labor practices are unfair labor practices within the meaning of Section 2(6) and (7) of the Act. AMENDED REMEDY Having found that Respondent has engaged in certain unfair labor practices, we shall order that it cease and desist therefrom and that it take certain affirmative action to effectuate the policies of the Act. We shall, among other things, order that Re- spondent, upon request, recognize and bargain with the Union as the exclusive collective-bargaining representative of the lessee drivers employed at its Suburban facility in Richfield, Minnesota, as part of the described appropriate unit, and that it apply from March 1, 1977, such terms of its governing collective-bargaining agreements as may be rele- vant to the lessees. Respondent will also be re- quired to bargain with the Union concerning any other terms and conditions of the lessees' employ- ment deemed pertinent, and to embody in a signed understanding any agreement reached with the Union. Additionally, Respondent will be ordered to make whole all employees covered by its collec- tive-bargaining contracts with the Union, from March 1, 1977, for any financial losses suffered by them as a result of Respondent's refusal to apply the terms of its labor contracts to lessee drivers, with interest as provided in Florida Steel Corpora- tion, supra. 3 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board adopts as its Order the recommended Order of the Administrative Law Judge and hereby orders that the Respondent, Yellow Taxi Company of Minneapolis, d/b/a Suburban Yellow Taxi Company, Minneapolis and Richfield, Minne- sota, its officers, agents, successors, and assigns, shall: I. Cease and desist from: (a) Withdrawing recognition from, and refusing to recognize and bargain with, Guild of Taxi Driv- ers and Associated Workers, Local Lodge 3025, Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Em- ployees, as the exclusive collective-bargaining rep- resentative of the lessee drivers employed at its Surburban garage in Richfield, Minnesota, as part of this appropriate unit: All lease and commission taxi drivers, limou- sine drivers, baggage freight truck drivers and cab service employees, including dispatchers, See, generally, Isis Plumbing & Heating Co., 138 NLRB 716 (1962). ordertakers, starters, and all employees who read meters, check oil and gas, wash cars, and generally service cabs, employed by Respond- ent at its Minneapolis and Richfield, Minneso- ta, facilities, excluding office clerical employ- ees, mechanics, professional employees, guards and supervisors, as defined in the Act. (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action which is necessary to effectuate the policies of the Act: (a) Upon request, recognize and bargain with the above-named Union as the exclusive collective-bar- gaining representative of the lessee drivers em- ployed at it Suburbans garage in Richfield, Minne- sota, as part of the appropriate unit described above. (b) Apply the terms and conditions of its collec- tive-bargaining agreements with the Union to the lessee drivers emloyed at its Suburban facility, from March 1, 1977, and, upon request, bargain with the Union concerning such additional terms and conditions of employment as may be relevant to the lessees' situtation, embodying any agreement reached in a signed understanding. (c) Make whole its employees for any financial losses suffered by them as a result of its refusal to apply the terms of its collective-bargaining agree- ments to lessee drivers, for the period on and after March 1, 1977, as set forth in the section of this Decision entitled "Amended Remedy." (d) Preserve and, upon request, make available to the Board or its agents, for examination and copy- ing, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order. (e) Post at its Minneapolis and Richfield, Minne- sota, facilities copies of the attached notice marked "Appendix." 4 Copies of said notice, on forms pro- vided by the Regional Director for Region 18, after being duly signed by Respondent's authorized representative, shall be posted by Respondent im- mediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in con- spicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by Respondent to insure that 4 In the event that this Order is enforced by a Judgment of a United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall read "Posted Pursu- ant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board." SUBURBAN YELLOW TAXI COMPANY 267 said notices are not altered, defaced, or covered by any other material. (f) Notify the Regional Director for Region 18, in writing, within 20 days from the date of this Order, what steps Respondent has taken to comply herewith. MEMBER PENELLO, dissenting in part: I agree with the members of the majority, for the reasons stated by them, that the Administrative Law Judge erroneously found that Respondent vio- lated Section 8(a)(5) and (1) of the Act by closing its Suburban garage in Richfield, Minnesota, to commission drivers and involuntarily transferring them to its facility in Minneapolis. Contrary to Members Jenkins and Truesdale, however, I would dismiss the entire complaint on the ground that the lessee drivers are independent contractors rather than statutory employees. Both my colleagues and Respondent, in its brief, agree that the facts here are not materially distinguish- able from those present in Yellow Cab Company, 229 NLRB 1329 (1977), enforcement denied sub nom. Local 777, Democratic Union Organizing Com- mittee, Seafarers International Union of North Amer- ica, AFL-CIO v. N.L.R.B., 603 F.2d 862 (D.C. Cir. 1978), petition for rehearing denied 101 LRRM 2629, 86 LC 11,372 (1979), in which I dissented from the Board's decision to find certain taxi driv- ers to be employees within the meaning of the Act. My review of the record confirms their assessment. Therefore, I dissent in this case for the same rea- sons I dissented in Yellow Cab." As a consequence, it is not necessary for me to reach Respondent's ar- gument that the Union waived its right to represent the lessees even if they are deemed to be employ- ees. ' See, in addition, my dissent in Air Transit, Inc., 248 NLRB No. 140 (1980). APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT withdraw recognition from, and refuse to recognize and bargain with, Guild of Taxi Drivers and Associated Work- ers, Local Lodge 3025, Brotherhood of Rail- way, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees, as the exclusive collective-bargaining representa- tive of the lessee drivers employed at our Sub- urban garage in Richfield, Minnesota, as part of this appropriate unit: All lease and commission taxi drivers, limou- sine drivers, baggage freight truck drivers and cab service employees, including dis- patchers, ordertakers, starters, and all em- ployees who read meters, check oil and gas, wash cars, and generally service cabs, em- ployed by the Employer at its Minneapolis and Richfield, Minnesota, facilities, exclud- ing office clerical employees, mechanics, professional employees, guards and supervi- sors, as defined in the Act. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employ- ees in the exercise of the rights guaranteed them by Section 7 of the Act. WE WILL upon request, recognize and bar- gain with the above-named Union as the exclu- sive collective-bargaining representative of the lessee drivers employeed at our Suburban garage in Richfield, Minnesota, as part of the appropriate unit described above. WE WILL apply the terms and conditions of our collective-bargaining agreements with the Union to the lessee drivers employed at our Suburban facility, from March 1, 1977, and, upon request, bargain with the Union concern- ing such additional terms and conditions of employment as may be relevant to the lessees' situation, and embody any agreement reached in a signed understanding. WE WILL make whole our employees for any financial losses suffered by them as a result of our refusal to apply the terms of our collective-bargaining agreements to lessee drivers, for the period on and after March 1, 1977, with interest. YELLOW TAXI COMPANY OF MINNE- APOLIS, D/B/A SUBURBAN YELLOW TAXI COMPANY DECISION STATEMENT OF THE CASE ROBERT M. SCHWARZBART, Administrative Law Judge: This case was heard in Minneapolis, Minnesota, on January 15, 16, and 17, 1979. The charge was filed on August 29, 1977, by Guild of Taxi Drivers and Associated Workers, Local Lodge 3025, Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employ- ees, herein the Union. The complaint, issued November 7, 1978, alleges that Yellow Taxi Company of Minneapo- lis, d/b/a Suburban Yellow Taxi Company, violated Sec- tion 8(a)(5) and (1) of the National Labor Relations Act, _ 268 DECISIONS OF NATIONAL LABOR RELATIONS BOARD as amended, herein the Act. The Respondent, in its answer, denied the commission of unfair labor practices. Issues 1. Whether Yellow Taxi Company of Minneapolis, herein Minneapolis Yellow, and Suburban Yellow Taxi Company, herein Suburban, are joint or single employers or are separate members of a multiemployer bargaining unit. 2. Whether Minneapolis Yellow and Suburban violated Section 8(a)(5) and (1) of the Act by withdrawing recog- nition from the Union as bargaining representative of the lessee taxi drivers at the Suburban garage in Richfield, Minnesota, and by thereafter refusing to bargain with the Union as to these drivers and to apply the terms of the existing collective-bargaining agreement to them, or whether the Suburban drivers, as lessees, had become in- dependent contractors. 3. Whether the Respondent's closing of the Suburban garage in August 1977, to all but lessee drivers, and its concurrent involuntary transfer of eight commission drivers to the Minneapolis Yellow garage in downtown Minneapolis was conduct violative of Section 8(a)(5) and (1) of the Act. 4. Whether the Union had waived the right to repre- sent and bargain for the Suburban lessee drivers. All parties were given full opportunity to participate, to introduce relevant evidence, to examine and cross-ex- amine witnesses, and to file briefs. Briefs, filed by the General Counsel and the Respondent, have been careful- ly considered. Upon the entire record of the case' and my observa- tion of the witnesses and their demeanor, I make the fol- lowing: FINDINGS OF FACT I. THE BUSINESS OF THE RESPONDENT Suburban Yellow Taxi Company is, and has been at all times material herein, a separate and distinct physical lo- cation operating from its garage in Richfield, Minnesota, under the direction, authority, and control of Yellow Taxi Company of Minneapolis, which, in turn, is located at a garage in Minneapolis, Minnesota. Minneapolis Yellow and Suburban are, and have been at all times ma- terial herein, engaged in the furnishing of taxicab trans- portation and related services. During the year ending December 31, 1977, a representative period, these con- cerns, in the course and conduct of their business oper- ations, derived gross revenues in excess of $500,000 from the furnishing of taxicab transportation and related serv- ices, and, during the same representative period, pur- chased and caused to be transported and delivered at the Richfield place of business goods and materials valued in excess of $50,000, of which goods and materials valued in excess of $50,000 were transported and delivered to the place of business in Richfield directly from points lo- cated outside the State of Minnesota. I The General Counsel's unopposed post-hearing motion that G. C. Exhs. 40(a)-(q) be received in evidence is hereby granted. From the above, I find that Minneapolis Yellow and Suburban are now, and have been at all times material herein, an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2 A. Background and the Single Employer Status of Minneapolis Yellow and Suburban This case, particularly with regard to the above-noted issue of whether the taxi drivers at the Suburban garage in Richfield are independent contractors or are employ- ees as defined in Section 2(3) of the Act, is a sequel to Yellow Cab Company,3 herein the Chicago Yellow Cab case, where the U.S. Court of Appeals for the District of Coumbia Circuit twice refused to affirm the Board's find- ing that lessee drivers were employees rather than inde- pendent contractors.4 As will be discussed, not only is there a corporate relationship between Minneapolis Yellow and Suburban in the present case and the Chica- go Yellow and Checker Taxi Companies, the Respondent in the Chicago Yellow Cab case, but Jeffrey Feldman, the president of Mineapolis Yellow Taxi, Inc.,5 is the son and former assistant of Jerry E. Feldman, the president of Checker Taxi Company, Inc., whose testimony and conduct were considered in Chicago Yellow Cab. Accord- ingly, in implementing the cab leasing program at Subur- ban, the younger Feldman used the leasing agreements and procedures considered by the Board and the court in the Chicago Yellow Cab case. Minneapolis Yellow is a wholly owned subsidiary of Checker Motors Corporation, an automobile manufactur- ing company located in Kalamazoo, Michigan. Checker Motors also has ownership interest in the following sub- sidiaries: Continental Air Transport, Pittsburgh Yellow Taxi Company, and the Yellow Cab and Checker Taxi Companies of Chicago. Minneapolis Yellow Taxi, Inc., has five operating divi- sions, the largest of which is the Yellow Taxi Company of Minneapolis which occupies a garage in downtown Minneapolis. This facility is licensed to operate 138 cabs on a yearly basis with an additional 27 licenses granted for a 6-month period by the city of Minneapolis. 