Squirt-Nesbitt Bottling Corp.

24 DECISIONS OF NATIONAL LABOR RELATIONS BOARD showing of interest. Accordingly, we instruct the Regional Director not to proceed with the election herein directed until he shall have first determined that the Petitioner has made an adequate showing of interest among the employees in the appropriate unit who are eligible to vote in the election 3 [Text of Direction of Election omitted from publication.] 8 Foremost Dairies, Inc., 118 NLRB 1424 , 1428, footnote 7. Squirt-Nesbitt Bottling Corp. and Bakery Sales Drivers Union, Local No. 344. Case No. 13-CA-339$. February 7, 1961 DECISION AND ORDER On June 14, 1960, Trial Examiner John P. von Rohr issued his In- termediate Report in the above-entitled proceeding, finding that the Respondent had engaged in and was engaging in certain unfair labor practices and recommending that it cease and desist therefrom and take certain affirmative action, as set forth in the copy of the Inter- mediate Report attached hereto. Thereafter, the General Counsel and Respondent filed exceptions to the Intermediate Report and briefs in support thereof, and Respondent filed a reply brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, the Board has delegated its power in connection with this case to a three-member panel [Chairman Leedom and Members Rodgers and Jenkins]. The Board has considered the Intermediate Report, the exceptions and briefs, and the entire record in the case, and hereby adopts the findings,' conclusions, and recommendations of the Trial Examiner, with the exceptions and modifications noted below. We agree with the Trial Examiner that the individual distributor- ship contracts entered into by the Respondent with its driver-salesmen did not alter the employee status of these drivers or convert them into independent contractors. We also find that Respondent violated Sec- tion 8 (a) (5) and (1) of the Act, as, concluded by the Trial Examiner, by refusing to bargain with the Union, the certified bargaining repre- sentative of its driver-salesmen, as to those driver-salesmen who signed distributorship contracts and by entering into individual contracts with such employees.2 1 Elmer Johnson, secretary-treasurer of the Union, was not present at the meeting be- tween Respondent and union representatives held an August 12,.1959, as the Intermediate Report finds. 2In view of our disposition herein, we find it unnecessary to pass upon whether, as found by the Trial Examiner , Respondent also violated the Act by cooperating with and encouraging the employees to accept the distributorship plan or would even have violated the Act had the individual contract effectively changed the status of the driver -salesmen to that of independent contractor. 130 NLRB No. 9. SQUIRT-NESBITT BOTTLING CORP. THE REMEDY 25 We have found that Respondent acted in derogation of its duty to bargain with the certified representative of its employees in violation of Section 8 (a) (5) and (1) of the Act. To remedy this violation, we shall enjoin the commission of the unfair labor practices found through the usual cease-and-desist provisions in our Order, and we shall order that Respondent bargain with the Union as the exclusive representative of the employees in the unit for which it was certified, including the employees who have signed individual distributorship contracts, and that it take certain other affirmative action designed to effectuate the policies of the Act. We are not adopting the Trial Examiner's recommendation that each driver-salesman who signed individual distributorship contracts with Respondent "be made whole for loss of pay, if any, suffered by reason of said driver-salesmen employment under individual con- tracts." The employees involved were not unlawfully coerced into signing the contracts, nor was their acceptance of the contracts in any sense involuntary. Indeed, the idea of individual distributorship con- tracts originated with employees, employees urged Respondent to create a distributorship system, employee meetings with Respondent on the subject were held at the urging of employees, and individual contracts were signed only by the driver-salesmen who desired them. Of course, Respondent violated the Act by thus dealing with the em- ployees themselves, to the exclusion of the Union. But we believe that our Order requiring Respondent to bargain with the Union and abro- gating the individual contracts will adequately remedy Respondent's unfair labor practice. To also reimburse the employees for such loss of pay as they may have suffered as a result of the distributorship arrangement instituted at their urging, as the Trial Examiner recom- mended, would, in the circumstances of this case, unjustly enrich them and be inequitable to Respondent; the policies of the Act could not thereby be effectuated.3 ORDER Upon the entire record in this case, and pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, Squirt-Nesbitt Bottling Corp., Milwaukee, Wisconsin, its officers, agents, successors, and assigns, shall : 1. Cease and desist from : (a) Refusing to bargain collectively with Bakery Sales Drivers Union, Local No. 344, as the exclusive representative of all driver- salesmen, excluding' office employees, professional employees, guards, 3 Cf. Shamrock Dairy, Inc., et at., 124 NLRB 494. 26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD supervisors, and all other employees as defined in the Act, with respect to rates of pay, wages, hours of employment, and other terms and conditions of employment. (b) Continuing or giving effect to any individual distributorship contract. (c) Dealing individually with employees in derogation of their bar- gaining representative in respect to any matter properly the subject of collective bargaining. (d) In any like or similar manner interfering with, restraining, or coercing its employees in the exercise of the right to bargain collec- tively through representatives of their own choosing. