Hughes Transportation, Inc.

458 DECISIONS OF NATIONAL LABOR RELATIONS BOARD HUGHES TRANSPORTATION, INC. and INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS AND WAREHOUSEMEN LOCAL No. 779, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WARE- HOUSEMEN AND HELPERS OF AMERICA, AFL, PETITIONER. Case No. 9-RC-2154. July 26, 1954 Decision and Direction of Election Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before Thomas M. Sheeran, hear- ing officer. The hearing officer's rulings made at the hearing 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 National Labor Relations Act. 2. The labor organization involved claims to represent certain em- ployees of the Employer. 3. A question affecting commerce exists concerning the representa- tion of employees of the Employer within the meaning of Section 9 (c) (1) and Section 2 (6) and (7) of the Act. 4. The Employer, under license from the Interstate Commerce Commission, is exclusively engaged in the transportation by truck of explosives, ammunition, and component parts for the United States Government in 16 States of the United States. At its Richmond, Kentucky, terminal, which alone is involved in this proceeding, the Employer owns and operates 100 trailers and 31 tractors, the drivers of which are herein referred to as Employer-owned equipment opera- tors. In addition, the Employer leases 12 tractors, of which 6 are driven by their owners, herein called owner-operators, and 6 are driven by owner-selected or Employer-selected drivers, herein called non- owner-operators. The Employer and the Petitioner, otherwise agreeing that truck- drivers and garage employees at the Employer's Richmond, Kentucky, terminal constitute an appropriate collective-bargaining unit, disagree with respect, to the inclusion therein of owner-operators and non- owner-operators. The Petitioner would exclude them on the ground that they are independent contractors; the Employer would include them on the ground that they are employees of the Employer as defined in the Act. The parties further disagree with respect to the status of the head mechanic, discussed below. Owner-operators and nonowner-operators The owners of the 12 leased tractors lease their tractors to the Employer pursuant to the provisions of identical equipment leases, 109 NLRB No. 75 HUGHES TRANSPORTATION, INC. 459 which are prepared by the Employer. These leases provide that the lessor (owner) is to pay all license fees and taxes of the State of origin of the equipment and all operating and maintenance expenses and is to bear the loss of, or damage to, the leased equipment. The lessee (Employer) is to pay the cost of all equipment license fees, taxes, and charges in the States through which the lessee operates the equipment, except as noted above; is to pay the cost of liability in- surance; 1 and is responsible for losses to the property and persons of others which are not occasioned by the driver's fault. The lessor is required to paint such signs and other information on the leased equipment as the lessee shall direct, and to remove the same at the termination of the lease at his own expense; 2 upon the termination of a lease the lessee is required to return the equipment to the lessor in substantially the same condition as received, except for ordinary wear, tear, depreciation, and loss or damage thereto. The leases further provide that the leased equipment is to be at all times in the lessee's sole and exclusive possession and control and is to be operated by "drivers or helpers selected, directed, appointed, and discharged by the lessee." The lessees are required to assume and pay the cost of "items properly classified as compensation of drivers or helpers as employees." The leases further provide that "if an owner is employed as a driver on the equipment leased from him," he shall not be entitled to any compensation as an employee whenever the leased equipment is not available for operation, unless during such period the owner "in his capacity as an employee" drives other equip- ment or performs other services at the lessee's request, in which event the owner shall be paid "the compensation due him for such services as an employee." In view of the dangerous nature of the cargo it transports, the Em- ployer is required to use a high degree of care in the selection and control of its drivers. Although owners of the leased tractors may apply to drive or may recommend others to drive their equipment, the Employer accepts as drivers only those who have satisfactorily passed physical examinations and have demonstrated their knowledge of the rules and regulations of the Employer and the Interstate Commerce Commission and their ability as drivers. In the event that they do not measure up to these requirements, the Employer may refuse to ac- cept them. In the event that a driver violates the rules or regulations of the Employer or the Interstate Commerce Commission, the Em- 1 Collision insurance, not mandatory under the terms of the leases, is paid for by the lessors. 