Consolidated Freightways

WESTERN NEBRASKA TRANSPORT SERVICE DIV., ETC. 301 managerial employees, professionals, and supervisors as defined in the Act and employees covered by existing collective-bargaining agreements. [Text of Direction of Election omitted from publication.] Western Nebraska Transport Service Division of Consolidated Freightways and General Teamsters and Truck Drivers Help- ers, Warehousemen Local 950, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Petitioner. Case No. 17-RC-3875. August 27, 1963 DECISION AND DIRECTION OF ELECTION Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, an original hearing and a reopened hearing were held before Hearing Officer Harold L. Hudson. 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. A question affecting commerce exists concerning the represen- tation of employees of the Employer within the meaning of Section 9(c) and Section 2(6) and (7) of the Act. 4. The Employer, engaged in hauling and distributing crude oil and petroleum products in western Nebraska, owns one tractor and one trailer operated by a full-time and a regular part-time driver, both of whom are concededly its employees. It also uses trucking equipment and drivers supplied by equipment lessors. The Peti- tioner seeks a unit of the truckdrivers, including the two conceded employees and the lease drivers supplied by the equipment lessors.' The Employer raises an issue as to whether the lease drivers are properly included in the Petitioner's unit as employees of the Employer. The Employer's Operations Before May 21, 1961, Earl Houk, one of the equipment lessors herein, operated a business known as Western Nebraska Transport Service, herein called Western, which was engaged in hauling crude There is no dispute as to the exclusion of equipment lessors who drive leased equipment. 144 NLRB No. 36. 302 DECISIONS OF NATIONAL LABOR RELATIONS BOARD oil from wellheads and pipeline terminals to bulk storage facilities, pursuant to certificates of convenience and necessity issued by the Interstate Commerce Commission and the Nebraska State Railway Commission. Houk leased trucking equipment from Leo K. Meyer, D. V. Thompson, R. A. Van Hansen, and Frank Woodrow, the other 4 equipment lessors in this proceeding. These four also hired drivers and supplied them to Houk to operate their leased equipment. On May 21, 1961, the Employer purchased Western from Houk, acquired Houk's operating certificates, and undertook to service IIouk's former territory by using equipment leased from, and drivers furnished by, the five equipment lessors herein, pursuant to the equipment leases described below. The acquisition involved the purchase from Houk of 7 tractors and 12 trailer units ; the Employer sold some of these items outright to the equipment lessors; 4 pieces were sold under chattel mortgage to 1 unidentified lessor. The Western operation is under the general direction of R. S. Gibson, the district manager for the Employer's Rocky Mountain division, and is conducted from three terminals, at Scottsbluff, Sidney, and Harrisburg, Nebraska. Zeiler, an accountant for the Employer, dispatches drivers at the Scottsbluff terminal. He exercises super- visory authority over the Employer's employees, including the power to hire or discharge or effectively to recommend the same, and his general authority extends to all terminals. The drivers he dispatches include the Employer's two concede) employees, the lease driver supplied by lessor Houk, and lessor Van Hausen who also drives 2 When dispatching, he directs and orders their operations and exer- cises "domination and control"' over their activities and time of em- ployment. Lessor Meyer dispatches at the Sidney terminal, and lessor Thompson, described as the "operator" or "manager" of the Harrisburg terminal, dispatches at that location, they receive sep- arate remuneration from the Employer for this service. Thompson and Meyer, in their roles as dispatchers, are described by District Manager Gibson as "supervising under my general direction and Mr. Zeiler's general direction the operation of the trucks they lease through us, including the drivers," and that the Employer considers them as its supervisory personnel "in a general manner." The Leases Standard lease forms that meet ICC requirements cover the leasing of equipment intended for the Employer's use in interstate commerce; other leases approved by the Nebraska State Railway Commission (herein called NSCR) cover the leasing of equipment intended for use in intrastate commerce. 