San Marcos Telephone Co.

In the Matter of SAN MARCos TELEPHONE COMPANY, EMPLOYER and SOUTHWESTERN DIvIsIoN No. 20, COMMUNICATION WORKERS Or .AMERICA, PETITIONER Case No. 16-RC-254.-Decided January 26, 1949 DECISION AND DIRECTION OF ELECTION Upon an amended petition duly filed, hearing in this case was held at San Marcos, Texas, on October 15, 1948, before a hearing officer of the National Labor Relations Board. The hearing officer's rulings made at the hearing are free from prejudicial error and are hereby affirmed. Pursuant to the provisions of Section 3 (b) of the National Labor Relations Act, the Board has delegated its powers in connection with this case to a three-man panel consisting of the undersigned Board Members.* Upon the entire record in this case, the Board makes the following : FINDINGS OF FACT 1. The business of the Employer : The Employer, a Texas corporation with its main office and place of business in San Marcos, Texas, is engaged in furnishing exclusive tele- phone service in San Marcos and surrounding territory over its own lines and equipment, as well as long distance telephone service over its own and connecting lines of the Bell Telephone System.' It is im- possible to make or receive long distance calls in the territory serviced by the Employer unless its facilities are used. Its gross annual re- ceipts during the past few years have amounted to approximately $50,- 000, an undetermined portion of which was derived from long dis- •Chairman Herzog and Members Houston and Murdock. ' Pursuant to an agreement with the Employer , the Bell Telephone System maintains a cable of telephone wires connected to the Employer 's switchboards in the Employer's building at San Marcos. 81 N. L. R. B., No. 53. 314 SAN MARCOS TELEPHONE COMPANY 315 tance telephone service.z The Employer has over 1,000 subscribers, at least 300 of whom are commercial or non-residential in nature.3 Contrary to the contention of the Employer, we find that it is engaged in commerce within the meaning of the National Labor Relations Act 4 2. The organization involved : The Petitioner, Southwestern Division No. 20, Communication Workers of America, is a labor organization claiming to represent -employees of the Employer.5 3. The question concerning representation : The Employer refuses to recognize the Petitioner as the exclusive bargaining representative of employees in the proposed unit until the Petitioner has been certified by the Board. We find that a question affecting commerce exists concerning the representation of employees of the Employer, within the meaning of Section 9 (c) (1) and Section 2 (6) and (7) of the Act. 4. The appropriate unit : The Petitioner seeks a unit of all employees in the traffic and cleri- cal departments of the Employer, including supervisory telephone operators, but excluding the Chief Telephone Operator, maintenance or plant employees, and the supervisor of the clerical department. The Employer contends that the appropriate unit should be limited to the telephone operators in the traffic department, excluding the Chief Telephone Operator and all supervisory telephone operators. It argues that the work of the clerical department has been contracted out to an independent contractor and that it no longer has any cleri- cal employees who could be included in any appropriate unit. In accordance with the prevailing custom in the telephone industry, the Employer divides its operations into three departments : traffic, plant, and clerical. All departments are located in the same building. 2 The Employer maintains seven switchboards-two are devoted exclusively to long distance calls, three are devoted to local calls only and the remaining two are combination switchboards capable of handling long distance and local calls. The record shows that the two long distance switchboards are constantly in use, often requiring the assistance of the two combination switchboards for long distance calls, and that long distance calls of an Interstate character are frequent. 3 Included in such non-residential group are an Army Air field, western Union Telegraph Company, State Teachers College, and various lumber companies. 