6 Suburban is an unincorporated operating arm of Min- neapolis Yellow and occupies the garage at Richfield, ap- proximately 10 to 12 miles from the downtown Minne- apolis Yellow garage. The Richfield garage is a one- story structure with an office occupied by Russ Under- 2 As the General Counsel has placed in issue whether Suburban and Minneapolis Yellow are joint, single, or separate employers, this matter will be considered below. 3 229 NLRB 1329 (1977). Checker Taxi Company was also a respond- ent in this case, 4 Sub nom. Local 777. Democratic Union Organizing Committee, Seafar- ers International Union of North America, AFL-CIO v. N.LR.B., 603 F.2d 862 (D.C. Cir. 1978). on reconsideration, rehearing denied. Minneapolis Yellow Taxi, Inc., is the correct name of the corporation which owns and controls Minneapolis Yellow and Suburban among its operating divisions. For easier references, both the corporation and its principal operating branch, the Yellow Cab Company of Minneapolis, will be referred to herein as Minneapolis Yellow. e The Minneapolis facility is a two-story structure where the general office and central shop are located. At the central shop, heavy mainte- nance is done, including replacement of engines and transmissions. There also are service maintenance locations within the building, and the dis- patch room. Approximately 550 employees work in or from this building. SUBURBAN YELLOW TAXI COMPANY 269 hill, the Suburban garage manager. The facility has one service bay area where minor and preventive mainte- nance is performed. Heavy maintenance on the suburban cabs is done at the downtown facility. Also at the Subur- ban garage besides the approximately 100 drivers, whose employee status is in dispute, are 3 assistant managers who report to Underhill and are responsible for the garage in his absence, and a mechanic, 7 who reports to both Underhill and the maintenance supervisor at the downtown garage. All general administrative and personnel matters for both garages are handled at the downtown Minneapolis Yellow facility, where all moneys ultimately are received and where the payroll records are kept. Prior to August 1, 1977, while both garages still employed commission drivers,8 paychecks for employees at both garages were prepared at the Minneapolis Yellow facility. These checks were drawn on the same bank accounts and signed by the president of Minneapolis Yellow, On August 1, 1977, Minneapolis Yellow, Suburban, and Pioneer Holding Company d/b/a Blue and White Cab Company were parties to a collective-bargaining agreement with the Union, signed January 10, 1977, ef- fective from February 15, 1976, to August 15, 1978, herein the 1976 contract,' 0 covering employees in a mul- tiemployer unit which included all full-time and part- time taxi drivers and cab service employees1 employed by Minneapolis Yellow, Suburban, and Blue and White. The contract also contained a union-security clause and provided for a system of seniority for full-time em- ployees. While the contract required maintenance of a separate seniority list for all full-time switchboard per- sonnel, there is no analogous provision requiring separate seniority lists for drivers at each of the three covered ga- rages. Prior to August 1, 1977, when commission drivers moved between the Minneapolis Yellow and Suburban garages, the payroll records noted such shifts as trans- fers. The General Counsel, apparently to rebut an anticipat- ed argument by the Respondent to be considered below, contends that Minneapolis Yellow and Suburban are not joint or single employers. In support of this position, she notes that Minneapolis Yellow and Suburban each sepa- rately signed the collective-bargaining agreements in their own names and were otherwise individually re- ferred to in the contract, that employees who moved from one garage to the other received new employment numbers and were required to complete new employ- ' The mechanic assigned to the Suburban garage is covered by the col- lective-bargaining agreement between Minneapolis Yellow and a different union for the mechanics at the downtown garage. 8 Commission drivers, compensated on the basis of a percentage (com- mission) of their meter receipts, are concededly employees within the meaning of Sec. 2(3) of the Act. 9 There was no separate bank account for Suburban. lo While Minneapolis Yellow and Suburban were separately named and referred to as parties to the agreement, the same two officials of Min- neapolis Yellow signed the contract for each. Except for its participation at the time in the same multiemployer bargaining unit, Blue and White was not otherwise related to Minneapolis Yellow or Suburban. i The contract defined cab service employees as all dispatchers, order takers, starters, and all employees who read meters, check oil and gas, wash cars, and generally service cabs, except those persons who are in direct supervision thereof. ment applications and to meet any jurisdictionally im- posed licensing requirements, the Minneapolis taxi in- spector had to be notified of such garage changes, and that each garage maintained its own seniority list. 12 However, as noted by the Respondent, in Airport Taxi Service, Inc. and Sea-Tac Taxi Service, Inc., 3 two sepa- rate corporations were found to constitute a single inte- grated taxicab enterprise and to be a single employer, for purposes of the Act where both concerns had a common president, essentially the same ownership, a common op- erations manager, and together shared central business offices, clerical and administrative personnel, dispatching personnel, public telephone number, dispatching base of operations, and repair facility. In finding single-employer status in Airport Taxi Service, supra, it also was noted that all personnel matters and policies affecting the terms and conditions of employment of both companies were com- monly determined and implemented, and that employees of both firms were paid by checks drawn on a single bank account belonging to one of the two companies. In the present case, not only are virtually all the above elements present, but there is also further ground that Minneapolis Yellow and Suburban is a single employer as Suburban has no separate corporate identity but exists solely as an operating branch of Minneapolis Yellow.' 4 While Suburban is separately mentioned in the collec- tive-bargaining agreement, the same company officials signed the contract for both. There is common owner- ship-all of Suburban's business and personnel policies are established by Minneapolis Yellow officials located in the common central business office. Noting also that cabs from both garages receive orders relayed from the downtown dispatching office, that major support and repair services for Suburban are provided at the Minne- apolis Yellow garage, and that paychecks for both loca- tions were drawn on the Minneapolis Yellow bank ac- count, it is concluded that Minneapolis Yellow and Sub- urban, herein collectively called the Respondent, are a single, integrated entity and employer for purposes of the Act. B. The Alleged Withdrawal of Recognition From the Union as Bargaining Representative of the Suburban Drivers-Facts 1. Suburban Garage Closed to Commission Drivers As noted, before August 1, 1977, the Union represent- ed, among others, the drivers who worked from both the Minneapolis Yellow and the Suburban garages. Prior to March I of that year, all drivers at both garages were undisputedly employees under the Act and were termed commission drivers as they were paid a percentage or commission on their gross receipts. These receipts were measured by the meter rates for the various runs plus the i2 Whether each garage kept its separate seniority list before August 1, 1977, such individual lists were not required under the contract and driv- ers could transfer without loss of seniority or other fringe benefits. la 230 NLRB 1082, 1083 (1977). "4 Other operating divisions of Minneapolis Yellow include Suburban Airport Limousine and Minneapolis Airport Limousine, which go be- tween the Minneapolis-St. Paul Airport and various downtown and sub- urban locations, and Yellow Taxi Baggage and Freight, which handles heavy freight. - 270 DECISIONS OF NATIONAL LABOR RELATIONS BOARD amounts payable under flat fare rates contracted by the Respondent with certain customers, in lieu of meter rates. On August 4, 1977, the Respondent, on Yellow Taxi Company of Minneapolis stationery, posted the following notice at the Suburban garage: COMMISSION DRIVERS DUE TO THE CONTINUOUS LOSS IN- VOLVED IN OPERATING ON A COMMIS- SION BASIS, THE SUBURBAN GARAGE WILL BE CLOSED TO COMMISSION DRIV- ERS AS OF SUNDAY AUGUST 7th 1977. ALL COMMISSION DRIVERS ARE WEL- COME TO TRANSFER TO THE MINNEAPO- LIS GARAGE, WITH NO LOSS OF COMMIS- SION RATE OR SENIORITY. Since on or about March 1, 1977, the Respondent has engaged in a program of leasing cabs to drivers at its Suburban garage where, for a scheduled fee to the Re- spondent accompanied by a posted bond, the driver became lessee of the cab for an agreed term and was en- titled to keep his receipts rather than turn them in to the Respondent as did the commission drivers.' In addition, unlike commission drivers, lessee drivers had no employ- ment benefits. By August 4, the date of the above notice, of the approximately 100 drivers operating the 50 cabs at Suburban, all were lessees except for around 8 drivers who were still on commission. After the notice was posted, these eight commission drivers, who did not elect to lease their cabs, were obliged to transfer to the down- town Minneapolis Yellow garage, without loss of senior- ity or other benefits, where they continued to be repre- sented by the Union as part of the multiemployer bar- gaining unit covered by the contract. Since August 7, 1977, the Suburban garage has operated completely on a lease basis and the Respondent, contending that the lessee drivers are independent contractors rather than employees, as defined in Section 2(3) of the Act,' 6 has refused to bargain with the Union concerning the terms and conditions of their work and to apply the terms of its successive collective-bargaining agreements with the Union to them. In determining whether individuals are employees or independent contractors, the Board and the courts apply the common law "right to control" test. Under this crite- rion, an employer-employee relationship exists when the employer reserves not only the right to control the result to be achieved, but also the means to be used in attaining the result. On the other hand, where the employer has reserved only the right to control the ends to be achieved, an independent contractor relationship exists. 7 To determine the nature of the relationship, the Board I' Leasing did not occur at the downtown Minneapolis Yellow garage as that city's ordinances prohibited same. All Minneapolis Yellow drivers continue on commission. '6 Independent contractors are specifically excluded from the defini- tion of employee by the language of Sec. 2(3) of the Act. '7 N.L.R.B v. United Insurance Co. of America, 390 U.S. 254 (1968); Yellow Cab Company, supra. analyzes and balances the facts presented in each particu- lar case. The General Counsel and the Union contend that by closing the Suburban garage to and by transferring the remaining commission drivers and by failing to bargain with the Union concerning the lessee drivers at that garage, a location specifically covered by the contract, the Respondent unlawfully withdrew recognition from the Union for a part of the unit, and has continued its refusal to bargain in violation of Section 8(a)(5) and (1) of the Act. The Respondent contends that it did not vio- late the Act in that it had negotiated the leasing arrange- ment in advance with the Union, that it is not obligated to bargain over the working conditions of independent contractors, and, in any event, the Union previously had disclaimed its interest in representing the lessee-independ- ent contractors. The General Counsel and the Union respond to this by asserting that the parties, during negotiations, had agreed only to a voluntary leasing program, breached by the later unilateral conversion of the Suburban garage and the involuntary transfer of those drivers who did not opt to lease, and that the Union had disclaimed representa- tion of the lessees only if they were true independent contractors. The General Counsel and the Union dispute the independent contractor status of the lessee drivers at Suburban, asserting that the Respondent has retained suf- ficient control over the activities so as to render them employees of the Respondent. The record reveals that negotiations for the 1976 con- tract began in September 1975.18 These were the first contract negotiations between the Respondent, Blue and White, and the Union, which had been certified as bar- gaining representative on August 14, 1975.19 On September 28, 1975, at the start of negotiations, the Union presented its comprehensive contract proposals. 2 0 Included were the following two relevant provisions: Section 36: Should the Company adopt a dial-a-rate system of operation or any other change in mode of operation, including a new type of operation, the matters of wages, hours and working conditions for such employees as may be required for such oper- ation shall be subject to negotiation with the Union. '" The General Counsel's account of what transpired during contract negotiations on the matter of cab leasing is based on the testimony of Lawrence R. Wieland and Richard S. Say, summarized here. Wieland, an employee of Blue and White, served as union recording secretary from June 1975 though December 1976. Say, employed by the Respondent, was president of the Union from July 1975 to April 1976, and thereafter served as business agent. At the time of the hearing, he was chairman of Local Lodge 3025 and an official of the parent Union. Both men partici- pated actively in the negotiations. 