J. Howard Smith, Inc.

J. HOWARD SMITH, INC. 21 compensation policy along with the general employees of the Company. On the basis of the foregoing, particularly the facts indicating that the killing of kosher cattle and shipping of kosher products forms a large portion of the Company's business, that the kosher workers perform all of their work at the Company's plant, and are indirectly controlled through the Employer's operation of its plant, we find that the Company and the Rabbis, who supervise and directly control the working conditions of the kosher workers and determine their salaries, constitute a single employer within the meaning of Section 2 (2) of the Act. 3. A question affecting commerce exists concerning employees of the Employer within the meaning of Section 9 (c) (1) and Section 2 (6) and (7) of the Act. 4. As the kosher workers are the only employees employed by the Company and the Rabbis as a single employer, and in view of the religious aspects of their work which is unlike that of the other em- ployees in the plant, we find that they should function as a unit separate and apart from the general production and maintenance employees of the Company.' We find that all schochtim and tag men employed by the Employer at the Company's plant in Kansas City, Kansas, excluding all super- visors as defined in the Act, constitute a unit appropriate for the purposes of collective bargaining, within the meaning of Section 9 (b) of the Act. [Text of Direction of Election omitted from publication in this volume.] * The Board has consistently found units of schochtim to be appropriate bargaining snits . Armour & Company, 72 NLRB 717, and cases cited therein. We therefore find no merit in the Rabbis' contention that the religious nature of their work precludes their representation for purposes of collective bargaining. J. HOWARD SMITH, INC. and SEAFARERS INTERNATIONAL UNION OF NORTH AMERICA, AFL, PETITIONER. Case No. 4RC--814. July 671951 Decision and. Order Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held in September 1950 before Fred G. Krivonos, hearing officer. Following that hearing, the Em- ployer, hereafter called Smith, moved to reopen the hearing on the ground that it was changing its method of fishing operations for the 1951 season. The Board remanded the case for hearing on the alleged 95 NLRB No. 9. 22 DECISIONS OF NATIONAL LABOR RELATIONS BOARD changes and the hearing was completed on May 2, 1951. The hearing officer's rulings made at the hearings are free from prejudicial, error and are hereby affirmed. Upon the entire record in this case, the Board finds : 1. The Employer is engaged in commerce within the meaning of the Act. 2. The labor organization involved claims to represent certain em- ployees of the Employer. 3. The question concerning representation : The Petitioner seeks to represent all fishermen and cooks employed on boats chartered by captains from Atlantic Navigation Company, hereafter called Atlantic, for the purpose of catching fish for sale to Smith. Although not disputing the categories in the requested unit, Smith contends that these men are not in its employ, but are inde- pendent contractors or employees of independent contractors, and that the unit sought is therefore inappropriate. The main business of Smith is the sale of products derived by proc- lessing menhaden fish for fish oil, solubles, and fish meal. At the docks near its plant in Port Monmouth, New Jersey, it purchases menhaden fish from *any boat which delivers them. Approximately ^80 percent of the fish delivered to these docks is caught by boats, called "charter boats," which were formerly owned or leased by Smith, but are now owned by Atlantic, a wholly owned subsidiary corporation of Smith. Smith purchases the remaining 20 percent of its fish from small boats, called "independents," which are owned by their captains. The relationship of the charter boat captains to Atlantic and to Smith is governed by two. agreements. Under the charter with At- lantic, a captain takes "full and.exclusive possession, management, navigation, control. and operation" of a fishing vessel worth from ;$150,000 to $300,000.: The boat is completely equipped by Atlantic, which also furnishes enough fuel for normal daily operations. In return, the captain pays Atlantic $4.40 for each thousand fish caught and sold, a sum calculated from the detailed monthly report made by the captain to the boat owner. The captain agrees to provide com- petent officers and crew at his own expense. The engineer is to be appointed by the captain and approved by Atlantic. The term of the charter is for the fishing season, although the owner may terminate it on 2 days' notice if the captain fails to keep any of the conditions.or stipulations set forth in the charter. . Sometime after a captain signs a charter agreement with Atlantic, he signs a fish purchase agreement with Smith. By this contract, the captain agrees to sell, and Smith agrees to buy, all menhaden fish de- livered by the captain to Smith during the season at a certain price per thousand fish. At the date of-the, hearing, no price had been set J. HOWARD SMITH, INC. 23 by Smith, allegedly because of the possibility that a price ceiling might be established by the Government for fish products. The fish purchase agreement provides that Smith will retain part of the purchase price until the end of the season , and that if the cap- tain does not fish for the entire season, this amount shall be kept as liquidated damages. According to the testimony, the purpose of this clause is to encourage captains to continue fishing until the season ends in October, despite the sporadic nature of the catch in September and early October. Each fisherman, in turn, does not receive his full share of the price for the catch unless he remains with the boat for the full season. A lump sum payment to the captain for the fish caught and delivered is made every 2 weeks. Should a