4 See N. L. if. B. v. Central Missouri Tel. Co., 115 F. (2d) 563 (C. A. 8, 1940) ; N. L. if. B. V. J. G Boswell Co., 136 F. (2d) 585, 589 (C. A. 9, 1943) ; Matter of The Elyria Telephone Company, 63 N. L. R B. 432. The Employer's motion to dismiss the amended petition on the ground that it is not engaged in commerce under the Act is hereby denied. ® The Employer's motion to dismiss the petition on the ground that the Petitioner is not a labor organization within the meaning of the Act is hereby denied. The record conclusively establishes that Petitioner is organized for the purpose of dealing with employers concerning grievances, wages, hours of employment, working conditions, and other matters affecting employees, and is therefore a labor organization within the meaning of Section 2 (5) of the Act. 316 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The traffic department is concerned with the actual handling of tele- phone calls, all of its employees being telephone operators. The plant or maintenance department constructs and maintains telephone facili- ties and equipment. The clerical department prepares and sends bills, takes orders for telephone installation, handles all books and records of the Employer, and has charge of the Employer's pay rolls. Recognizing the highly integrated and interdependent character of the operations of the different departments in the telephone in- dustry, the Board has frequently sanctioned the grouping of clerical and traffic employees in the same bargaining units In view of the foregoing, we conclude that a unit consisting of employees in the clerical and traffic departments is appropriate in this case,? unless there is merit to the Employer's contention that its clerical employees are in fact the employees of an independent contractor. The Employer contends that the entire operations of its clerical department were contracted out in the fall of 1947 to a certified public accountant (hereinafter called the Accountant), and that since then the two clerks employed in the clerical office have not been its em- ployees but those of the Accountant, an independent contractor.8 Prior to the 1947 arrangement, the clerical office was admittedly operated as a direct function of the Employer. The Accountant, before that time, performed accounting and auditing services for the Employer and had charge of its books and billing. He was paid a fixed monthly sum and supervised the two clerks in the Employer's clerical department. The latter were paid directly by the Employer and were during this period admittedly its employees.9 In the fall of 1947, the Employer entered into an oral arrange- ment with the Accountant,10 under which the Accountant pays the two clerks, deducts their withholding income taxes, and pays social security taxes with respect to their services. At the end of each month, the Accountant submits a bill to the Employer listing the amount of time spent by, and the wages paid to, the two clerks and the amount of office supplies purchased during that period. The Em- ployer then reimburses the Accountant for such expenditures, and, 8 Matter of Southwestern Associated Telephone Co., 76 N. L. R B 110.5 , Matter of Souther it Bell Telephone & Telegraph Co., 55 N. L. It. B. 1058. In Case No 16-R-2137, a proceeding involving this same Emplo'ei, the Board, on April 9, 1947, found that the traffic and clerical employees constituted an appropriate unit and certified the Southwestern Telephone Workers Union, N. F. T. W , the predecessor of the instant Petitioner, as the exclusive bargaining agent for such employees. No con- tract appears to have been entered into by the parties following such certification. 8 Section 2 (3) of the amended Act provides that "the term `employe' . . . shall not include . any individual having the status of an independent contractor . . 8 The two clerical employees were included in the unit found appropriate In the Board proceeding noted hereinbefore, supra, n. 7 10 This agreement is apparently terminable at the will of either party. SAN MARCOS TELEPHONE COMPANY 317 in addition, pays the Accountant a fixed monthly sum for his own sere-, ices.11 The Clerks perform the same services in the same office of the Employer as before the 1947 agreement. The Accountant main- tains his own office, but performs the Employer's work at the Em- ployer's office as well as at his own office. Although he performs accounting and auditing services for other business concerns, he de- votes a portion of each day to the Employer's work. The Act, as previously noted, excludes an "independent contractor" from the category of "employee." The legislative history, in this connection, shows that Congress intended to give the term "inde- pendent contractor" its conventional meaning, following the ordi- nary common-law test, namely the "right of control." 