19 The parties stipulated that two Teamsters local unions had consecu- tively represented the taxi drivers and other employees of Minneapolis Yellow, Suburban, and Blue and White until 1975. In August 1975, the second Teamsters local was decertified and the Guild of Taxi Drivers concurrently became the certified bargaining representative. On August 1, 1976, while negotiations for the 1976 contract were still in progress, the Guild merged with the Brotherhood of Railway, Airline and Steam- ship Clerks, Freight Handlers, Express and Station Employees, Local Lodge 3025, AFL-CIO. 20 In September 1975, there were approximately 700 employees in the multiemployer bargaining unit, of which about 100 worked at or from the Suburban garage. SUBURBAN YELLOW TAXI COMPANY 271 If an agreement is not reached, the Union is free to strike. Section 37: The Company shall not institute any leasing system without the approval of the Union.2 ' The next bargaining session took place on or about November 19, 1975, when representatives of the Em- ployers and the Union met with a Federal mediator. Having earlier rejected the Union's proposals on leasing as unreasonable, the Respondent by its then president, Jack F. Daly, Jr.,2 2 presented its own initial proposals. Although declaring its desire to introduce voluntary leas- ing, the Respondent could provide no details of such a program or discuss the matter further until it learned the amount of a proposed meter rate increase to be granted by the Minneapolis city council. 2 3 The Respondent fur- ther conditioned implementation of leasing on Internal Revenue Service approval of a lease agreement to be submitted, in order to obtain exemption from payroll witholding requirements for lessee drivers. No progress was made during the negotiating session of January 7, 1976, when the Union continued to oppose leasing. Toward the end of the strike, on February 16 or 17, the parties met again for a session which lasted for over 12 hours. During that meeting, the Union agreed to accept leasing as part of the contract after Daly's repeat- ed assurances that the leasing program would be strictly voluntary, that the lessees would be members of the Union and covered by the union-security clause of the collective-bargaining agreement. Daly also again stated that, before implementation, any leasing program would have to be approved by the Internal Revenue Sevice to obtain payroll withholding exemptions. Daly recognized that the Respondent was faced with the problem of de- vising a lease agreement that would enable the withhold- ing exemptions but also would permit the drivers to be represented by the Union. However, Daly stated, in re- sponse to a question, that lessee drivers would not be eli- gible to participate in the pension plan until after they stopped leasing. In this regard, Say testified that Daly agreed that drivers who had been with the Respondent on a commission basis and who thus had accrued equities in insurance, vacations, and pension rights would be per- mitted to revert to commission driving if they tried leas- ing. Daly affirmed that the Respondent, under its voluntary leasing program, would hire new drivers under the com- mission system and, after they had gained experience, would permit them to convert to lessee status, as he did not believe that inexperienced drivers would be able to lease successfully. Experienced drivers who wished to 21 The union proposals, according to Wieland, were inserted to insure that the Respondent's operations would not be changed without negotia- tions with the Union, which then knew of the cab leasing system that had been introduced in Chicago by the Yellow and Checker Cab Companies. 22 Daly, an attorney in private practice at the time of the hearing, had worked for the Respondent for many years in positions of increasing re- sponsibility before becoming president. Daly was in charge of the Re- spondent's operations from 1967 until about March 1, 1977. Daly served as the Respondent's principal spokesman in negotiations for the 1976 con- tract. 23 As noted, cab leasing is prohibited in Minneapolis itself lease cabs would be taken on simultaneously with newly hired commission drivers, and current commission driv- ers would have the opportunity of becoming lease driv- ers if they so desired. Daly, working from his notes of the meeting of Febru- ary 16 or 17, prepared a summary of what had been agreed to at that session, delivering a copy of this docu- ment to the Union on February 18. The last two items of this summary are as follows: 24. Lessees or independent contractors to be rep- resented by the Union as part of the Union collec- tive bargaining unit and covered by the Union Se- curity Clause. 25. Final contract and lease terminology to be ac- ceptable to I.R.S. At the parties' next bargaining session, on February 19, the Union expressed concern that the Respondent might allocate the best cabs to the lessees and, at the union rep- resentatives' urging, Daly agreed to include a provision in the contract that no cabs would be specifically desig- nated as leased cabs. Wieland related that during that meeting, with company representatives present, he draft- ed contract language, approved by management, that cabs would be given out on a first-come-first-served basis. 24 By April 20, 1976, however, when the parties met again, Daly still had not prepared his draft. In the inter- im, Wieland, working from his own negotiating session notes, which included the events of the February 19 meeting, had written his own contract draft. This docu- ment contained, inter alia, a union-seniority clause and the following language relevant to leasing which Wie- land averred previously had been agreed to by the Re- spondent: Section 23 A. If a person leases he or she is not en- titled to health and welfare benefits for such peri- ods; moreover, such time on leasing is to be cred- ited for said benefits if the driver goes off the lease program. Provided, however, that if a person goes on leasing the third time within a calendar year, he or she forfeits vacation and health and welfare benefits for that calendar year. No pension rights shall accrue while a driver is on leasing. B. . The company shall not require that any cabs shall operate exclusively as lease cabs. 24 The testimony of Wieland and Say partially conflicted with respect to what occurred during the February 19 meeting. According to Wie- land, Daly left the meeting early soon after agreeing not to favor lessees in making cab assignments. Say, on the other hand, recalled that Daly was still present when the meeting broke up at midnight, the purpose of that session having been to work out language clarifications for the basic agreement that had been reached on February 16 or 17, and to resolve the particulars of leasing. Say related that at the end of the meeting Dal, announced that he preferred to prepare the draft contract as the Compa- ny had done in past negotiations, estimating that the draft would be com- pleted in 3 to 6 weeks. In any event, it is undisputed that, when the par ties adjourned on February 19. Daly was to prepare a contract draft for signature, and that cabs would be assigned on a first-come-first-served basis, with no preference given to lessees. r 272 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 2. Should a shortage of cabs exist, drivers shall be given cabs in the order that they check in at the garage, with no priority to be given to either lease or commission drivers, provided that all scheduled drivers shall be given cabs before any cabs are pro- vided to unscheduled drivers. 3. The company shall not institute a lease oper- ation unless and until the language in this contract pertaining to lessees and independent contractors, and the language in the company's lease agreement with individual lessees and independent contractors, is found to be acceptable by the Internal Revenue Service. 4. The company shall not make any mileage charge above the prevailing lease rate for the first 200 miles driven on any shift. 5. Any charge for overtime on a shift beyond twelve (12) hours shall be a pro-rated fraction of the prevailing lease rate. Any charge for overtime shall not include down time. Say testified without contraction that, on April 20, the Union offered Wieland's draft to the Respondent for pur- poses of getting a signed contract, but that William Goodnough, the Respondent's vice president for oper- ations and personnel, replied that the Respondent was not going to sign the contract. Goodnough referred to certain unfair labor practice charges filed by the Union which were then pending against the Respondent and stated that, when that process was ended, the parties would arbitrate some issues and then sign a contract.2 5 The Respondent also expressed its displeasure at the Union for not having helped get cab leasing approved by the Minneapolis city counsel as earlier promised. On August 4, 1976, Local Chairman Say, Union Attor- ney Stephen B. Horwitz, 26 and another union repre- sentative met with Daly. Horwitz testified that Daly congratulated the Union on its recent affiliation with BRAC, stating that he welcomed it and looked forward to a new relationship.27 At the Union's request, Daly also agreed to enforce the union-security clause in the draft agreement by henceforth terminating employees who were delinquent in paying their dues.28 Daly then gave Horwitz a copy of a lease that had been used by the Yellow and Checker Cab Companies of Chicago, telling the union representative that, if leasing inside Minneapolis became legal, the Respondent would institute leasing there, as well as Suburban. Horwitz re- plied that, for leasing arrangements to exclude employees from coverage by the union contract, such lessees would have to be true independent contractors. Daly affirmed 25 The parties independently resolved these other charges before the start of the hearing and the complaint does not allege that the Respond- ent had violated the Act by conditioning its willingness to sign a negoti- ated collective-bargaining agreement upon the Union's withdrawal of its charges. Accordingly, no such finding is considered herein. 2' Horwitz, Chicago-based assistant general counsel of the Brother- hood of Railway and Airline Clerks (BRAC) at the time of this meeting, was in private practice at the time of the hearing. 27 The merger, as noted, had taken place 3 days before. 28 Horwitz related that, while there were certain language differences and a new contract had not been signed, the parties had been applying terms of Wieland's draft, and the Union was proposing that the union- security clause in the draft be enforced as well. such an intent.29 Neither in Wieland's draft contract nor in the discussions with Daly was any reference made as to whether applicants for employment at Suburban would be included or excluded from the voluntary leas- ing clause of the proposed contract. Daly recalled that he had begun the August 4 meeting by telling the BRAC representatives that they had lost all sense in taking over a group such as the Taxi Guild which had been trying unsuccessfully to affiliate with every labor union in the Twin Cities area. He asked if they knew that they had within their new membership people who had attempted to bomb his house. He then continued that he was pleased to have some professional people in the Union and wished them luck. Horwitz then asked when the new contract would be signed. Daly replied that this would happen as soon as he could redraft the entire agreement and overlay the leasing language with the employee language, a difficult job. He showed Horwitz where he had marked up the earlier contract between the Respondent and the Team- sters Union for these employees and stated that he was doing his best but that his law partners were not pleased that he had given all of his time over a period of several months to work on this. It was the leasing provision that had caused the delay in drafting the contract, the terms of which had been basically agreed to since the preced- ing February. Daly averred that there had been disagreement at that meeting on the matter of dues, telling the union repre- sentatives that he was experiencing difficulty in getting many of the drivers to pay their dues as many felt that the earlier strike had not been necessary and that they had not received complete backing from the Union. Daly stated that he could not force drivers who felt the strike unnecessary to pay union dues.30 During a telephone conversation soon after the August 4 meeting, Daly, when asked by Horwitz, agreed that his contract drafting would be expedited if the Union dis- claimed an interest in representing independent contrac- tors. Thereafter, on August 10, Horwitz sent a letter to Daly enclosing for his approval a draft supplemental agreement enabling the Respondent to submit its pro- posed cab leasing arrangement to IRS for approval in those jurisdictions where permitted and, if approved, to offer to unit employees the "option of becoming lessees 29 During several earlier conversations with Daly, Horwitz had ex- pressed the concern of BRAC's legal department that independent con- tractors might improperly be subject to the union-security clause of the contract and had stated his intent to draft language to exclude independ- ent contractors from the coverage of that provision. The Board's Region- al Office, involved in other matters