2 As noted below, Van Hansen leases to the Employer one tractor, to which the Employer attaches its trailer. WESTERN NEBRASKA TRANSPORT SERVICE DIV., ETC. 303 The ICC leases place the leased equipment under the possession, control, and use of the lessee, who assumes full responsibility in re- spect to the equipment it is operating, to the public, the shippers, and the ICC. The lessee is to assure that "before any person other than a regular employee of the authorized carrier" is assigned to drive the equipment, the lessee shall make certain that the driver shall meet certain safety requirements therein set forth and shall require that the driver furnish a certificate of physical examination. The lessor is to maintain and service the equipment at its expense. The lessee pays the driver for his services, withholds any withholding or social security tax required by the U.S. Government, and main- tains a record of each trip made by the equipment. The NSRC leases place the equipment under the exclusive direction and control of the lessee and further provide that the lease drivers are to be considered the lessee's employees and that the lessee shall pay their wages with the usual deductions for taxes, insurance, etc., the cost of which items is to be transferred to the lessors as deductions from the rental payments. The lessors are to pay for equipment service and maintenance. The Lessors Earl Houk leases the Employer's Scottsbluff, Nebraska, head- quarters to the Employer, retaining office space which he uses in con- nection with a separate petroleum haulage business of his own. When operating this business, known as National Leasing Corporation, he be- comes a customer of the Employer, who hauls for him either with its own equipment or with leased equipment. When Houk sold his busi- ness to the Employer, he retained two units which he leases to the Employer, one unit to be used as a spare when the other is not in operation. As noted above, Zeiler, the Employer's dispatcher, dis- patches the driver hired by Houk to operate his leased equipment. The Employer's part-time driver frequently drives Houk's leased equip- ment, as well as other equipment of Houk's not under lease. Houk does not drive. Leo K. Meyer has five tractors and five trailers under lease to the Employer. He has been in the trucking business for 12 years and solicited the Employer's accounts for the past 8 years. As noted above, he dispatches at the Employer's Sidney terminal. He provides two drivers for the leased equipment and also drives his equipment. D. V. Thompson, an incorporated lessor known as Clear Creek Trans- portation, Inc., supplies the Employer with four drivers for his leased equipment; he drives only occasionally. As noted above, he dispatches at the Employer's Harrisburg terminal. R. A. Van Hansen drives his own tractor, for which the Employer supplies the trailer. If he needs an additional driver, he and the Employer select one by mutual con- sent; the Employer, however, has the final say over the hire of such 304 DECISIONS OF NATIONAL LABOR RELATIONS BOARD driver. Zeiler, the Employer's dispatcher, dispatches Van Hausen's driver and exerts control over his driving time, his destination, and the customers he serves. Frank Woodrow furnishes no drivers, but drives his leased equipment. He "swaps" his ICC franchise with that of the Employer, for which he receives 100 percent of the gross rental income from his leased equipment. Were he to hire a driver, the choice would be subject to the Employer's approval. The equipment lessors maintain physical possession of the leased equipment and maintain and service it, as required by the lease agree- ments, selecting their own repair stations and sources of supply. They pay all license fees. They hire lease drivers and determine their wages, hours of work, and vacations; however, the Employer has ultimate con- trol over the hire of all drivers of leased equipment and over the selection of their vacation dates. It further appears that the Employer can effectively order lessors to lay off personnel when not needed. The Employer, as required by the leases, pays the drivers' wages by check and deducts therefrom insurance, tax, and other deductions and withholdings. The facts of this case clearly show that both the equipment lessors and the Employer have a considerable interest in, and exercise a degree of control over, the use of the leased equipment herein by the Em- ployer under the leases. This duality of control arises from the ex- ercise of day-to-day control over the leased drivers by equipment lessors, on the one hand, and what we consider to be the more basic ultimate control of their employment which the Employer daily exer- cises over these drivers, on the other. The NSRC leases specifically describe lease drivers as employees of the Employer and all of the leases accord the Employer full possession and control of the leased equipment. The Employer's approval of the lease drivers' hire is