2 All of the tractors have "Hughes Transportation, Inc " with "Charleston, South Caro- lina" or "Richmond, Kentucky" on the cab doors, together with the requisite Interstate Commerce Commission and State markings ; some tractors also have the words "Leased by Hughes Transportation, Inc.," with or without the name of the tractor owner 460 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ployer may discharge him ,and immediately hire a replacement of his own choosing without notice to the owner of the equipment. All drivers are dispatched on a "first in , first out" basis. All drivers are privileged not to drive on occasion , if they do not desire to do so; the privilege stands so long as it is not abused . Should they for any reason refuse to drive a load when their turn arrives , their names are placed at the bottom of the dispatcher's list. All drivers are required to follow prescribed routes. They are permitted to "swap" loads only upon notification to the Employer . Any driver can, with the Em- ployer's permission , drive his tractor to and from his home; no driver, however, is permitted to use the equipment he drives for purposes other than those of the Employer. If a leased tractor is under repair, the driver may at his own request be temporarily assigned to drive an Em- ployer-owned tractor, and for so doing he is compensated in the same manner as the Employer-owned equipment operators, hereinafter de- scribed; if a leased tractor operator is unable to drive, the Employer may, without notification to the owner , assign an Employer-owned equipment operator to drive the same.3 Basic compensation for all drivers , whether or not they work dur- ing any pay period, is $45 a week, minus tax and employee benefit de- ductions described below.' Payroll checks of Employer-owned equip- ment operators also include the additional amount, if any, by which these drivers' mileage earnings (figured at the rate of 6 cents a mile loaded and 4 cents a mile unloaded ) exceeds this figure. With respect to leased equipment drivers, on the other hand, both excesses and deficiencies in operators' mileage earnings (figured at the rate of 18 cents a mile loaded and 16 cents a mile unloaded), with respect to this $45 figure, are reflected in the separate equipment lease checks paid to the owners as compensation for the lease of their equipment. Thus, owner-operators, who receive $45 a week in payroll checks as com- pensation for driving, also receive equipment lease checks which vary in amount according to the excess or deficiency of mileage which they accumulate as drivers ; nonowner-operators likewise receive $45 in payroll checks as drivers, while the owners receive the equipment lease checks, figured in the same manner as those of the owner-operators. Whether or not, in the latter case, the nonowner-operator receives an upward or downward adjustment in his compensation to reflect his mileage earnings is entirely the concern of the equipment owner. A second point of difference in the compensation of Employer-owned equipment drivers, as opposed to leased equipment drivers, lies in the 8In practice , the Employer, wherever possible, notifies the equipment owner. 4 The $45 figure is guaranteed to the Employer-owned equipment drivers. Interstate Commerce Commission regulations require all drivers to be listed on the Employer 's payroll. HUGHES TRANSPORTATION, INC. 461 fact that only drivers in the former group participate in the Em- ployer's bonus plan.' For all drivers, the Employer deducts sufficient amounts from their payroll checks to cover social security, an Employer-sponsored group hospitalization and accident insurance plan, and tax withholdings, if any. Although the Employer deducts State Workmen's Compensa- tion only from the equipment checks it pays out, it totals the wages of all drivers in order to determine the amount of its contribution to the State. In the recently decided Eldon Miller case,' which our dissenting col- leagues deem to be dispositive of the issue herein, the Board considered the status under the Act of so-called "conditional sales drivers," who, like the owner-operators in this case, drove equipment which an "em- ployer" was operating pursuant to lease arrangements. In that case, the Board ultimately concluded that the "conditional sales drivers" were independent contractors, and were not employees within the Act's meaning. In certain respects, the owner-operators in this case appear to resemble the "conditional sales drivers" of the Eldon Miller case. Thus the owner-operators here, like the "conditional sales drivers," lease to an "employer" equipment which they themselves drive; they, like the "conditional sales drivers," also bear the operat- ing and maintenance expenses of the leased equipment, are responsible for repairs to such equipment, and pay various license fees therefor; and their compensation, like that of the "conditional sales drivers," depends in part upon the extent of their driving. However, there are absent from this case certain factors which were present in the Eldon Miller case, and upon which the Board expressly relied in deciding the latter case; correlatively, there are present in this case certain im- portant factors which were not present in the Eldon Miller case, and which we consider to be decisive of the issues presented here. In the Eldon Miller case, the Board noted that the express intent of the parties was to create an independent contractor relationship. The presence of this factor, said the Board, was a "persuasive reason for resolving a close case, . . . in favor of the expressed intent of the parties." ° Significantly, no such intent appears in this case. Rather, those clauses of the leases summarized and quoted above, which deal with the compensation and services of drivers, refer to the drivers as "employees," and for this reason manifest an intention to create an 5 The Employer's bonus plan provides additional compensation of 1 cent a mile to Em- ployer-owned equipment operators with 60-day accident-free records . Bonus shares of drivers with accident records are accumulated and distributed at Christmas time to all drivers in this group, whether or not they have accident-free records, in proportion to the mileage they have earned. 