between these parties, had expressed a similar concern. o0 In crediting Horwitz' account of the August 4 meeting, and the union representatives generally, I do not find Daly to have been candid. After testifying at some length that the defunct Teamsters agreement was to serve as the basis for the new agreement, he finally conceded that Wieland's draft, submitted 2 months after Daly had agreed to prepare a document for signing, had served as the basis for the contract that ulti- mately was signed and, except for the leasing clause, was essentially the same document. After considerable equivocation, Daly, on cross-examina- tion, also conceded that, in the interim, the parties had been applying terms and conditions of employment set forth in Wieland's unsigned draft to members of the unit and that the discussion concerning enforcement of the union-security clause related to that provision as contained in the Wieland draft. SUBURBAN YELLOW TAXI COMPANY 273 and independent contractors. Any employee who volun- tarily chose to become a lessee/independent contractor will, from the date he exercised said option, no longer be covered by any of the terms and provisions of the exist- ing collective bargaining agreement between the EM- PLOYER and the UNION." Negotiations, however, continued slowly. On Novem- ber 23, 1976, Horwitz sent another letter and supplemen- tal agreement to Daly. This correspondence addressed itself to four contract issues that remained in dispute apart from leasing and proposed solutions. Horwitz noted that time was of the essence as no less than 9 months had passed since the termination of the strike and the Union's ratification of the agreement. Item 5 of the enclosed supplemental agreement proposed the follow- ing: The UNION hereby disclaims any right to repre- sent independent contractors should the COMPA- NY obtain authority to commence lease arrange- ments. Should any employee within the bargaining unit represented by the UNION voluntarily choose to become a lessee/independent contractor then, from the date said option becomes effective, he or she shall have no further rights and benefits under the collective bargaining agreement. Although the contract was not thereafter signed until January 10, 1977, the further delay was based on issues unrelated to leasing. The signed agreement contained the following relevant language: Section 23 A. The Employer may offer any employee within the bargaining unit represented by the union the option of becoming a lessee-independent contractor. Should any bargaining unit employee voluntarily accept the Employer's offer to become a lessee-in- dependent contractor, then, from the date said option becomes effective, he or she shall have no further rights and benefits under this collective bar- gaining agreement. B. Should a shortage of cabs exist, drivers shall be given cabs in order that they check in at the garage, with no priority to be given to either lease or commission drivers, provided that all scheduled drivers shall be given cabs before any cabs are pro- vided to unscheduled drivers.[Emphasis supplied.] Say testified that in February 1977, having been ad- vised by a driver that Jeffrey Feldman, the Respondent's new president, was going to the Suburban garage in Richfield to speak to drivers about leasing, he and Na- thaniel Forbes, then Guild president, also went to that garage to counter Feldman's anticipated representation that leasing would be a good deal. Feldman, irritated by their interruptions of his conversations with the drivers, threatened to call the police. When asked his purpose, Feldman declared that it was his intent to start a leasing program at that garage as soon as a gasoline pump that could accurately measure the gallons to be sold to the drivers could be installed. Leasing was introduced at the Suburban garage on March 1, 1977. The concept took hold and by the begin- ning of August of that year, of the approximatley 100 drivers at the Suburban garage, only around 8 continued to work on a commission basis. By letter, dated July 20, 1977, to Feldman, Say wrote that the Union had been advised by counsel that taxi drivers who were leasing from his company in Richfield were employees as defined in the Act, asserted the Union's right to represent the lessees at the Suburban garage and demanded bargaining. On August 4, Feldman called Say and told him that, for economic reasons, the Suburban garage was going to be closed to commission drivers. The Respondent was going to give the Suburban commission drivers three op- tions- 3 1 to lease, to go to the downtown garage, or to quit. Say protested that this violated the contract and, the next day, wrote to Feldman grieving this action, re- questing a meeting to discuss the matter and, that failing, declared that the Union would seek arbitration. By letter to Say, dated August 9, Feldman replied that, under the contract, any unit employee who volun- tarily accepted the option of becoming a lessee-independ- ent contractor shall have no further rights or benefits under the collective-bargaining agreement. Feldman de- clared that leasing had been negotiated and that it was not proper at that time to reopen the subject. However, in another letter to Say, dated the following day, Feld- man recalled that he personally had advised Say of the closing of the Suburban garage to commission drivers, but as Say's declared attempts to obtain information from and to discuss this matter with the Respondent had never been brought to his attention, he offered to meet. Taking up this offer, Say met with Feldman and the Respondent's vice president, Goodnough, on August 15, 1977. In response to Say's question, Feldman stated that he had closed that garage to commission drivers because he was losing money. He had lost $4,000 in June, $4,000 in May, and $3,000 in July. When Say asked to see the Respondent's books to check out its claim, Feldman wanted to know why. Say replied that if the Respondent was going to plead poverty, the Union felt that Feldman was under an obligation to show the books to the Union's certified public accountant. Feldman told Say to subpena the books. 32 When Say asked what it would take to reopen the Suburban garage to commission drivers, Feldman said that he did not know and asked for a suggestion. Say re- plied that Feldman should reopen the Suburban garage to the eight locked-out commission drivers and start hiring commission drivers again. Feldman stated that he would take the matter under advisement. He shrugged his shoulders when Say asked how many lessees the Re- spondent planned to have at Suburban. In a letter to Feldman, dated August 16, Say reiterated in writing his earlier oral request that the Union's ac- '1 Simultanelously, the Respondent posted the above-quoted notice at the Suburban garage declaring it closed to commission drivers as of August 7. 32 As the complaint does not allege that the Respondent had unlawful- ly refused to show the Union its books in these circumstances, no finding is made thereon. 274 DECISIONS OF NATIONAL LABOR RELATIONS BOARD countant be permitted to examine the Respondent's books. Say also asked to be informed when Feldman reached a conclusion with regard to his suggestion that the Respondent remedy its situation by reinstating the transferred commission drivers to Suburban and, by re- suming the hire of other commission drivers at that loca- tion. The subject matter of the August 16 letter was re- peated in another letter to Feldman, sent August 24, ac- cusing the Respondent of violating section 23 of the con- tract, relating to voluntary leasing. As some of the relo- cated drivers, because of the short notice given, had lost several days' pay while obtaining their Minneapolis li- censes, the Union demanded that these drivers be made whole and that the disputed closing of the Suburban garage to commission drivers be submitted to arbitration. Feldman's written response, dated August 25, noted that as only 8 commission drivers were employed at the Suburban garage while over 80 others were leasing, the Respondent "found it too cumbersome and time consum- ing to operate any further under this dual operation." Feldman rejected Say's suggestion that the garage be re- opened to commission drivers, requested additional infor- mation about the relocated drivers who had lost money, and enclosed an arbitration panel request form. The next correspondence in this series was sent on February 24, 1978, when Say, thanking Feldman for the copy of the lease agreement received the day before,3 3 requested copies of all leaflets, brochures, or flyers per- taining to the Suburban leasing operation, noting that the Union represented the commission drivers who could be affected by those distributions. Say again questioned the status of the lessees as true independent contractors, as- serting the Union's right to represent such drivers. On January 12, 1979, Minneapolis Yellow and Subur- ban signed the current collective-bargaining agreement, effective August 15, 1978, to August 15, 1981.34 The provision of this contract relevant to leasing is identical to the above-quoted language in the prior agreement. At present the downtown Minneapolis Yellow garage continues to operate completely on a commission basis, while all the drivers at the Suburban garage lease their cabs. 2. The Status of the Suburban Drivers as Employees or Independent Contractors-Facts As noted, the Respondent, contrary to the General Counsel and the Union, contend that the drivers at the Suburban garage are true independent contractors rather than employees and, accordingly, there is no obligation to bargain with respect to them. The record reveals that drivers who wish to purchase leases do so by completing a resume specifying their driving experience, jurisdictions where licensed, personal references, and traffic violations. Each prospective lessee then signs a lease agreement and posts a bond which is used, in the event of an accident, to pay the deductible on the company-provided automobile insurance. Drivers generally post only $100 bonds but, where there is a 35 The Respondent had promised to furnish a copy of the lease agree- ment in the preceding August. "SUnlike the earlier contracts, Blue and White is not a party to the present agreement. record of accidents or motor vehicle violations, the Sub- urban garage manager, Russ Underhill, may require the posting of $250 bonds. Lease applicants also are required, at their own expense, to undergo and pass physical ex- aminations required by ordinance." As noted, lessees at Suburban must have appropriate licenses to operate cabs in the Minnesota cities of Bloomington and Richfield and at the Minneapolis-St. Paul Airport. 3 8 In return for the leasing fee, also paid at the time the lease agreement is signed, and the posted bond, the lessee driver receives a fully equipped, licensed radio cab with liability insurance, towing service," tires, antifreeze, repair service or all damage determined not to be the fault of the driver, and repair for all damage in excess of the lessee's posted bond. Lessees receive credits for lease time lost because of breakdowns, but no reimbursement for time lost for preventive maintenance. 38 At the time of the hearing, leases were available for periods of 12 hours, 24 hours, and I week. These may be broken down as 12-hour day and night leases, respective- ly, and the Respondent, in the past, has experimented with a variety of other leasing plans. The lease agreement, which must be signed every time a lease is renewed, was taken verbatim from the lease considered by the Board and District of Columbia Cir- cuit in the Chicago Yellow Cab case, supra. Under the agreement, each lessee agrees to be the sole driver of the leased vehicle, to comply with all applicable laws, ordin- ances, and Government regulations, to inspect the vehi- cle at the start of the lease term and report any defects to the Respondent, to promptly report all accidents to the proper authorities,36 and to return the cab at or before the end of the lease period in the same condition as originally delivered, with a full tank of gas. 4 0 At the time of the hearing, there were about 50 cabs at the Suburban garage and approximately 102 lessee driv- ers. The lease cabs bore the logo "Suburban Yellow Taxi" while the Minneapolis Yellow Cabs displayed a shield and telephone number, but no name. The driver's right to use the Suburban name and goodwill in connec- tion with the operation of the cab is one of the terms of the leasing arrangement. 4t However, the driver may put no trade name on the cab other than that furnished by 3'The Respondent, as a courtesy, refers lease applicants to a physicians group where, by arrangement, these examinations are provided at major discount. New commission drivers, too, must undergo such examinations at their own cost. 3 While the lease agreement specifies a licensing requirement for the above jurisdictions, Suburban cabs are also licensed to operate in Burns- ville, Eden, Eden Prairie, and Edina. "3Towing is supplied free within a 50-mile radius of the garage. 3 aPreventive maintenance, furnished by the Respondent at its own cost, may be scheduled for cabs while on lease. If the driver persists in not bringing in his cab when notified, Underhill may take the cab out of service until the maintenance work is completed, usually in about 15-20 minutes. "5 When the Respondent is notified of an accident, a supervisor from Minneapolis Yellow is dispatched to the scene. 