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Upon request, bargain collectively with Bakery Sales Drivers Union, Local No. 344, as the exclusive representative of the employees in the appropriate unit and embody any understanding reached in a signed contract. (b) Notify individually, and by the posting of the notice attached hereto, all driver-salesmen with whom Respondent has made indi- vidual contracts that it will no longer offer, solicit, enter into, con- tinue, or enforce such contracts, but without prejudice to the assertion by the driver-salesmen affected of any legal rights they may have ac- quired under such contracts. (c) Offer to all driver-salesmen with whom Respondent has made individual contracts immediate and full reinstatement to their former or substantially equivalent positions as driver-salesmen, without prej- udice to seniority or other rights and privileges. (d) Post at its place of business in Milwaukee, Wisconsin, copies of the notice attached hereto marked "Appendix." 4 Copies of such notice, to be furnished by the Regional Director for the Thirteenth Region, shall, after being duly signed by the Respondent's authorized representative, be posted by the Respondent immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Re- spondent to insure that said notices are not altered, defaced, or covered by any other material. (e) Notify the Regional Director for the Thirteenth Region, in writing, within 10 days from the date of this Order, what steps the Respondent has taken to comply herewith. 4 In the event that this Order is enforced by a decree of a United States Court of Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the words "Pursuant to a Decree of the United States Court of Appeals, Enforcing an Order 11 SQUIRT-NESBITT BOTTLING CORP. APPENDIX NOTICE TO ALL EMPLOYEES 27 Pursuant to a Decision and Order of the National Labor Relations Board, and in order to effectuate the policies of the National Labor Relations Act, as amended, we hereby notify our employees that : WE WILL NOT refuse to bargain collectively with Bakery Sales Drivers Union, Local No. 344, as the exclusive bargaining repre- sentative of the employees in the appropriate unit. The appropriate bargaining unit is: All driver-salesmen of Respondent, Milwaukee, Wisconsin, excluding office employees, professional employees, guards, all other employees, and supervisors as defined in the Act. WE WILL NOT, in any like or related manner, interfere with, re- strain, or coerce employees in the exercise of the rights guaranteed by Section 7 of the Act. WE WILL bargain collectively, upon request, with Bakery Sales Drivers Union, Local No. 344, as the exclusive bargaining repre- sentative of the employees in the appropriate unit, and, if an understanding is reached, embody such understanding in a signed agreement. WE WILL offer to all driver-salesmen with whom we have indi- vidual contracts immediate and full reinstatement to their former or substantially equivalent positions as driver-salesmen, without prejudice to seniority or other rights and privileges. All our employees are free to become, remain, or refrain from be- coming or remaining members of the above-named Union, or any other labor organization, except to the extent that such right may be affected by an agreement requiring membership in a labor organiza- tion as a condition of employment, as authorized in Section 8(a) (3) of the Act, as modified by the Labor-Management Reporting and Dis- closure Act of 1959. SQUIRT-NESBITT BOTTLING 'CORP., F, mployer. Dated---------------- By------------------------------------- (Representative ) ( Title) This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced, or covered by any other material. INTERMEDIATE REPORT STATEMENT OF THE CASE Upon a charge duly filed, the General Counsel of the National Labor Relations Board, for the Regional Director of the Thirteenth Region (Chicago, Illinois), issued 28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD a complaint against Squirt-Nesbitt Bottling Corp., herein called the Respondent, alleging that the Respondent had engaged in certain unfair labor practices within .the meaning of Section 8(a)(1) and (5) of the National Labor Relations Act, as .amended. In substance, it is alleged that on or about July 17, 1959, the Respondent, in derogation of the rights of the Charging Union as the designated bargaining -representative of the employees, bargained with its employees individually and .entered into individual contracts with them , thereby refusing to bargain collectively in good faith with the Union. Respondent filed an answer in which it admitted the jurisdictional allegations of the complaint, but denied the commission of any unfair labor practices. Pursuant to notice, a hearing was held at Milwaukee, Wisconsin, on March 21 and 22, 1960, before the duly designated Trial Examiner. All parties were repre- sented by counsel and were afforded opportunity to adduce evidence, to examine and cross-examine witnesses , to present oral argument, and to file briefs . Subse- quent to the close of the hearing, briefs have been received from the Respondent and the General Counsel, both of which have been carefully considered. Upon the entire record, and from my observation of the witnesses, I hereby make the following: FINDINGS OF FACT AND CONCLUSIONS 1. THE BUSINESS OF RESPONDENT The Respondent is a Wisconsin corporation with its office and place of business located in Milwaukee, Wisconsin, where it is engaged in the manufacture, sale, and distribution of carbonated beverages. During the calendar year 1958, Respondent purchased and received raw materials valued in excess of $100,000 from suppliers located outside the State of Wisconsin. The Respondent admits, and I find, that it is engaged in commerce within the meaning of the Act. II. THE LABOR ORGANIZATION INVOLVED Bakery Sales Drivers Union, Local No. 344, hereinafter referred to as the