12 Under this doctrine, an employee relationship, rather than that of an independent contractor, exists where the person for whom the services are per- formed reserves the right (even if not exercised) to control the man- ner and means by which the result is accomplished.13 The facts and circumstances from which possession of such power to control may be determined vary from case to case, and are dependent in large measure upon the nature of the functions in question and the degree to which the possibility of detailed supervision is present in such functions.14 Thus, ordinary manual labor requiring little discretion is capable of being supervised in each minute detail. The practice of a certified public accountant, lawyer, doctor, or other professional person, however, requires the exercise of discretion with respect to the precise manner of performance of his work. Under such cir- cumstances, the courts have shifted their investigation of the degree of control over the specific details of the work to an analysis of the degree to which the professional person has become integrated into the operating organization of the employing unit.15 As seen above, 11 The Accountant was paid a greater monthly sum before the 1947 arrangement, since he apparently did more of the Employer's work himself at that time. 12 See Matter of Steinberg & Co , 78 N L. It. B. 211. 13 Singer Manufacturing Co v. Rahn, 132 U S 518 ( 1889). 14 United States v. Vogue, 145 F. ( 2d) 609 , 611 (C. A. 4th, 1944) ; Peasley v. Murphy, 381 111 187, 44 N. E 2d 876 , 880 (1942) ; Ryan v. Farrell, 208 Cal 200 , 280 Pac. 945, 946 (1929) 15 West Virginia Coal and Coke Corp. V. State Compensation Com'r , 116 W. Va. 701, 182 S E 826 , ( 1935 ) ; Bernstein v. Beth Israel Hospital, 236 N. Y. 268, 140 N. E. 694 ( 1923 ) , Matter of Steinberg & Co., 78 N L. R B 211, 223; see also , I. R B. Cum. Bul. 1939-1, Jan -June 1939 , S. S. T. 363, p. 291 , where the Bureau of Internal Revenue in iuling on the employee status of certain physicians stated: "It is the opinion of the Bureau that the 0 Clinic has the right to exercise , and does exercise , such control and direction over the manner and means in which the associate physicians perform their duties as establishes the relationship of employer and employee . Such control and direction, although not as detailed perhaps as in the case of other employees performing services of a different character, requiring detailed control , is such as is necessary in i mew of the character of the work . It is accordingly held that the five associate physicians performing service under the stated circumstances are employees of the 0 Clinic for the purposes of Title VIII and IX of the Social Security Act." 318 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the clerical operations involved are an integral and functional part of the communication service that the Employer holds itself out to perform for the general public.- Upon the basis of the foregoing facts, particularly the close integra- tion of the Employer's clerical department with its other departments, the inclusion of the clerks in the unit previously found appropriate by the Board, the manner in which the clerks are paid, the payment of the Accountant on the basis of a fixed monthly sum thus not sub- jecting him to the risk of loss, the continuing character of the serv- ices performed, the power of the Employer summarily to end the relationship without subjecting itself to liability and the fact that at the present time, as before the 1947 arrangement, the clerks working under the Accountant perform their duties on the Employer's premises and with the Employer's equipment, we find that the Accountant is not an independent contractor 17 and that the clerks are employees of the Employer." We shall therefore include the latter in the unit. is 16 See Matter of Interstate Telephone Co., 77 N. L It. B 637 ; Matter of People's Telephone Corp., 69 N. L. R. B. 540 ; Matter of West Coast Telephone Co., 66 N. L. R B. 1073. 17 Even assuming, as the Employer contends, that the Accountant has the sole right of hire and discharge of the clerks involved , this does not in and of itself compel a finding that an independent contractual relationship exists. Such a factor is merely one of the elements , not In itself controlling , to be considered in determining the existence of an employer-employee relationship . Linstead v. Chesapeake & Ohio Railway Company, 276 U S 28 , 34 (1928 ). Nor does the fact that both the Employer and the Accountant consider the relationship created by the 1947 agreement to be that of an independent contractor , or the fact that the Accountant assumes the responsibility of handling with- holding income and Social Security Tax payments , have any controlling effect. Rutherford Food Corp . v McComb, 331 U. S. 722, 729 (1947 ) ; Matter of Southwestern Associated Telephone Co., 76 N. L. It. B . 1105, 1115 . Attempts to "label" a relationship created under a contract have never been afforded any degree of finality . Rather, it is settled that the nature of a relationship created under a contract must be determined by a consideration of all the relevant facts and circumstances . Gulf Refining Co. v. Brown, 93 F (2d) 870 (1938). 