4OWhile lessees generally may purchase gas anywhere, they are re- quired, at the end of the lease period, to top off their tanks at the Subur- ban garage gas pump. 4 At the request of certain drivers, the Respondent, at its own expense, has had business cards and calendars printed for distribution to the public by the drivers. The business cards state "Suburban Yellow Taxi Compa- ny" and the calendars state "Minneapolis Yellow Cab Company" and "Suburban Yellow Cab Company." SUBURBAN YELLOW TAXI COMPANY 275 the Respondent and any goodwill arising from the use of the Respondent's trade names insures to the Respondent. Article 7 of the lease agreement which specifically seeks to define the relationship between the Respondent and the lessees is as follows: 7. The Relationship of employer-employee or principal-agent does not exist and is not intended to exist by either party to this lease. Instead, only a lease exists. Specifically: a. Lessee's compensation is not guaranteed. All income derived from the use of the Taxicab by Lessee is the sole property of Lessee. b. Lessee is at all times free from right of control and direction of Lessor in the operation of the Taxi- cab, or while the same is in Lessee's possession, and Lessor shall not exercise or attempt to exercise any supervision over the service performed by Lessee. Any rates of fare suggested by Lessor which are not regulated by law, ordinance or governmental rules or regulations are merely for the information of Lessee and Lessee is not obligated to charge such rates. c. Subject to compliance with (the law and exist- ing regulations), Lessee shall not be required by Lessor to operate the Taxicab in any prescribed manner or accept any calls than those which Lessee may of Lessee's violation agree to accept. d. Lessee shall not be required to report the loca- tion or whereabouts of the Taxicab at any time during the lease period. e. Lessee shall not be required to account to Lessor in writing or otherwise for any amounts col- lected from passengers. Lessee shall not be required to furnish Lessor any trip sheet or other record of Lessee's activities unless required by applicable law, ordinance or governmental rules or regulation, except for information relating to accidents or relat- ing to the defense of any claims or suits againt Lessor. f. Subject to compliance with the provisions of (law), Lessee shall not be restricted in any manner as to the area in which Lessee may operate the Taxicab. g. Lessee shall not be required to have the Taxi- cab remain in any specified place or operated for any minimum number of hours during the lease term. This agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified except in writing signed by Lessee and an officer of Lessor. Lessee's rights hereunder are not transferable or assignable in whole or in part. Any waiver by Lessor of any rights arising from breach of or default under any provisions of this agreement must be in writing signed by an officer of Lessor and shall not be con- strued as a continuing waiver or a waiver of other breaches or defaults of the same or any other provi- sions of this agreement. The General Counsel contends, however, that the stated disclaimer in the lease of an intent to create an employer-employee relationship is contradicted by the actual practices of the Respondent in its dealings with the drivers. By variously and unilaterally changing the terms of the signed lease agreements, the Respondent ex- ercises control over the lessees beyond that indicated by the agreed language. Thus, the General Counsel argues that contrary to the language of paragraph (c) of the lease agreement, which provides without qualification that the Respondent will provide repair or tow service if the cab becomes inoperable, the Respondent unilaterally imposes a towing charge if the driver, by not using a tank heater in the winter, cannot start his cab and re- quests towing services on 3 consecutive days. On Janu- ary 1, 1978, the Respondent also issued a memorandum announcing that there no longer would be a breakdown credit for holders of 24-hour leases.4 2 The lease-agreement article protecting the Respond- ent's goodwill and tradenames does not provide that the lessees are restricted by agreements between the Re- spondent and third parties. However, in practice, lessees are not permitted to do business on their own behalf with customers with whom the Respondent has written or oral agreements, but are expected to service such cus- tomers on behalf of the Respondent. The Respondent points out that these arrangements provide additional work to be shared by all lessees for their mutual benefit. In this area, former lessee Maynard Neilsen testified that, in 1977, Underhill told him that he had learned from other drivers that Neilsen had been picking up and dropping off certain passengers under his own agree- ments with these passengers and that, if he caught Neil- sen setting up his own loads, he would not lease to him. Similarly, lessee James Van Tassel related that he was not free to make his own deal with a company with which Suburban had a package pickup contract. Van Tassel, however, also testified that he did have his own customers where there was no conflict with the Re- spondent's contractual arrangements, and that about 30 percent of his business came from the telephone calls to his home from individuals he had driven for years.43 Former lessee Scott Kern testified that, on a number of occasions during a 6-month period in the spring and summer of 1978, he overheard Garage Manager Under- hill admonish another lessee about his performance and, on two separate instances, Underhill accused this lessee of picking up packages from a customer even without having received radio orders to do so. For the first inci- dent of this type, the driver's lease was not renewed for I to 2 weeks. When the second similar incident occurred, 42 Another unilateral change by the Respondent herein was the recent $3-per-hour increase in the amount of the late charge to lessees who return their cabs after expiration of their leases. This charge becomes ef- fective immediately upon expiration of the lease. However, drivers on 24- hours leases have a 4-hour grace period in which to renew after expira- tion before the late charge becomes payable. If the cab has been leased for immediate use, the late charge proceeds will go to the waiting lessee as the late return infringes on his lease term. If the cab has not been so leased, the late charge becomes company revenue. 4a These individual customers usually sought rides to the airport. Van Tassel also derived substanial further revenue independently of the Re- spondent from passengers who hail his cab. 276 DECISIONS OF NATIONAL LABOR RELATIONS BOARD approximately I month later, his lease again was not re- newed. 4 4 Other areas of control and/or discipline over lessee drivers cited by the General Counsel include summary determination and collection of alleged driver over- charges, the use of flat fare rates, memoranda to lessees governing various aspects of their operations, require- ments that lessees clean, vacuum, and wash their cabs, restrictions on the use of the radio on the freedom of les- sees to refuse to accept assigned runs without penalty, the alleged imposition of a dress code, and the Respond- ent's permanent and temporary refusals to renew leases, and threats of same. 4 While meter rates, all established by ordinance, consti- tute approximately 95 percent of taxi revenues, the Re- spondent, both before and since the introduction of leas- ing, has contracted with approximately 25 to 30 corpo- rate customers to furnish transportation, usually for pack- ages, at flat rates which are negotiated and not regulated by law. Although paragraph 7(b) of the lease agreement provides that lessees are not obligated to charge rates not regulated by law, all Suburban lessees have been made aware by posted memoranda and bulletins of those com- panies with which the Respondent has contracted to pro- vide flat transporation rates, and these rates are binding upon lessees who accept orders involving these custom- ers. 46 The Respondent, in turn, contends that this does not constitute control as lessees, unlike commission driv- ers, are free to refuse such runs if offered, and do accept them because they have found such assignments to be personally beneficial. The Respondent asserts that a major benefit to the drivers in purchasing leases is the goodwill already acquired by the Respondent and the opportunity to service a larger established clientele. In addition, the Respondent has made commitments to airlines that lessees delivering luggage can charge only for the shortest routes.4 7 Lessee Ardent Frey testified that, in mid-December 1978, he was told by Underhill 44 Kern's account was substantially corroborated by the Respondent's president, Feldman, who related that the driver's lease had not been re- newed because he had prevented other lessees from obtaining orders at IBM, an established customer of the Respondent, by independently pre- senting himself at the IBM building to pick up package and/or passen- gers, as the case may be. The Respondent had acted in this matter only after receiving complaints from the customer and other lessees. In addi- tion, according to Feldman, the driver also had been guilty of "lying his location," misrepresenting the location of his cab to the dispatcher when bidding for runs, at the expense of more favorably situated drivers. 45 As was true in the Chicago Yellow Cab case, certain incidences of control, alleged by the General Counsel for which leases may be denied, are mandated by various laws and ordinances and must be enforced by the Respondent. Accordingly, leases can be refused to drivers who oper- ate their cabs in excess of the speed limit, who do not keep their cabs clean, who drive while under the influence of alchohol or drugs, and who use their cab radios in violation of Federal Communication Commis- sion rules, i.e., by using profane language over the air. The industry is heavily regulated by laws and ordinances which, among other things, state where taxi drivers may and may not congregate and wait, what the meter rates may be, and which restrict passenger solicitation and the right of the driver to refuse to transport orderly persons to their desired destinations. '6 The Respondent also has contracted with certain customers that there will be no drivers' tips on transportation charges, which, too, is binding on the lessees. 4 The Respondent's cabs frequently are used to deliver delayed lug- gage to its destination. that he had overcharged by $20 for carrying luggage from the airport, which he would have to repay to Un- derhill before renewing his lease. At Underhill's sugges- tion Frey took his complaint on this matter to the down- town Minneapolis Yellow garage where he spoke to Wayne Joyce, general manager. Although Frey denied having charged too much and offered to take any willing company representative on the same run to prove his point, Joyce rejected his offer, stating that he could de- termine the mileage on his map. As Frey could not con- vince Joyce that his charges were correct, he was com- pelled to repay the $20 in order to continue leasing. 48 Witness Kern testified that, while a lessee, he and other drivers utilized the Respondent's charge slip system, which, the General Counsel asserts, is another way used by the Respondent to monitor drivers' charges. These slips are given to the drivers instead of cash by the customer when they complete delivery. The driver then turns in the completed charge slip to the Respond- ent and is paid the rate for that run, while the Respond- ent forwards the charge slip to the customer for pay- ment. The Respondent reviews these charge slips and, where it believes that overcharges have occurred, col- lects the claimed amounts from the drivers even in the absence of customer complaint. While lessee drivers, unlike commission drivers, gener- ally have the right to refuse orders radioed by the dis- patchers,49 this freedom was not always available, parti- culary as it related to baggage runs from the airport. As noted, the Respondent has arranged with various airline companies to deliver delayed baggage from the airport to the passenger's location. Under the airport baggage starter system, the cab drivers line up behind various call boards at the air terminal. When there is 48 As a lease driver, Frey repaid Suburban for alleged lessee over- charges on six to eight occasions. Scott Kern also testified that while a lessee he, too, had been told that the Respondent suspected that he was overcharging and he would be required to repay any amounts found to be due. It is clear from the record that complaints concerning possible overcharges were made by customers directly to the Respondent who re- served the right to unilaterally determine, in summary fashion, whether the overcharge had been made. If found, the Respondent would demand reimbursement from the driver on the penalty of not renewing his lease. Moneys collected are conveyed to customers by the Respondent rather than directly by drivers. *4 Although kern testified that, while drivers technically had the right to refuse orders for runs, it was his experience that, of the approximately nine dispatchers employed by the Respondent, one identified dispatcher had made unfavorable comments on the radio about lessees who did not accept offered runs and he would subsequently assign such drivers to poorer runs. Also, J. C. Ritterson related that, on one occasion while a lessee, he had been politely requested by the dispatcher to go to the rear of the cab stand line after refusing a run. However, chief dispatcher James Le Tourneau testified that, under the Respondent's policy, lessees are free to refuse orders for runs, without penalty, and