Union, is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES A. The bargaining negotiations On July 13, 1959, following a consent election, the Union was certified as the exclusive collective-bargaining representative for a unit consisting of all Respondent's driver-salesmen, excluding office employees, professional employees, guards, super- visors, and all other employees as defined by the Act.' Various bargaining meet- ings followed and are discussed below. To avoid repetition, and unless otherwise noted, the representatives for the Union were August J. Bopp and Elmer Johnson, business representative and secretary-treasurer, respectively. Principal representa- tives for the Company were Mrs. Lily W. Graves, president, and Donald Hansen, sales manager. The first meeting, which was held on July 17, 1959,2 was brief. The Union pro- posed that the Company sign an agreement identical to that of an area agreement which the Union had with other franchised bottlers in the Milwaukee area and sub- mitted a copy of such agreement to the Company. As spokesman and principal negotiator for the Respondent, Mrs. Graves agreed that she would examine the contract before the next meeting. During this meeting Mrs. Graves did not men- tion the fact, which is unrefuted, that on July 14 one John Conrardy, a driver- salesman, had approached her and stated that he and another employee, Dick Eich- miller, were interested in the prospect of becoming distributors .3 Within a few days after the July 17 meeting, two of Respondent's driver- salesmen,' Eichmiller and Robert Blackhall, approached Sales Manager Hansen and told him that they were interested in discussing the possibility of obtaining distributorships. Hansen reported the matter to Mrs. Graves. I Case No. 13-RAT-480 (not published in NLRB volumes). The Union won the election by a vote of 10 to 9 2 All dates herein refer to the year 1959 unless otherwise indicated. 8 Mrs Graves testified that at this time she told Conrardy that she did not think it was a good idea for two men to go into business together She also told these employees that she did not know if she could legally discuss this subject inasmuch as the Company was bargaining with the Union. SQUIRT-NESBITT BOTTLING CORP. 29 The second meeting between the Respondent and the Union was held on July 30. At this meeting Mrs. Graves stated that several of the men had asked for informa- tion regarding distributorships, The matter was discussed briefly, Mrs. Graves stat- ing that she did not know what effect distributorships would have upon a contract and union representatives dismissing the subject by stating that they were unac- quainted with operations of that nature. Mrs. Graves thereupon submitted a con- tract in counterproposal to the one which the Union had offered and the parties proceeded to discuss it provision by provision? Differences arose and the meeting ended with each party agreeing to give further consideration to the proposals at hand. On July 31 (a Friday) Mrs. Graves was approached by John Conrardy and Robert Blackball who requested that she meet with some of the drivers, themselves included, who were desirous of obtaining specific information relative to the subject of distributorships. Pursuant to this request, Mrs. Graves agreed to meet with the men on the following day-Saturday, August 1. In preparation for the meeting Mrs. Graves that evening made long-distance telephone calls to three bottlers located in other States who operated under a distributorship setup. From them she obtained certain information concerning the operations and arrangements of the distributor- ship plan. A meeting was held on August 1, as scheduled, with six driver-salesmen in attend- ance. Blackball submitted a list of questions which he had prepared. Mrs. Graves, in turn, explained to the men in great detail the inherent involvements of distributor- ships, as she had ascertained them to be, including the various obligations and responsibilities which would result to each of the parties. As she was not able to answer all of the questions which were raised, the meeting ended with Mrs. Graves' assurance to the men that she would endeavor to obtain further information. On the following Monday, August 3, Graves prepared a two-page typewritten memorandum in which she listed in detail the various aspects of the distributorship plan as she had discussed it with the six employees on the preceding Monday. She gave copies of the memorandum to two of the driver-salesmen for circulation among the employees who had not attended the August 1 meeting. The memorandum concluded with the following statement. We hope to give you something more specific on this within the next week or so after we have studied some other distributorships and have been able to analyze our own situation. But remember, this has to be worked out so that each of you makes money for we can't exist unless you do. Also on Monday, August 3, according to the credited testimony of Mrs. Graves, she called Bopp and told him about the meeting which she held with six driver- salesmen the previous Saturday. Bopp replied that he was meeting with the men that same evening and that he would learn more about it at that time. Fourteen employees were present at the union meeting held on the evening of August 3. The union representatives, including Bopp, were told about the meeting between the six driver-salesmen and Mrs. Graves on August 1 and one of the employees furnished Bopp with a copy of the memorandum which Graves had prepared subsequent to that meeting . The Union's position upon receiving this information from the men , as expressed in the credited testimony of Bopp, was that .,we told them they would have to make up their minds if they were going to be distributors or driver-salesmen." Thereupon, pursuant to a motion of employee Eddie Schultz, the employees voted 13 to 0, with 1 abstention , to remain as driver- salesmen 5 At this meeting the