18 In the alternative , the Employer urges that even If the clericals are held to be its employees , they should not be included in the unit on the ground that such clerks are "professional employees " within the meaning of the Act. This contention is rejected since the record shows that these employees perform routine bookkeeping and clerical duties , clearly not professional work within the meaning of the Act. See Matter of Inter-Mountain Telephone Co., 79 N. L. R. B. 715. "The Employer cites Matter of Southwestern Associated Telephone Company, 76 N. L. R. B. 1105, in support of its contention that the Accountant performs his work as an inde- pendent contractor. That case is clearly distinguishable on its facts from the instant situation . Thus, unlike the Accountant here involved , the agents in the Southwestern case, who operated switchboard exchanges in rural and thinly populated communities, were appointed on the basis of written contracts of limited duration whose terms specifically provided that the agents were to act as independent contractors ; with few exceptions, the agents paid the salaries of their assistants, as well as all expenses for heating , lighting, and servicing, without being reimbursed therefor by the company ; they were required to perform at their own expense-without reimbursement by the company-all work in- volved in the making and accepting of contract orders and the collection of revenues resulting therefrom ; the agents' assistants were not former employees of the company who had performed the same services prior to execution of the agency agreement , but were generally procured from within the agents' immediate families ; and, as stressed by the Board, the agents were , with few exceptions, not paid a fixed monthly sum but were paid SAN MARCOS TELEPHONE COMPANY 319 The Accountant, however, will be excluded, inasmuch as he is clearly a supervisor within the meaning of the Act. There remains for consideration the question of the supervisory status of the two employees classified as "supervisory telephone oper- ators." The Petitioner would include these two operators in the unit. The Employer would exclude them as supervisors. The record indicates that when the Chief Telephone Operator is off duty, these two operators, or in their absence, an operator with the most seniority, have nominal charge over the telephone operators. The authority of these individuals, however, is limited to solving oper- ational problems. They have no authority to originate orders, but are required to follow the work schedules set up by the Chief Telephone Operator. Unlike the Chief Telephone Operator, they have never hired, discharged, or disciplined any of the telephone operators. It is clear that, despite their classification, the only supervision these two supervisory operators exercise is of a routine nature. Accord- ingly, we shall include the two supervisory telephone operators in the unit 20 We therefore find that the following employees of the Employer constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9 (b) of the Act: all employees in the traffic and clerical departments of the Employer, including super- visory telephone operators, but excluding maintenance employees, the Accountant, the Chief Telephone Operator, and all other supervisors as defined in the Act. DIRECTION OF ELECTION As part of the investigation to ascertain representatives for the purposes of collective bargaining with the Employer, an election by secret ballot shall be conducted as early as possible, but not later than 30 days from the date of this Direction, under the direction and super- vision of the Regional Director for the Sixteenth Region, and subject to Sections 203.61 and 203.62 of National Labor Relations Board Rules and Regulations-Series 5, as amended, among the employees in the unit found appropriate in paragraph numbered 4, above, who were employed during the pay-roll period immediately preceding the date of this Direction of Election, including employees who did not work during said pay-roll period because they were ill or on vacation or temporarily laid off, but excluding those employees who have since according to a schedule based upon the amount of revenue collected by them and the number of telephones and stations serviced by the exchange. 20 See Matter of Ohio Telephone Service Co., 72 N. L R. B. 488. 320 DECISIONS OF NATIONAL LABOR RELATIONS BOARD quit or been discharged for cause and have not been rehired or rein- stated prior to the date of the election, and also excluding employees on strike who are not entitled to reinstatement, to determine whether or not they desire to be represented, for purposes of collective bargain- ing, by Southwestern Division No. 20, Communication Workers of America.