dispatchers are so instructed. Le Tourneau's testimony, corroborated by Feldman and other of the Respondent's witnesses, including lessees Bruce Stein and Robert Pace, comports with the weight of the evidence, and is credited. Al- though it is possible that Kern and Ritterson, in refusing orders, may have been given poorer runs or have been otherwise discommoded by the personal reaction of individual dispatchers, it is noted that the dis- patchers themselves, except for Le Tourneau, were nonsupervisory mem- bers of the bargaining unit herein, and that such occurrences were rare. Accordingly, it is found that lessees are free to decline proffered runs, with the proviso, as testified to by Stein, that, if they do accept a run, they are obliged to complete it. Commission drivers, on the other hand, are expected to accept and complete all assigned orders. ---- SUBURBAN YELLOW TAXI COMPANY 277 something to deliver, the airport starter5 ° calls the downtown dispatcher. If the baggage is destined for a lo- cation within Suburban's jurisdiction, 5t the dispatcher calls the first Suburban driver on line, telling him to see the starter for the baggage. The cab is left at the special waiting stand, while the driver goes inside to pick up the baggage and charge slips from the starter. Although Feldman testified that the lessee driver knows before leaving the pool area, on the basis of what has been com- municated to him, what the nature of the run will be and is free to decline the order by so informing the dispatch- er, lessee Frey testified that, after waiting at the stand for about 5 hours, he had been ordered to leave the airport by the starter when he refused to accept one bag for de- livery on a run that would be worth about $1.95.52 However, Frey's testimony is confirmed by that of chief dispatcher Le Tourneau who related that drivers at the airport do have to leave their cabs and accept every run before they know its nature and profitability. his is be- cause it is the dispatcher's job to get the orders out and problems would be created for them if they had to an- nounce where each run was going before calling the driver. Therefore, according to Le Tourneau, although a lessee driver may have waited in line for many hours to be the next up, he must blindly leave his cab and see the starter before he knows what he is being given. If he then refuses to take the run, he loses his place in line. Accordingly, I credit the testimony of Frey corroborat- ed by Le Tourneau that, as a practical matter, lessee drivers at the airport cannot reject baggage runs without undergoing meaningful penalty. Also, inconsistent with paragraph 7(d) of the lease agreement, which states that lessees are "not required to report the location of the taxicab," lease driver Maynard Neilsen testified that, on an occasion in the summer of 1977 after he had turned off his radio, he was told by a dispatcher who had called him that he should not do so again when on duty. Lessee Frey described a similar ex- perience where, after he had turned off his radio, Under- hill had asked his whereabouts. The testimony of Feld- man and Le Tourneau that lessee drivers, unlike commis- sion drivers, are in charge of their own radios and may turn them off while on duty, is contradicted by a bulletin on radio procedure to lessee drivers, 53 directing: "Keep your radio on at all times; cancellations can thereby be checked before you go too far." Accordingly, as the testimony of the two drivers that they were not free to turn off their radios while on duty is supported by the written statement of the Respond- ent's policy in this area, they are credited in this regard, sO Unlike the Chicago Yellow Cab case, the starters are not employed by the cab companies, but by the Airport Commission. s' All calls for taxi service from either Minneapolis Yellow or Subur- ban are made to the same downtown telephone number and drivers from both locations are dispatched from the downtown dispatching office. 2 According to Frey, the bag had not been marked for rush or emer- gency delivery, the starter had refused to delay sending him out until there were additional bags for delivery, and when he protested having to go to the end of the line after so long a wait because of having refused so obviously unprofitable a run, he was directed by the dispatcher to leave the airport. 3s G.C. Exh 9 and it is concluded that lessee drivers are expected to keep their radios on at all times while on duty. However, as indicated by the Respondent, it is also clear that there are real distinctions between lessee and commission drivers. Lessees pay only their leasing fees and other expenses, such as may be necessary to post bonds and pay for gasoline, but need not account for their earnings, as do commission drivers who are paid on the basis of what they turn in. There are no minimum performance standards or hours of work set for lessees as there are for commission drivers, who, alone, punch timecards and may be disci- plined and ultimately discharged for not meeting mini- mum standards in terms of both revenue per mile and per shift. Detailed records are kept of the performance of commission drivers on driver performance cards. Com- mission drivers normally work a 9-1/2-hour shift which may reach 11 hours in times of emergency. There are no limits on the hours lessees may work.5 4 While both commission drivers and lessees receive radio orders for runs from the same dispatching office, only lessees are free to refuse such runs. Commission drivers alone receive the Yellow Cab manual, which sets forth a comprehensive set of work rules, including a dress code which prescribes shirts, jackets, and trousers of solid colors, prohibits extremely high-heeled shoes, and establishes grooming standards. Commission drivers are prohibited from wearing jeans and tennis shoes. However, contrary to Neilsen's testi- mony that he was unable to lease his cab on one occa- sion until he left and changed from his jeans, Feldman, corroborated by lessees Bruce Stein and Robert Pace, averred that no dues or grooming codes have been en- forced against lessees. From the general evidence in this area, I find that lessees, who do not receive the manual, are not subject to dress and grooming codes and that the single incident described by Neilsen was isolated, prompted by someone who was substituting that day for Underhill, s 5 and was not an expression of company policy. Commission drivers are subject to having their behav- ior, driving ability, and trip sheets scrutinized on the streets by the Respondent's road supervisors, who are in- structed not to so approach lessees except when their cabs are involved in accidents or to determine if the cab has been sublet, contrary to the lease agreement. Lessees are permitted to use their cabs on personal business during their lease term. Commission drivers are not. Further, there is a mandatory 2-hour training session for new commission drivers, which includes instruction on how to drive taxis and on radio procedure, a program that does not exist for recent lessees. However, if a new lessee so requests, the Respondent will pay another expe- rienced lessee a small fee to go out with the new lessee to provide any necessary instruction and show the loca- tions of the steady accounts. 5 4De facto work hours are, in effect, set for lessees as the Respondent starts its 12-and 24-hour leases at 6 a m, and. accordingly, its 12-hour night leases at 6 pm. 55 Neilsen did not know the identity of the individual who had refused him his lease on this occasion 278 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Apart from such legally mandated reasons as speeding, radio operation in violation of Federal Communications Commission (FCC) regulations, and driving under the in- fluence of alchohol or drugs, leases also may be refused by the Respondent for the following reasons: (a) Driver dishonesty, including fraudulent use of the Respondent's charge slips, overcharges where the driver refuses reimbursement, and non-delivery of goods to be transported. 5 6 (b) Sleeping at cab stands. One lessee, who slept in his cab parked at a stand over night so that he would be positioned to get lucrative early morning runs to the airport, was warned by Underhill that his lease would not be renewed if he was found sleeping there again. Underhill had acted after re- ceiving complaints from other drivers who had passed that stand to wait elsewhere after seeing the sleeping driver's cab already there. (c) Picking up packages at customers' premises without having been so assigned by the dispatcher to the detriment of other drivers. (d) "Long cabbing" where the lessee prevents other drivers more favorably situated to handle an order from receiving it by giving a false cab loca- tion when bidding on the order. (e) Acting detrimentally to the Respondent's goodwill and to the other lessees by making his own arrangements with customers under contract with the Respondent. In the period from March 1977 through December 1978, while leasing to some 240 drivers, the Respondent has refused leases to approximately 21. The Respondent further notes that as two other Feder- al agencies, each of which applies a similar "right to con- trol" test, have previously found these lessees to be inde- pendent contractors, it would be consistent to reach a like conclusion here. By letter, dated August 5, 1977, the Internal Revenue Service granted the Respondent's request of the preced- ing March 21 for a ruling concerning the status of the lease drivers for Federal employment tax purposes, in- cluding income tax withholding. Based solely on the sub- mitted lease agreement and the Respondent's ex parte ap- plication, the IRS determined that the lease drivers were not employees of the Respondent. The Respondent also contends that the independent contractor status of its lease drivers was affirmed by the Equal Employment Opportunity Commission when, on December 29, 1978, its district director in Milwaukee, Wisconsin, administratively dismissed a charge of dis- crimination against the Respondent alleging violation of Title VII of the Civil Rights Act of 1964, brought by a driver whose lease had not been renewed. The stated ground for the EEOC's dismissal was that that agency ," One driver was refused a lease in December 1978, because of com- plaints received from a florist who was one of the Respondent's regular accounts. Feldman testified without contradiction that certain flowers which had been reported as undelivered and a missing wrought iron flower stand were later found in the trunk of the driver's cab. lacked jurisdiction as the lease agreement had not cre- ated an employer-employee relationship. C. Discussion and Findings I. The status of lease drivers as independent contractors or employees In Chicago Yellow Cab, supra, in facts not materially distinguishable from the present matter, the Board found the lessee taxi drivers to be employees of the respondents therein, thus reversing the finding of the Administrative Law Judge who, relying principally upon Columbus Green Cabs, Inc., et a, 5 7 had found them to be inde- pendent contractors. In reaching its conclusion, the Board noted (229 NLRB at 1332) the following factors which are applicable here: . . (1) the lessee drivers have no investment in the instrumentalities of their work; (2) lessee cabs dis- play the Companies' insignia and all goodwill aris- ing from operation of the cabs inures to the Compa- nies' benefit; (3) the work performed by the lessee drivers is an essential part of the Companies' normal operations; (4) the lease term is short and is renew- able only at the Companies' discretion; (5) the terms of the lease are unilaterally set by the Companies; (6) the lessee driver is required by the Companies, upon penalty of forfeiture of the lease, to obey a pervasive scheme of municipal regulations; (7) no subleasing is permitted; (8) the Companies discipline lessee drivers through the threat of city action; (9) the lessee drivers are, in the manner of regular em- ployees, subject to reference checks at the time of application for a lease; (10) the Companies unilater- ally determine whether a lessee driver is at fault in the event of an accident .... It is doubtless true that through leasing the Com- panies have, by substituting economic incentives for more direct means of control, been able to relin. quish some of their supervisory and regulative re- sponsibilities. By charging a flat fee for use of the cab instead of collecting a percentage of the driver's daily fares, the Companies have freed themselves of the necessity of enforcing rules designed to prevent cheating. Similarly, by charging a fee for late re- turns, punctuality is assured without the need for discipline. However, it is also patently clear that the Companies have retained considerable control over the lessee drivers and that only by ignoring business realities can it be said that these drivers exercise any real "independence." As stated, the lease agreements used by the Respond- ent herein were taken verbatim from those considered in Chicago Yellow Cab and similarly implemented, a course enabled by its interrelationships to the respondents in the 57 214 NLRB 751 (1974). Later, in Chicago Green Cabs, Inc.. et a., 237 NLRB 1132 (1978), a representation case involving the same parties and unit as at 214 NLRB 751, the Board, on an expanded record, found that the lessees were employeees within the meaning of the Act. SUBURBAN YELLOW TAXI COMPANY 279 Chicago Yellow Cab case.58 Although the Court of Ap- peals in its original Chicago Yellow Cab, Decision, and on reconsideration, refused to accept the Board's finding