employees also voted to authorize a strike in the event a contract was not executed by August 17. Hansen testified that on the following day, August 4, some of the employees told him what had transpired at the unon meeting on the evening before and that they had decided to "put over" the idea of distributorship until April. This information 4 Bopp testified that Respondent did not submit its counterproposal until the third bar- gaining meeting on August 5, as he recalled it Upon consideration and examination of all the testimony, I am persuaded that Mrs. Graves' recollection as to the chronology of events is the more accurate and most reliable. Accordingly , where there are differences as to the subjects discussed at the various meetings , I have accepted the account of Mrs Graves. In any event, there is no material dispute or difference between Bopp and Graves as to the substance of the discussions at the various meetings. 5 Conrardy and Blackball testified that at this meeting the employees voted to "shelve the idea" until the following April In any event it is clear that at this meeting the employees voted to abandon the idea of distributorships at this time. 30 DECISIONS OF NATIONAL LABOR RELATIONS BOARD concerning the stand of the employees at the August 3 union meeting was imparted by Hansen to Mrs. Graves. Notwithstanding the formal resolution of the preceding evening to drop the dis- tributorship proposition (which decision was made known to the Respondent), three of the employees at the end of the day (on August 4) approached Hansen again and stated that they still wanted distributorships.6 The result of this was that another meeting was held between Hansen and the driver-salesmen when the employees reported to work the next morning, August 5. Although Hansen testified that this meeting was a spontaneous affair, it is evident that he did not come entirely unprepared. Suffice it to note that at this meeting Hansen used a blackboard on which he demonstrated in some detail the earnings which the employees could make under a distributorship system? On August 5 the third bargaining meeting was held between the Union and the Respondent. Bopp began by advising Respondent's representatives that a union meeting had been held on August 5, that the employees had voted to reject the proposition of distributorships, and they had voted to authorize a strike if a collective- bargaining agreement was not reached by August 17. Mrs. Graves thereupon told Bopp about the employees' meeting with Hansen on August 4, stating that in view thereof it was apparent to her that the employees had changed their minds and that they still wanted distributorships. Upon being so apprized the Union took the position that if distributorships were what the men wanted, it was the bargaining agent and it would negotiate the contract.e Mrs. Graves, however, took the position that the Union had no "jurisdiction" to bargain for the driver-salesmen if they were to become "independent businessmen," i.e., distributors. These positions having been stated, the parties continued to bargain over the terms of the contract with no final agreement being reached. In the meantime, which was after Mrs. Graves had received additional information concerning distributorship from other bottlers, Mrs. Graves consulted with her attorneys with regard to a possible distributorship contract which would be suitable to the Respondent. It was on Monday, August 10, according to Mrs. Graves, that she decided a distributorship program would be economically feasible for the Respondent Company. On the following day, August 11, she held a meeting with the employees and at that time read to them a distributorship contract which had been drafted by her attorneys. Five of Respondent's driver-salesmen signed copies of the contract before this meeting ended. The next bargaining meeting was held on the following day, August 12, and at its outset Bopp was notified of the action taken by the five employees in signing the distributorship agreements. According to the credited testimony of Bopp, Mrs. Graves stated also that most of the others had indicated their intention to sign. At this meeting Mrs. Graves took the position, which was consistent with the posi- tion she had taken before, that Respondent could not bargain with respect to the employees who had signed or who were about to sign distributorship agreements except to the extent that Respondent would bargain concerning the "tenure of em- ployment" of those employees. She explained to Bopp that, "tenure would cover sev- erance pay for the time going back to July 20, which had been set as retroactivity date." Although Mrs. Graves indicated that Respondent would continue to bargain for those employees who would not become distributors, it was evident by this time that very few, if any, employees would remain in this category. A total of 14 of the Respondent's approximate 20 driver-salesmen signed dis- tributorship agreements by August 14. By letter dated August 18, 1959, Mrs. Graves notified the Union that Respondent was prepared to accept the Union's proposed collective-bargaining agreement with certain exceptions, including a modification of the Union's wage proposal, which were set forth in the letter. This communication concluded with the following statement: As you are aware, certain of our driver-salesmen presently covered by this agreement have entered into contracts with us as independent contractors. Upon commencement of their duties as such independent contractors, they will no longer be employees and this contract and agreement will no longer cover 8 These employees included those who originally were in favor of the idea , I e , Igna zitto, Conrardy, Eichmiller , and Blackball 7 Hansen testified that by this time Respondent had received "additional information" concerning distributorships and also that on August 4 Respondent received in the mail a form of distributor contract from another bottler. 