dispute arise between Smith and a captain, the matter is to be referred for arbitra- tion, : after 14 days, to the American Arbitration Association. The menhaden fishing season lasts from May until October. Al- though the independent boats begin fishing early in May , the charter boats do not begin to fish until after the fish have "schooled." Towards the end of May, Atlantic summons the captains to its headquarters in Reedville, Virginia, where the fishing boats have been stored for the winter. The fishermen then assemble at Reedville. At that time, each captain mans his charter boat with a crew of approximately 24 men. Thereafter the boats sail north to the Port Monmouth docks of the Smith Company. It is customary for the charter boats to leave the docks about 4 o'clock each morning, fish all day, and return in the late afternoon. The fish are counted on Smith's docks by a volumetric device; the cap- tain does not receive his pay at the time the fish are delivered to Smith, but is paid later on a biweekly basis. The relation of master and servant exists whenever the employer retains the right to direct the manner in which the business shall be done as well as the result to be accomplished ., In accordance with the mandate of. Congress ,2 the Board has adopted common law tests to determine whether or not a right of control over the business lies with the alleged employer.3 Accordingly, in deciding whether the right of control is held by the fishing captains or by Smith , we shall apply a variety of tests, such as who has the right to hire and discharge the fishermen, controls the method of their payment, furnishes the tools with which they work, and supervises the work. No one factor is determinative ; one must look at the venture as a whole.' 1 Singer Manufacturing Company v. Rahn, 132 U. S. 518. 2 See House Conference Report No. 510, 80th Congress, 1st Sess. 1947, pp. 32-33; souse Report No. 245, 80th Congress, 1st Sees. 1947, p. 18. s Sinclair Refining Company, 93 NLRB 1115; San Marcos Telephone Company, 81 NLRB 314; Steinberg & Company, 78 NLRB 211. 4 The common law tests applied by the Board were discussed in Steinberg and Company, supra. See also N. L. R. B. v. Phoenix Mutual Life Insurance Company, 167 F. 2d 983, cert. den., 335 U. S. 845 ; Cosmopolitan Company v. McAllister, 337 U. S. 783 at 795. 24 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The Petitioner urges the Board to take a realistic view of the eco- nomic relationship between Smith and the captains. Such a view, it contends, would show that the captains are dependent upon Smith for their livelihood. It insists, first of all, that Atlantic's control over the fishing operations must be imputed to Smith. All the directors and officers of Atlantic are officers and directors of Smith, and, with one exception, members of the same family. A transfer of the ownership of boats to Atlantic was made by Smith with the purpose, according to the Petitioner, of evading the obligations of an employer. It is undenied that there is frequent consultation between the officers of the two' corporations. Considering Atlantic and Smith as one employer, the Petitioner maintains that the captains, having only their skill as a commodity for sale, are in poor position to bargain with either corporation. It points to the undisputed existence of a "gentlemen's agreement" by which all the charter boat captains agree to sell to Smith all the fish that their boats catch. This agreement, it is contended, prevents a captain from selling to other fish processing companies, and a captain realizes that he must sell only to Smith or he will not be given a boat for the next season. Without the promise of a boat, a captain is, of course, unable to recruit a crew. This dependence on Smith, the Peti-. tioner maintains, is inconsistent with the status of an independent contractor. The Petitioner points to other factors showing the control of the fishing operations by Smith or its subsidiary. Thus, Atlantic decides when the season for the charter boats will begin and end; Smith fur- nishes free of charge the services of an airplane which radios the loca- tion of schools of fish to the charter boats. In past years, Smith has handled all the clerical work for the captains, obtained licenses for the boats, paid the fishermen directly, and withheld the required taxes from their pay. Although the captains have been .told that Smith would no longer perform these services in 1951, as of the date of the reopened hearing-a month before the opening of the season-no arrangements had been made by the captains to obtain the licenses or handle any of the accounts. The distinction between control over the result contracted for and control over the method of obtaining that result is often a difficult one to make. Anyone who has a contractual relationship for the full-time services of another person has a certain amount of control over that person's mode of operations. In this case a strict application of the common law tests of control leads us to the conclusion that the cap- tains are independent contractors and' the fishermen their employees. We note, in particular, that the relationship of the captains to Smith and its subsidiary, Atlantic, is to be governed in 1951 by two written agreements which give to the captains all the rights and privileges J. HOWARD SMITH, INC. 25 of independent contractors.' Under these agreements, a captain has complete control of the management and navigation of. his charter boat. Subject to the necessity of delivering the fish daily, he may fish at the hours he chooses and in the area he considers most productive. He is under no obligation to follow the suggestion of the Smith Com- pany airplane in regard to the best location for fishing.