6 Eldon Miller, Inc., 103 NLRB 1627 ; 107 NLRB 5157, 7 107 NLRB 557. 462 DECISIONS OF NATIONAL LABOR RELATIONS BOARD employer-employee relationship. Again in the Eldon Miller case, the Board noted that the "conditional sales drivers" possessed the kind of powers exercised by "employers" with respect to the hiring, firing, and payment of substitute drivers. And it was this factor which in the language of the Board "rendered vulnerable our original determina- tion that these drivers [the "conditional sales drivers"] are `employees' within the meaning of the Act." 8 Significantly, again, it does not here appear that the owner drivers in this case possess powers which are usually attributed to employers. To be sure, they may select their sub- stitutes, but, as set forth above, the ultimate power to hire and to re- place the substitutes is vested in the Employer. Indicative of the degree of "control" which the Employer in this case exercises over all drivers herein involved is the fact that the leasing of equipment to the Employer does not automatically qualify the lessor, or his substitute, to drive for the Employer. On the con- trary, the Employer carefully selects all drivers on the basis of their driving qualifications-a factor which does not appear to have existed in the Eldon Miller case. Similarly, unlike the employer in the Eldon Miller case, the Employer, without exception prescribes the routes to be followed by drivers, and requires that the swapping of loads be done only by its leave. Again, unlike the employer in the Eldon Miller case, the Employer makes social-security deductions and with- holds income-tax payments from the compensation of its drivers. The extent of the control the Employer exercises over the drivers, as well as its almost unqualified exercise of a dominion over the leased equipment, has convinced us that the factors present herein indica- tive of an "employer-employee" relationship outweigh those indica- tive of an "independent contractor" relationship. Under all the above circumstances, therefore, we find that owner- operators and nonowner-operators are employees of the Employer within the meaning of the Act, and we shall therefore include them in the unit herein found appropriate .9 The Head Mechanic The head mechanic, also known as the shop foreman, effectively recommends the discharge and discipline of employees. Although he has not recommended increases for employees, his recommenda- tions in this respect would be carried out insofar as reasonable. We therefore find that the head mechanic is a supervisor as defined in the Act, and we shall accordingly exclude him from the unit herein found appropriate. 8 Ibid. In the Eldon Miller case , the Board originally determined that the "conditional sales drivers" were employees. 103 NLRB 1627 , 1629-1630 . In a supplemental decision, the Board, upon reconsideration, reached the result indicated in the text . 107 NLRB 557. 9 Cf. Malone Freight Lines, Inc., 106 NLRB 1107, and cases cited therein HUGHES TRANSPORTATION, INC. 463 We find that all truckdrivers and garage employees at the Em- ployer's terminal at Richmond, Kentucky, including Employer-owned equipment operators, owner-operators, and nonowner-operators, but excluding office clerical employees, plant clerical employees, profes- sional employees, guards, all other employees, the head mechanic, dis- patchers, and other supervisors as defined in the Act, constitute a unit appropriate for the purposes of collective bargaining within the means of Section 9 (b) of the Act. [Text of Direction of Election omitted from publication.] CHAIRMAN FARMER and MEMBER PETERSON, dissenting in part : The majority opinion in this case directs an election in a truck- driver unit, and includes therein Employer-owned equipment opera- tors, owner-operators, and nonowner-operators. We disagree with our colleagues as to the inclusion of the owner-operators and non- owner-operators on the ground that their finding that these drivers are employees of the Employer is based upon a factual situation which appears to closely parallel that involved in Eldon Miller, Inc.'0 wherein the Board recently found certain truckdrivers to be inde- pendent contractors. It would appear that, in the following respects, the relationship existing between the owner-operators and the Employer in the in- stant case is comparable to that existing between the owner lease drivers and the employer in the Eldon Miller case." The owner-operators in this case and the owner lease drivers in Eldon Miller own their vehicles outright and operate under lease agreements with their respective employers, which require the leased vehicle to be used exclusively in the employer's operations. Neither lease agreement requires the personal services of the lessor. More- over, it appears that the accepted practice in both cases, in those in- stances where the lessor does not personally drive, has been for the lessor to recommend or select a substitute driver subject to the ap- proval of the employer, thereby leaving to the latter the ultimate power to hire. The Board in its Supplemental Decision and Order in the Eldon Miller case,12 found certain other drivers operating under conditional sales and lease agreements with the employer also to be independent contractors. In the following respects, the relationship between both the owner lease drivers and the "conditional sales drivers" and the employer in Eldon Miller is similar to that existing between the owner-operators and the Employer in this case. 10 103 NLRB 1627; 107 NLRB 557. 