8 Testimony of Mrs Graves. SQUIRT-NESBITT BOTTLING CORP. 31 them. Also, should other driver-salesmen in the future enter into similar con- tracts with us, they too will be relieved from coverage under our contract with you. No further communications or meetings were held between the parties. The Union filed the unfair labor practice charge herein on August 21, 1959. B. Status of the drivers under the distributorship agreements For reasons which will become apparent hereinafter, it is incumbent that a deter- mination be made as to whether the distributorship agreements converted the driver- salesmen into independent contractors or whether under those agreements the driver-salesmen continued to retain their status as employees. It is now well established that in determining the status of persons alleged to be independent contractors, the Act requires the application of the "right-of-control" test.9 Where the person for whom the services are performed retains the right to control the manner and means by which the result is to be accomplished, the rela- tionship is one of employment; on the other hand, where control is reserved only as to the result sought, the relationship is that of independent contractor. The Board and the courts have long recognized that the resolution of this question often is a difficult one and depends on the facts of each case with no one factor as determinative. It is true, as the Respondent points out in its well-documented brief, that a number of factors are present in the distributorship arrangement which are essentially char- acteristic of an independent contractor relationship. The factors pointing in this direction will be considered first.la In most instances these factors represent changes in the employment relationship which were not present before the driver-salesmen entered into the distributorship agreements.ii Thus, under the distributorship agree- ments (which are for a 2-year period) the driver-salesmen now are required to pay their own taxes and to make their own social security contributions, if any. They no longer enjoy paid vacations, a company pension plan, or a company health and accident plan. Uniforms are no longer furnished by the Company but the men are required to furnish their own. The driver-salesmen formerly were required to work a 5-day week starting at 7 a.m. and ending at 4 p in. There is no set workweek as to days or hours under the distributorship agreements. Formerly the routes to which the drivers were assigned were under the exclusive control of the Respondent. Under the distributorship agreements the drivers are granted certain exclusive rights to particular routes and territories of their own. In the past the drivers were required to service their routes by making stops in the order and method prescribed by the Respondent. They now have authority to determine their own method and frequency of serving their customers. Whereas the Respondent previously leased the trucks from Hertz and provided them for the use of the driver-salesmen, the latter are now required to furnish their own trucks and pay for their own insurance i2 The distributorship agreements permit the drivers to warehouse their own trucks and goods; in the past the drivers were required to return the trucks to the Respond- ent's premises. Under the old arrangement helpers were furnished and paid by the Respondent. This practice was abolished under the distributorship agreements and the driver-salesmen now must pay for the services of any additional help which they may need. Under the former arrangement the driver-salesmen were paid a salary by the Respondent, plus commission on a per case basis. They received their pay each week by check. The salary method was discontinued under the distributorships and the men are paid by commissions only. They now purchase the Respondent's prod- 9 Golden Age Dayton Corporation, 124 NLRB 916, Bob, Inc, 116 NLRB 1931 ; Okla- homa Trailer Convoy, Inc, 99 NLRB 1019 11 Unless otherwise noted, there is no conflict in the evidence with respect to the factors, both pros and cons, involving the employment relationship about which we are here concerned 11 For the convenience of all concerned, the Respondent and the distributors agreed to certain temporary arrangements which were to remain in effect until about April 1 1960. These included the once a week assignment of a city route to out-of-town distributors during the winter months and the prorating of truck rental expenses among the drivers. In view of their temporary nature, I do not regard these arrangements as dispositive or controlling of the issue here under 'consideration 12 Actually the men drive the same trucks, the leases having been reassigned by Hertz from the Respondent to the drivers. 32 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ucts at a price determined by the Respondent . The distributorship agreements do not set or restrict the prices at which the men resell the products to the retailers. The earnings of the men are thus based upon the difference of what they pay for the beverages and what they receive from sales. The foregoing represent the factors reflected in the evidence which tend to point toward in independent contractor relationship. We turn now to the factors dis- closed in the record which tend to indicate an employee relationship. The latter factors for the most part pertain to requirements and restrictions which are reflected in the provisions of the distributorship agreements and may be set forth and sum- marized as follows: (1) The distributor is limited to purchasing all nonalcoholic soft drinks for resale in his territory from the Respondent; (2) the distributor is required to cooperate in and actively support and work on all sales, advertising, and promotional campaigns suggested by the Respondent; further, he is required to follow the Respondent's suggestions with respect to the placing and displaying of