that the lessees are employees, in City Cab Company of Orlando, Inc., et al., the Board again concluded that lessee cab drivers are employees within the meaning of the Act and that a bargaining obligation existed. Observ- ing that the Chicago Yellow Cab case was factually distin- guishable from Orlando City Cab, in footnote 4 of Orlan- do City Cab, the Board, in reaching its conclusion, relied on the following factors which are applicable to the present matter: We find that an analysis and a balancing of the facts here clearly manifest an employer-employee relationship. The Employer publishes rules to which it requires all cab drivers to adhere. These rules govern the operation of all cabs at the airport and are published to meet the obligation of a concession agreement between the Employer and the Orlando airport. The cabs driven by contract drivers are wholly owned by the Employer with income real- ized from advertisements on the trunks of the cabs accruing solely to the Employer. Both contract and commission drivers must report to the Employer's facility to get a cab as no specific cabs are assigned to contract drivers .... After receiving a cab, the contract driver is provided with a trip record sheet which he is required to keep. The contract driver may use the Employer's dispatcher to receive cus- tomer calls, although, at least theoretically, he is not bound to the dispatch system. However, contract drivers have received oral reprimands from a dis- patcher when they have refused requests to pick up rides. Finally, through its ability to make unilateral changes in the contract and the rates at any time, the Employer effectively controls working condi- tions and the amount of money drivers can earn. As the Board's intent expressed in the cited similar recent cases is clear, it, of course, is binding on me. Accordingly, it is noted that, in this case as in those cited, the drivers, while they pay a lease fee, have no capital investment in the cabs they drive and, in fact, the Respondent has discretion to assign a different vehicle to each lessee whenever leases are renewed. 60 The terms and conditions under which the lessees work are unilaterally established by the Respondent, who, as in Chicago Yellow Cab, retains the right to end the leasing relationship, which it has done at least 21 times. As argued by the Respondent in reliance on the court's decision in Chicago Yellow Cab, the Respondent's ability to terminate the leasing relationship may be indic- ative of the Respondent's stronger bargaining position, rather than an incident of control. However, when this ss Not only is this Respondent under the same corporate ownership as those in Chicago Yellow Cob but its president, Feldman. is the son and former assistant of the president of the Chicago Checker Cab Company. $g See 242 NLRB No. 16 (1979). issued after the court's initial decision in Chicago Yellow Cab, but before the court ruled on the General Coun- sel's motion for reconsideration. 60 Frequent reassignment of cabs is a real possibility as there are twice as many lessee drivers at the Suburban garage as there are cabs. paramount position is used to control the manner in which the lessees perform their work and to impose obli- gations and restrictions not mentioned in the lease agree- ment, the lessees then are left to operate in a narrowed channel. Although the lease agreement provides, in effect, that lessees are not obligated to charge rates not imposed by law or ordinance, i.e., the meter rates, lessees, in fact, are bound by the flat rate schedules negotiated by the Re- spondent and various of its customers. To the extent that these flat rates fall below the meter rates for correspond- ing runs, which, obviously, is the attraction of such an arrangement to the customers, the lessee becomes limited as to what he may charge and earn beyond the require- ments of law. Although the "right to control" test used in determin- ing independent contractor status in different industries is always defined in essentially the same terms,61 certain in- dustries inherently lend themselves more readily to the independent contractor relationship than do others, and closer questions arise where this same standard is applied to those businesses which are less adapted. In the construction industry, for example, where inde- pendent contractor status has often been found, the gen- eral contractor, in retaining the various independent sub- contracting concerns, customarily negotiates with each for the completion of specific work, i.e., the installation of the electrical wiring, masonry, or plumbing on the jobsite. The subcontractor then proceeds to carry its work to completion, is paid, and departs. The subcon- tractor is answerable to the general contractor only for the suitability of the finished job and generally operates under his own name and professional reputation. In a host of cases, frequently involving common situs picket- ing and jurisdictional disputes, subcontractors' identities as separate employers have been recognized by the Board. Critical to the independent status of such subcon- tractors is their freedom to hire and use such employees and equipment in their work as they see fit, limited only by considerations of practicability and profitablity. The use of subcontractors in the construction industry contrasts with taxi industry leasing where, as in the pres- ent case, the relationship between the Respondent and it lessee drivers is more ingrown and continuing, and the lines of authority less clearly defined. Here, the lessees negotiate with the Respondent not for the completion of specific tasks or products, but for terms which the par- ties, particularly the Respondent, anticipate will govern a continuing long-term relationship. :2 The terms of the lease agreement and the nature of the ongoing relationships thus created necessarily generate concerns on the part of the Respondent with respect to 6' As noted, under the right-to-control test, an employer-employee re- lationship exists when the employer reserves not only the right to control the result to be achieved, but also the means to be used in achieving the result. On the other hand, where the employer has reserved only the right to control the ends to be achieved, an independent contractor rela- tionship exists. Chicago Yellow Cab supra, at 1332. 62 The Respondent encourages longer term leasing relationships by publicizing and providing lower daily costs for weekly leases and by af- fording 4-hour grace periods for renewal of 24-hour leases before imposi- tion of the late charge. It is clear that the great majority of drivers who lease cabs from the Respondent do so on a repetitive basis -- - 280 DECISIONS OF NATIONAL LABOR RELATIONS BOARD matters affecting its own vital interests and which pro- vide material incentive to regulate and control the lessees in the performance of their work. Among these factors are (a) the need to protect its trade names and goodwill and, thus, the marketability of its leases, from possible diminution by lessees who use same in their business; 63 (b) the need to protect its licensing privileges from revo- cation or suspension because of misuse of its vehicles by lessees who operate them in the company name; (c) the Respondent's economic interest in reducing its costs and in extending the life of its cabs, even when this conflicts with the interests of the lessees; and (d) the need to impose order so that lessees do not use unfair competi- tive practices in obtaining runs at the expense of the other lessees. One of the strongest incentives to control thus referred is economic. It is to the Respondent's benefit to keep down the amount of mileage put on its cabs during any given lease term. Not only does low mileage generally prolong the life of the cab and reduce annual replace- ment costs but, as the Respondent President Feldman testified, the costs of the company-provided insurance and leased tires also are geared to the amount of mile- age.64 The principal means used by the Respondent to ensure lower mileage-the lease provision that the lessee shall be the sole driver of the cab-restricts not only the drivers' mileage and earnings, but also their ability to uti- lize fully the cabs with their own personnel during the lease terms. 6 5 While the provision enabling only the immediate lessee to drive might not severely impact the holder of a 12- hour lease, which approximates a single work shift, it is not reasonable to presume that a lessee for 24 hours could by himself drive the cab for the entire lease period. In fact, under the single driver clause, the longer the lease term, the greater is the proportion of idle cab time to the overall duration of the lease. Also thereby in- creased is the loss to the lessee of potential earnings. In precluding its lessees from allowing others to drive during their lease terms, the Respondent not only has af- fected the lessees' financial returns but has interfered in an area of discretion essentially reserved for independent contractors-the ability to work in their own way using their own personnel. Unlike the example in the construction industry, where subcontractors generally perform in their own names, the lease agreement used here reserves for the Respondent all goodwill from the operation of its cabs and the driv- ers, whether commission or lessee, work only under the Respondent's logo. Accordingly, users of Suburban cabs receive no notice that Suburban drivers have an inde- pendent status and complaints relating to alleged over- charges are routinely made to the Respondent's office 63 This entails an examination by the Respondent of the adequacy of customer service, particularly as related to its own regular patrons. 64 Unlike Chicago Yellow Cab where the lease agreement specified that lessees were not permitted to drive more than 250 miles a day, the lease agreement here does not per se limit the number of miles a lessee can drive. 1e While it might be argued that lessees possibly benefit in lower leas- ing fees from whatever the Respondent saves in thus reducing mileage, the issue is one of whether control is actually exercised rather than whether justified. rather than to the drivers themselves. In practice, the Respondent, in protecting its goodwill, has reserved for itself the right to deal summarily with lessees in unilater- ally determining whether overcharges in fact occurred, the amount of same, and to the demand reimbursement on the penalty of loss of leasing privileges. To the gener- al public, lease drivers appear as part of the Respondent's general operation. Even the ordinances of licensing juris- dictions create a joint and several liability in the case of violations.6 6 It is left to the Respondent to exercise disci- pline over its lessees to protect its business reputation and cab licenses. In noting in Chicago Yellow Cab that lessees, as here, are not subject to income withholding taxes and enjoy no fringe benefits, the Board stated supra at 229 NLRB at 1332-33: The fact that the lessee drivers pay no Federal withholding taxes, though relevant, is not determi- native of independent contractor status.tx The ab- sence of fringe benefits is of some relevance but is of little probative value .... And, finally, al- though the drivers are admittedly on their own once they leave the garage and are free to prospect for fares when and where they choose, this . . . is "inherent in the nature of the work" and is there- fore not of special significance. Ad See Checker Cab Company and its Members, 141 NLRB 583 (1963), 153 NLRB 651 (1965), affd. 367 F.2d 692 (C.A. 6, 1966); Blue Cab Company and Village Cab Company, 156 NLRB 489 (1965). Finally, contrary to the Respondent, it does not appear appropriate to defer to the ruling by the Internal Reve- nue Service, made August 5, 1977, that the lessees are in- dependent contractors. While the finding of another Government agency is a factor to be considered, it is in- sufficient to affect the conclusions herein as this determi- nation is based on a record developed after hearing in which the parties participated, presented evidence and cross-examined witnesses, whereas the IRS ruling recites that it was based on a Form SS-8 and the lease agree- ment. The IRS, in administratively considering the Re- spondent's ex parte application, did not have before it evidence of the extent to which the Respondent unilater- ally had altered the terms of the lease agreements in con- ducting its leasing program, and could not be aware of the measure of control over the lessees' work actually exercised by the Respondent, as detailed above. 