° Furthermore., under the two agreements, a charter boat captain is obligated to pay a fixed price per thousand fish to Atlantic and he receives a fixed price from Smith for all the menhaden fish caught during the season. Con- sequently, like other independent contractors, his profit or loss is at- tributable in part to the way in which he combines efficiency and economy in the management of his ship. The existence of the relationship of independent contractor in the present instance is likewise confirmed by other circumstances commonly associated with this relationship. Thus, the services of an independ- ent contractor, unlike those of an employee which may generally be terminated at the will of the employer, may not be ended without breach of the agreement.7 Similarly, the agreements with Atlantic and Smith may not be ended during the season except upon breach of the conditions of those agreements. Neither Atlantic nor Smith may terminate the employment of any of the fishermen. Moreover, the independence of the captains is indicated by the fact that each captain is required to obtain his boat license in his own name; that he is charged with supplying the boat with food; that he is responsible for the payment of the accounts carried for the boat at grocers in Port Monmouth; and that he is responsible for the manning of his boat.8 There is no doubt that the fishermen are under the supervision of the captains rather than Smith. They are hired and discharged by the captains.9 Their work is supervised and they may be disciplined by the captains. Finally, the captains set the wages of the fishermen. It is admitted that the wage scale for fishermen is standard on all the charter boats and, furthermore, that it is dependent upon the price paid by Smith for menhaden fish, but this in no way indicates that 5 On the date of the reopened hearing , because no price had been set for menhaden fish, no captain had signed the fish purchase agreement with Smith , although those signing the charter agreements had promised to do so . If the fish purchase agreement eventually signed is substantially different from the one submitted in evidence , or if the method of operation should depart from that provided in the written agreements, reexamination of the relationship between the fishermen , captains, and Smith may be in order. G Lack of control by the purchasing company over the freedom of the fishermen to go where they please and to fish in any manner and for any length of time they wish was one of the factors relied upon by the Board in Alaska Salmon Industry, 81 NLRB 1335, where fishermen were held to be independent contractors . In that case, over 15 percent of the small fishing boats was owned directly by the fish processing companies. 7 New England Telephone and Telegraph Company, 90 NLRB 1139. 8 In recruiting a crew for the first time, a captain may travel as much as several thousand mites during the winter months in order to have a sufficient number of fishermen assemble at his boat at Reedville at the start of the season. 9See Birmingham v. Bartels, 332 U. S. 127 ; The Fuller Automobile Company, 88 NLRB 1452. 26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Smith has the power to change the wages that the fishermen receive. The standard wage scale is the result of an agreement or understand- ing among the charter boat captains in order to prevent competition in recruiting crews. The power to hire, fire, set the wages, and super- vise the fishermen in this case is of primary importance in showing that the fishermen are the employees of the captains." The method of payment of wages has been one of the tests consid- ered by the Board and the courts to determine whether an alleged independent contractor has the right of control over those working under him 11 In the instant case, it appears that in 1951 the captains, rather than Smith, have the obligation to withhold the required taxes from the fisherman's salaries, and retain part of those salaries as a bonus to be paid at the end of the year. Although Smith handled all accounts for the captains in 1950, the captains understand that in 1951 they are solely responsible for keeping the records that accom- pany the operation of a boat and the payment of its crew. These responsibilities of the captains are indicative of an independent con- tractor status. Of course, if the changes in this regard, as in others promised for the 1951 season, are not effected, reexamination of our decision herein will be warranted. Applying the common law tests to the factors discussed above, we find that the captains are independent contractors and the fishermen their employees.12 This decision is in accord with the Board's deci- sion in Alaska Salmon Industry, Inc., supra, and with court decisions in related fields of law 13 We find, accordingly, that no question af- fecting commerce exists concerning the representation of employees of the Employer, within the meaning of Section 9 (c) (1) and Sec- tion 2 (6) and (7) of the Act, and we shall therefore dismiss the petition. Order Upon the basis of the entire record in this case, the National Labor Relations Board hereby orders that the petition filed in the instant matter be, and it hereby is, dismissed. MEMBERS HOUSTON and STYLES took no part in the consideration of the above Decision and Order. 10 See, for instance , Fairchild Cafeteria, 87 NLRB 667 , where a contractor who hired, fired, and set the wages of his employees was held to be independent despite the fact that his prices and profits were limited by the contracting principal. 11 J. F, Alexander Lumber Company, 78 NLRB 1097; Flint Oil Company, 88 NLRB 634. 12 Cf. N. L. R. B. v. Steinberg, 182 F. 2d 850. 13 In antitrust cases, the courts have held that fishermen who owned or leased fishing boats under somewhat similar arrangements were independent contractors . Columbia River Packers Ass'n v. Hinton, 315 U. S. 143; Local 36 of International Fishermen and Allied Workers of America v. United States, 177 F. 2d 320, cert. den. 339 U. S. 947. See also , a case arising under the Jones Act, Cosmopolitan Company v. McAllister, 337 U. S. 783, supra.