advertising materials; (3) all trucks used by the distributor must be painted and inscribed in accordance with the Respondent's requirements; the trucks must be kept in a clean and neat condition and maintained in good repair; if the trucks are warehoused, the warehouse areas must be kept clean, sanitary, and in good repair; distributors are required to give representatives of the Respondent access to trucks and warehouse areas for purposes of inspection; (4) distributors and their helpers are required to wear "standard" uniforms when selling and distributing Respond- ent's products; (5) distributors are required to maintain full and complete sales records, route books, and books of account in a form approved by the Respondent and they are required to provide the Respondent at least once a week with duplicate copies of daily sales records; (6) the Respondent retains the right to solicit orders in the distributors' territories; (7) the Respondent retains the right to sell and service a territory and to retain any profit derived thereby in the event the distributor for any reason is unable to sell or service such territory, (8) the distributors are required to attend periodic "co-operative" meetings called by the Respondent; and (9) the distributors are required to carry public liability and property damage insurance in the amounts prescribed by the Respondent. In addition to the foregoing requirements and conditions which are embodied in the contracts, uncontroverted testimony indicates that Respondent maintains exclu- sive control over charge accounts and credit arrangements with the distributors' customers. Thus, in the event a customer of the distributor desires credit or a charge account, the customer is furnished with an application which must be sub- mitted to and approved by the Respondent before any credit can be given. The evidence establishes also that on occasion Respondent's sales supervisors accompany the distributors on their routes. In this regard it is signnficant that the memorandum which Mrs. Graves prepared as a summary of what she told the employers at the August 1 meeting (which memorandum was also circulated among the employees who did not attend that meeting) contains the following statement: "Our present supervisors will then be `advisors'-like any franchise, we will have to he there to help see that the job is done right." [Emphasis supplied ] While there is no equivalent provision, as such, in the distributorship agreements , there is evi- dence that this policy was effectuated after the driver-salesmen became distributors. Thus, Robert Blackhall, a witness for the Respondent and the only driver-salesman then employed to testify on the subject, testified that since he became a distributor Harold Ellis, his former supervisor, accompanied him "once or twice" on his routes 13 Concerning those occasions, Blackball testified, "He just rides around and observes, he writes a report and he turns the report into the Company and from there on I will find out if there is anything wrong with my route, that they will sug- gest ways for me to change it." Further that "he examines ways I am not performing the contract correctly . . . how I can get . more sales through additional mer- chandising by putting our products at a different spot or by hanging what we call advertising helps . or give me a hint where I can locate a vendor that he knows about, some people that want it that I don't know about." Also, according to Black- hall, Ellis examines the condition and cleanliness of his stock and where it is located in the customer's premises. Although there is no doubt but that the supervisors ac- company the distributors far less frequently than they did prior to the distributorship system, I find that a practice and understanding exists between the Respondent and the distributor which entitles the supervisors to accompany the distributor on such is Blackball testified that before becoming a distributor Ellis would accompany him as often as once or twice a week. SQUIRT-NESBITT BOTTLING CORP. 33 occasions as the Respondent may see fit and for the purposes testified to by Black- hall. This was made clear by Mrs. Graves to the driver-salesmen at the outset of the distributorship system and the practice shows that it has been carried into effect 14 Moreover, the evidence is clear that Respondent's supervisors (also known as sales counselors under the distributorship system) attend and participate in the meetings which the distributors are by contract required to attend. It is significant, too, that the driver-salesmen who initially became distributors were experienced employees. During their tenure of employment they had become fam.liar with Respondent's operations and well knew what was expected of them by way of handling Respondent's products. In this regard, Hansen testified that new employees are hired as "trainees " The new employees are hired on proba- tion with the understanding that they will become distributors only after they undergo a training course and show that they will measure up to Respondent's required qualifications. The training course is conducted by Hansen and other of Respond- ent's supervisors. It is clear that by utilization of a system whereby Respondent hires only trainees and requires them to undergo a thorough training program con- ducted by its supervisors, Respondent is thus assured that the prospective distribu- tors are thoroughly indoctrinated with the detailed methods of Respondent's dis- tributorship operations. C. Conclusions concerning the status of the drivers under the distributorship system After careful consideration and analysis of the cases and of all the factors here involved, it is my conclusion, and I find, that the driver-salesmen retained their status as employees under the distributorship agreements. There is no need to burden this report with further analysis of the various factors involved or with a comparison of the numerous