6 7 For the above reasons, finding that those aspects of the owner-driver relationship showing extensive control outweigh those factors indicating driver independence, I conclude that the Respondent's cab drivers are employ- ees within the meaning of the Act, and that the Respond- 6H Sec. 11.16 of the Minneapolis-St Paul International Airport ordi- nance, regulating the conduct of taxicabs within its jurisdiction, provides that every licensee and every driver or a taxicab shall observe and obey all pertinent rules, regulations, and ordinances controlling the use and op- eration of such vehicles, establishing, in effect, a joint and several liability for any breach. e7 Lorenz Schneider Co., Inc., 209 NLRB 190, 191, fn. 5 (1974). For like reasons, deferral also is unwarranted to the administrative ruling of the district director. SUBURBAN YELLOW TAXI COMPANY 281 ent is required to bargain with the Union concerning the terms and conditions of their employment.68 2. The Respondent's withdrawal of recognition from the union as bargaining agent for the lease drivers The Respondent answers the General Counsel's con- tention, that it unlawfully withdrew recognition from the Union as the bargaining representative of the Suburban drivers when they became lessees, by asserting that, during contract negotiations, the Union disclaimed its right to represent lease drivers and that the Respondent had met its contractual obligation to establish a volun- tary leasing program by not forcibly compelling commis- sion drivers already at Suburban to become lessees. Fur- ther, when, in August 1977, business reasons compelled closing the Suburban garage to the few remaining com- mission drivers, they all were offered the option of trans- ferring to the downtown Minneapolis Yellow garage without loss of seniority, pay, or other benefits. The par- ties differ in their interpretation as to whether the volun- tary leasing language of the contract had been intended to apply to applicants for employment, or only to com- mission drivers already employed at Suburban. The Gen- eral Counsel, contrary to the Respondent, contends that voluntary leasing, as agreed by the parties, was to be ap- plicable to drivers in both categories. The record establishes that the parties intended that the leasing program be voluntary, as reflected in the con- tract proposals submitted by each side during negotia- tions and by the provisions concerning leasing in the last two collective-bargaining agreements. By the agreement reached, drivers at the Suburban garage would not be compelled to lease their cabs unless they so desired. Nevertheless, there were still eight commission drivers employed at the Suburban garage when, on August 7, 1977, the Respondent closed that facility to commission drivers, requiring that such drivers either lease their cabs, transfer to the Minneapolis Yellow garage located 10 to 12 miles away, or resign their employment. While there is no evidence that the Suburban commission driv- ers who earlier had become lessees had done so involun- tarily, the Respondent's unilateral refusal to employ com- mission drivers at that facility after August 7 unilaterally ended the voluntary leasing program there. The Re- spondent's chief negotiator for the 1976 contract, Daly, testified that many of the commission drivers who had worked for Suburban did so because of the proximity of that facility to their homes, and the record shows that drivers who transferred to other jurisdictions were re- quired to meet new licensing requirements. The Respondent, in its brief, admits that after August 7, there no longer was an option to be a commission driver at the Suburban garage, but contends that it had no duty to offer such an option to prospective drivers at that location and that the remaining employee drivers s~ In observing that the axicab industry is inherently less adapted to functioning through services of independent contractors than certain other industries, including construction, no suggestion is intended that lessee cab drivers cannot become independent contraclors As stated in matters cited above, such a dtetrmination must he made independently on the facts of each case had the voluntary option of remaining as commission drivers merely by transferring to the downtown facility. I find this argument unpersuasive. The 1976 collective- bargaining agreement covered a unit of commission driv- ers at three garages-Minneapolis Yellow, Suburban, and Blue and White. The Union had bargaining rights at each location and the contract contained no provision enabling the forced transfer by an employer of drivers from one garage to another. Rather, the parties, in nego- tiating their contract, had agreed that leasing was to be voluntary at each location. Having concluded that the lease drivers herein are em- ployees, rather than independent contractors, I find no merit to the Respondent's contention that the Union had waived its right to represent them. As the evidence showed, the parties reached basic agreement on the terms of a collective-bargaining agree- ment in February 1976 but, in August of that year, Daly still had not met his commitment to draft the finished contract for signature. Earlier, in April, responding to Daly's delay the Union had submitted its own draft. In August, Daly still having taken no action with respect either to his or the Union's draft, met with union repre- sentatives, including Attorney Horwitz. In response to concerns expressed by the Union's legal staff and by the Board's Regional Office that the contract should not un- lawfully cover independent contractors, as not employ- ees under the Act, the Union proposed to remove true independent contractors from the unit description. I agree with the General Counsel that the Union, having ended its earlier strike only when the Respondent agreed that the Union would represent the lease drivers as well as commission drivers, would not have relinquished its representational rights concerning the lessees merely to make it easier for Daly to complete his contract draft if they could be lawfully included in the unit. Accordingly, crediting Horwitz, as noted above, it is concluded that the Union had agreed to waive its right to represent les- sees only if they became true independent contractors, a status which the lease drivers at Suburban did not achieve. Therefore, the Union remains the bargaining representative of these drivers. Accordingly, the Respondent's unilateral action, in de- priving commission drivers who wisued employment as such at the Suburban garage of that opportunity in avoidance of its existing bargaining obligation for the drivers at that location, constitutes withdrawal of recog- nition from the Union for that segment of the unit in vio- lation of Section 8(a)(5) and (1) of the Act. Similarly, to deny applicants for employment at the Suburban garage their chance to work there as commission drivers, par- ticularly in furtherance of the Respondent's unlawful withdrawal of recognition from the Union as bargaining representative of its Suburban drivers, also is included in the violation of Section 8(a)(5) and (1)69 of the Act found herein. 7 R Applicants for employment also are entitled to the protection of the Act Amerae Corporation. Swan Horve Division. 217 NLRB 942 (1975) 7' he General Counsel anticipating the Respondent's argument as roted that. under the sluntary leasing system. drivers had a choice I driving on a commissiorn basis fr Minneapolis Yellosw or on a lease basi, Conlinued 282 DECISIONS OF NATIONAL LABOR RELATIONS BOARD IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Respondent set forth in section II1, above, occurring in connection with the Respond- ent's operations described in section 1, above, have a close, intimate, and substantial relationship to trade, traf- fic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing com- merce and the free flow thereof. CONCIUSIONS OF LAW I. Respondent Yellow Taxi Company of Minneapolis and Suburban Yellow Taxi Company are a single em- ployer engaged in commerce within the meaning of Sec- tion 2(2), (6), and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 3. All lease and commission taxi drivers, limousine drivers, baggage freight truck drivers and cab service employees, including dispatchers, ordertakers, starters and all employees who read meters, check oil and gas, wash cars, and generally service cabs, employed by the Respondent at its Minneapolis and Richfield, Minnesota, facilities, excluding office clerical employees, mechanics, professional employees, guards and supervisors as de- fined in the Act, constitute a union appropriate for pur- poses of collective bargaining within the meaning of Sec- tion 9(b) of the Act. 4. At all times material herein, the Union has been the collective-bargaining representative of the employees in the above appropriate unit within the meaning of Section 9(a) of the Act. 5. By withdrawing recognition from and by refusing to continue to recognize and bargain with the Union as the collective-bargaining representative of the Respondent's lessee drivers at the Suburban garage in Richfield, Min- nesota, the Respondent has engaged in unfair labor prac- tices within the meaning of Section 8(a)(5) and (1) of the Act. 6. By refusing to apply the terms of their outstanding successive collective-bargaining agreements with the Union to the lessee drivers at the Suburban garage since August 1, 1977,72 the Respondent has engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 7. By unilaterally and without the agreement of the Union coercively transferring to its Minneapolis facility on about August 7, 1977, the eight commission drivers who were still employed at the Suburban garage in Rich- field, Minnesota, the Respondent has engaged in unfair labor practices within the meaning of Section 8(a)(5) and (I) of the Act. for Suburban, sought to magnify the difference in the two locations by contending that Minneapolis Yellow and Suburban do not constitute the same employing entity. This argument, rejected above, was unnecessary to establish the violations found herein. 71 The unit found herein is generally patterned on that described in the most recent collective-bargaining agreement signed by Minneapolis Yellow, Suburban, and the Union on January 12, 1979. As noted, Blue and White was not a party to this contract. 72 The applicability of the August 1, 1977, date will be discussed below with regard to the remedy. 8. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that the Respondent has engaged in cer- tain unfair labor practices, I shall recommend that it be required to cease and desist therefrom and to take certain affirmative action designed to effectuate the policies of the Act. For the reasons set forth above, I shall recommend that the Respondent be ordered, upon request, to bargain collectively with the Union as the exclusive collective- bargaining representative of the employees in the above- described unit, including the lease drivers employed at the Suburban facility in Richfield, Minnesota, and to apply to such lease drivers, from August 1, 1977,73 such terms and conditions of its two most recent collective- bargaining agreements with the Union as may be applica- ble-i.e., seniority, insurance, pension, and other fringe benefits. As the parties here have agreed to a system of cab leasing, this should continue on a voluntary basis, as ne- gotiated. Since it has been found that the Union is the bargaining representative of the lessees, who now consti- tute a new driver category within the unit, the Respond- ent, upon request, should be required to bargain with the Union concerning any other terms and conditions of the lessees' employment deemed relevant. Any agreement reached should be embodied in a signed understanding, perhaps amending or augmenting the current collective- bargaining agreement. To remedy the Respondent's unlawful coercive trans- fer, on or about August 7, 1977, of eight commission drivers employed at the Suburban garage in Richfield, Minnesota, to the downtown Minneapolis Yellow garage, it is recommended that the Respondent be required to offer them immediate reinstatement to their former posi- tions at the Suburban garage and to make whole, these 73 Although the complaint alleges that the Respondent has refused to bargain since February 28, 1977, August I of that year appears to be the earliest date in which a violation can be found. In the present matter, unlike Chicago Yellow Cab, the Respondent and the Union negotiated and agreed upon a voluntary leasing program which was introduced on March I., 1977. It further was agreed that, if these lessees were true inde- pendent contractors, the Union would not represent them. There is no evidence, before August 1977, that any drivers who became lessees did so involuntarily, The Union thereafter did not seek to represent the lessees from March I until the Union's letter of July 20, 1977, meanwhile bar- gaining at Suburban for only a dwindling number of commission drivers. The most immediate response to the Union's July bargaining demand came on August 1, when the Respondent discontinued its practice of fur- nishing the Union's president, Nathaniel Forbes, with monthly reports of personnel changes at the Suburban garage. In these circumstances, I find that the Union had agreed to a system of cab leasing and had permitted the Respondent to implement this program in the period from March I to August 1, 1977 However, as the Union did not clearly and unequivocally waive its right to represent the lessees unless true independent contrac- tors, which they were not, it is concluded that the Respondent's refusal to bargain with the Union and the applicable date for applying the con- tract to the lessees should be August 1, 1977, when the Respondent stopped furnishing monthly personnel change reports to the Union and first manifested that it no longer recognized the Union at its Suburban facility SUBURBAN YELLOW TAXI COMPANY 283 for any7 4 and all other employees covered by the con- tract, for any financial loss sustained by them as the result of the Respondent's unlawful refusal to apply the terms of the collective-bargaining agreement to the lessee 74 The transferred commission drivers also are entitled to be reim- bursed, if not yet made whole for any earnings lost wile they are await- ing licensing in Minneapolis drivers since August 1, 1977. Backpay is to be computed on a quarterly basis in the manner established in F. W. Woolworth Company,75 with interest as provided in Flor- ida Steel Corporation.76 [Recommended Order omitted from publication.] 7" 90 NLRB 289 (1950). 7a 231 NLRB 651 (1977). See, generally, Isis Plumbing & Hearing Co., 138 NLRB 716 (1962).