11 103 NLRB 1627. 12 107 NLRB 557. 464 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The method of compensating the lessor is elastic and based upon the extent of hauling operations. In Eldon Miller, the lessor is com- pensated on a percentage of gross revenue, whereas here the lessor receives from the Employer a weekly driving payroll check plus an equipment lease check based upon mileage. In both cases, the lessor, in effect, determines the wage of his substitute driver .1-3 In Eldon Miller, the lessor's substitute is paid by the lessor. Here, although the substitute receives a flat $45 weekly sum from the Employer, whether or not he receives "an upward or downward adjustment in compensation to reflect his mileage earnings" is entirely the concern of the lessor, thereby leaving to the latter's discretion the total wage to be paid the substitute driver. Like the case at hand, the leasing of equipment to the employer in Eldon Miller does not automatically qualify a substitute to drive for the Employer. Although in each case the owner of the equipment may recommend or select a substi- tute, in neither case may any person be hired to drive for the em- ployer without the latter's approval. The lease agreement in both cases provides the employer with the power to designate routes to be followed by the drivers, and requires the lessor to pay the necessary license fees and all costs of operation of his vehicle, such as main- tenance, repairs, etc. The majority bases its finding of an "employer-employee" rela- tionship upon: (a) "the extent of the control the Employer exercises over the drivers," and (b) the Employer's "almost unqualified exer- cise of a dominion over the leased equipment." In this respect, it is worthy of note that the Board in its determina- tion in Eldon Miller 14 found the existence of an independent contrac- tor relationship despite the fact that the employer, under the lease and conditional sales agreements, not only requires that the equipment be used exclusively in the employer's operations (in the immediate case there is at least one instance where the owner-operator and his sub- stitute received a 60-day leave of absence to operate for another trans- portation firm) and requires the equipment to be parked on company premises when not in use on company business (here it appears that the driver is permitted to take the equipment home when it is not in use by the Employer), but also retains title to the equipment which is registered in the company's name, and retains an option to "purchase any and all of the equipment leased by the agreement" upon a 60-day termination notice to the "conditional sales driver" (in the instant case 13 In Eldon Miller, frequently Interstate Commerce Commission regulations necessitate the hiring of a substitute for the "conditional sales driver " whenever a 24-hour schedule is in operation. 14 The factual situation relating to the provisions of the lease and conditional sales agree- ments noted in the Board's earlier decision (103 NLRB 1627) was not changed by its sub- sequent decision ( 107 NLRB 557 ), wherein the status of the "conditional sales drivers" was found to be that of independent contractor rather than that of employee of the employer. ELLIMAN STEEL COMPANY 465 absolute ownership of the equipment is in the owner-operator).15 Thus, it would appear that the exercise of dominion over the leased equipment by the employer in Eldon Miller exceeds that of the Em- ployer in the instant case. Furthermore, the lease agreement here does not require the personal services of the lessor, whereas, in Eldon Miller, except as previously noted, most lease agreements require that the owner leasing under conditional sales agreements drive and oper- ate the tractor at all times, thus precluding him from obtaining em- ployment elsewhere. Also, in the instant case, drivers are privileged not to drive on occasion, whereas, in Eldon Miller, the lease agreement obligates the driver to accept all work assignments. Thus, the exist- ence of the various' factors noted above tending to support an inde- pendent contractor relationship in the instant case appear to be even stronger than those upon which the Board made its independent con- tractor finding regarding the "conditional-, sales drivers" in Eldon Miller. In view of the above considerations, we are of the opinion that the owner-operators and nonowner-operators, respectively, are independ- ent contractors and employees of independent contractors. Accord- ingly, we would exclude them from the unit. 15 Eldon Miller, Inc., 103 NLRB 1627 at 1629-1630. ELLIMAN STEEL COMPANY and HERBERT H. SULZBACH, ATTORNEY ON BEHALF OF EMPLOYEES DESIRING DECERTIFICATION, PETITIONER and LOCAL 985, INTERNATIONAL UNION, UNITED AUTOMOBILE, AIRCRAFT, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW-CIO. Case No. 7-RD-171. July 26,1954 Decision and Direction of Election Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before Myron K. Scott, hearing officer. The hearing officer's rulings made at the hearing 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 Petitioner, an attorney representing employees of the Em- ployer, asserts that the Union is no longer the bargaining representa- tive, as defined in Section 9 (a) of the amended Act, of the employees designated in the petition 1 We hereby deny the Union 's motion to dismiss the petition on the ground that the Peti. tioner is acting on behalf of another labor organization , Teamsters, Local 299, AFL. As- suming this to be true, the Union's contention is immaterial , as the Act permits a labor 109 NLRB No. 77.