Board and court cases on the subject. The pertinent factors pointing in both directions have all been itemized in the foregoing section. In the opinion of the Trial Examiner the positive factors pointing to an employee relationship, including the various requirements and restrictions which are imposed upon the distributor, all of which have been discussed above, indicate substantial control by the Respond- ent over the distributors' method of operations. Such control over the distributors' method of operations is characteristic of an employee relationship. Conversely, I find that the evidence as a whole establishes that the distributors do not possess the freedom of action as to the manner and means of accomplishing their work which is an essential characteristic of independent contractors.15 D. The refusal to bargain; analysis and conclusions Both the General Counsel and the Respondent have cited the Shamrock Dairy case 16 in support of their respective positions. The Respondent argues that by offering to bargain with the Union with respect to the "tenure of employment" of the driver-salesmen for the period of their employment prior to the execution of the distributorship agreements, Respondent thereby fulfilled any and all of its obligations to bargain under the Shamrock case. The fact of the matter is, and contrary to the Respondent's contention, the Respondent did not bargain on this subject within the 14 Richard Sparks, a distributor who left the Company on January 7, 19G0, testified that Ellis (also his former supervisor) accompanied him on his route on an occasion after he became a distributor. 15 The following additional observations might be noted The Respondent's products (Squirt, Hires Root Beer, and Double Cola) are of the type generally sold to the public at standard prices. The prices at which Respondent sells those products to the distributors are determined by the Respondent. The routes and territories of the distributors already had been established. Accordingly, the "risk" element, a factor indicative of an inde- pendent contractor relationship, appears negligible here. Moreover, although the contract does not require the distributors to work any set hours or days, the evidence indicates that the men continue to report at the plant early in the morning to pick up their products . That the freedom which the distributors enjoy with respect to any working schedule is more apparent than real is further demonstrated by the fact that the distributorship agreement permits the Respondent to take over or re- assign any territory where the distributor falls to afford such service as provided for in the contract. 16 Shamrock Dairy, Inc, et al., 124 NLRB 494. 597254-61-vol. 130-4 34 DECISIONS OF NATIONAL LABOR RELATIONS BOARD meaning of the Shamrock case. In the latter case, which involved a situation where the employer had unilaterally instituted a contractor-operator plan, the Board clearly held that the employer's obligation to bargain with the Union included the obligation to bargain with respect to the very adoption of the plan-this in addition to matters relating to tenure of employment, a matter which would arise only if, in fact, the plan was adopted. It is clear that here the Respondent unilaterally adopted and put into effect the dis- tributorship system without negotiating with the bargaining representative about it. It is not enough, as Respondent also seems to urge, that the Union was notified in advance of Respondent's plans to inaugurate the system and that Respondent's bar- gaining obligations were thereby satisfied. Mere notification of contemplated unilateral action clearly does not satisfy the processes of collective bargaining con- templated by the Act. Nor can any claim be made that the Union abandoned the em- ployees or that it in any way waived its rights to bargain over the adoption of the distributorship system. As heretofore related, the Union Representative Bopp initially took the position that the Union would bargain over the distributorship system and he adhered to this position through the last bargaining meeting. Not in the least inconsistent was the Union's action in filing an unfair labor practice charge within a few days after the distributorship was made an accomplished fact. On the basis of the foregoing, and under the Shamrock case, I find that the Re- spondent violated Section 8(a)(5) and (1) of the Act by engaging in individual bar- gaining with its employees and by entering into individual contracts with its em- ployees at a time when the Union was the certified bargaining representative of the employees. The case does not rest at this point, however, for in the opinion of the Trial Ex- aminer the extent of the violation here exceeded that found by the Board in the Shamrock case and in the Smith's Van & Transport case 17 In each of the latter cases the Board found that the unilateral actions of the employers in entering into contract agreements were economically motivated, i e , the motivating factor was non- discriminatory.18 But beyond this, it appears that the employers in each of the cited cases initiated and sponsored the action in kind by reason of business considerations, viz. more profits, greater efficiency, and the like In the instant case there is no evi- dence whatsoever that the Respondent adopted the distributorship system for business reasons For what the record shows, the Respondent has profited no more or no less under the distributorship arrangement than it had under the driver-salesmen system. Furthermore, the original suggestion to adopt the distributorship system came from the employees; it was not initiated or sponsored by the employer. In view of the foregoing, and for the additional reasons noted hereinafter, I am of the opinion that the facts in the instant case are more analogous to that in Medo Photo Supply Corp.19 In the Medo case the employer recognized the union as the bargaining representative of its employees. At the employees' request and upon their statement that they would abandon the union if their wages were increased, the employer negotiated with them without the intervention of the union, granted the requested increase in wages, and thereafter refused to recognize or bargain with the union. The Supreme Court there rejected the notion that the employer was relieved from its bargaining obliga- tions because the employees asked that they be disregarded, holding that "the statute was enacted in the public interest for the protection of the employees' right to col- lective bargaining and it may not be ignored by the employer, even though the em- ployees consent." In finding a violation of Section 8(a)(l) and (5), the Court found that the obligation to bargain with the union being exclusive, it exacted the "negative duty to treat with no other " The facts show that here the employees came to the Respondent and expressed an interest in distributorships It is true that, unlike the Medo case, they did not come out and specifically announce that they would abandon the Union if the distributorships were granted to them Nevertheless, it is obvious that Respondent, if not immediately. soon became cognizant of the fact that it no longer would have to deal with the Union once the men were in fact established as independent con- tractors As heretofore noted, once approached with the suggestion, Respondent went to no little effort and expense to ascertain whether the distributorship system could feasibly be integrated into Respondent's operations. Thereafter it not only 19 Smith's Van d Transport Company. Inc, of at, 126 NLRB 1059 Thts case was also cited by the General Counsel in support of his contentions 19 See also Brown Track and Trailer Manufacturinq Company, Inc, et at, 106 NLRB 999. 19 Medo Photo Supply Corporation v N L R B, 321 U S 678. SQUIRT-NESBITT BOTTLING CORP. 35 cooperated with the employees, but the evidence establishes that Respondent in fact encouraged the employees to accept what it by then proposed in the way of a distributorship arrangement. Thus, it will be recalled that at the August 3 union meeting the employees had voted to authorize a strike and that Respondent was advised of this action on August 4. Nevertheless, at a meeting with the employees on August 5, the Respondent offered further inducement to the employees by ex- plaining to them in great detail the possibilities of what they might earn under the distributorship system. In view of the foregoing, and upon the record as a whole, I find that the Respond- ent further violated Section 8(a) (1) and (5) by its conduct in cooperating with and encouraging the employees to accept the distributorship plans. The foreseeable results of such action was bound to undermine the Union as the employees' bar- gaining representative. Medo Photo Corp , supra. This is particularly true where, as here, the action occurred prior to the expiration of the 1-year certification period. Ray Brooks v. N.L.R.B., 348 U.S, 96. Finally, I find that even if the individual contracts changed the status of the drivers to that of independent contractors, Respondent nonetheless violated Section 8(a)(5) and (1) of the Act. The refusal to bargain here occurred prior to the actual execution of the distributorship contracts. As held by the Board in Smith's Van & Transport Company, et al., supra, the Union was entitled to bargain over the adoption of the contract system.20 IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The Respondent's activities set forth in section III, above, occurring in connection with the Respondent's operations described in section I, above, have a close, inti- mate, and substantial relation to trade, traffic, and commerce among the several States, and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that Respondent has engaged in certain unfair labor practices, I shall recommend that it cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. Having found that Respondent has refused to bargain collectively with the Union and has, on the contrary, engaged in individual bargaining with its employees in derogation of the Union's representative status, it will be recommended that the Respondent cease and desist therefrom and that it cease giving effect to the indi- vidual contracts with its driver-salesmen . In order to restore the status quo, it also will be recommended that the driver- salesmen with whom the Respondent has made individual contracts be offered full reinstatement to their former or substantially equivalent positions as driver-salesmen, without prejudice to seniority or other rights and privileges, and that each be made whole for loss of pay, if any, suffered by reason of the said driver-salesmen employment under individual contracts. CONCLUSIONS OF LAW 1. Bakery Sales Drivers Union, Local No. 344, is a labor organization within the meaning of Section 2(5) of the Act. 2. All driver-salesmen, including office employees, professional employees, guards, supervisors, and all other employees as defined in the act, constitute a unit appro- priate for purposes of collective bargaining within the meaning of Section 9(b) of the Act. 3. At all times material since July 13, 1959, the Union has been the exclusive bargaining representative in the aforesaid unit within the meaning of Section 9(a) of the Act. 4. By failing to bargain collectively with the Union as the exclusive bargaining representative of the employees in the appropriate unit, by bargaining individually with the employees, and by entering into individual contracts with the driver- salesmen, the Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a) (1) and Section 8(a)(5) of the Act. 5. The aforesaid unfair labor practices are unfair labor practices affecting com- merce within the meaning of Section 2(6) and (7) of the Act. [Recommendations omitted from publication.] 20 See the Board's remedial order in the Smith's Van case, supra.