essential and it is the Employer's responsibility to secure drivers who meet prescribed health and safety standards. The Employer dis- patches lease drivers, through its Employer-hired dispatcher, or through equipment lessors acting under its general supervision. The Employer is responsible for the payment of all drivers' wages, for deductions therefrom, the establishment of insurance and workmen's compensation programs in their behalf, and the keeping of records for these purposes. And, finally, the Employer controls the time and destination of its deliveries and has authority to effectively order the layoff of lease drivers when not needed. All of the above factors support the finding, which we hereinbelow make, that the lease drivers are employees of the Employer.' Further support for this finding arises from the fact that the lease drivers, as a group, devote virtually all of their time to driving for the S N L R.B. v. Nu- Oar Carrler8, Inc., 88 NLRB 75, enfd . 189 F. 2d 756 (C.A. 3), cert. denied, 342 U.S. 919 ; Denton Truck Linea, Inc., 143 NLRB 1372. WESTERN NEBRASKA TRANSPORT SERVICE DIV., ETC. 305 Employer and have essentially the same interests as the Employer's conceded employees. The Board has previously emphasized the du- ality of functions of equipment lessors who also drive their own equipment, stressing the fact that although they, as owners of and investors in their own equipment, are unlike regular employees, they are nevertheless, as drivers of equipment, substantially similar to other drivers in functions and employee interests, and to that extent may themselves properly be considered as employees of the equipment lessee.4 In the instant case, no dispute arises as to the lessor-drivers. It is evident that the lease drivers are primarily interested in driving for the Employer and are subject to its control, just as are the Em- ployer's conceded employees. The cited cases thus, a fortiori, support our finding therein that an employer-employee relationship exists be- tween the lease drivers and the Employer. Accordingly, we conclude that the lease drivers are employees of the Employer, within the mean- ing of the Act. We find that the Employer's drivers, excluding lessor drivers, office clerical employees, sales employees, and supervisors as defined in the Act, constitute a unit appropriate for the purposes of collective bar- gaining within the meaning of Section 9(c) (1) and Section 2(6) and (7) of the Act. [Text of Direction of Election omitted from publication.] MEMBERS BODGERS'and LEEDOM, dissenting : We disagree with our colleagues' holding that the drivers of the lease equipment are employees of Western Nebraska, the lessee of that equipment. In our view, the lessors of the equipment are independent contractors, and the drivers who are hired by the lessor to operate the equipment are his employees and not employees of the lessee. As to the status of the lessors, the record shows the following : The lessors' remuneration is dependent on the gross income they receive from the use of their leased equipment; and their profits grow in pro- portion to the manner in which they are able to expand the lessee's service area. They have a considerable investment in money, time, and experience in their leased equipment and, in apparent recognition thereof, the lessees accord them as much latitude as possible in their operations under the leases. The lessors, one of whom is incorporated, have for years developed or serviced the territory or accounts now handled by the lessee, and one of them receives in excess of $50,000 a year in rental under his lease agreement with the lessee. Four of the five lessors receive rental payments in the amount of 90 percent of gross income from the rented equipment, while the fifth receives 100 percent of the gross income, inasmuch as his rental arrangement per- & Lyon Van ,& Storage Co., etc., 123 NLRB 734, 744-745 ; Hoster Supply Company, 109 NLRB 466; Deaton Truck L4nes, Inc., supra. 306 DECISIONS OF NATIONAL LABOR RELATIONS BOARD mits him and the lessee to trade the use of their franchise territory. Although lessors receive a "wage" for driving, the amount of their "wage" is purely arbitrary, as in any event it is deducted from their monthly rental check. We are convinced that the above entrepre- neurial aspects of the relationship establish, consistently with court and Board authority, that the equipment lessors are independent con- tractors,' and we would so find. Consistent with their independent contractor status, the equipment lessors perform all day-to-day hiring of the lease drivers, regulate their hours of employment, and alone negotiate, determine, and pay the cost of their wages and vacations. The lessee's control over the lease drivers' operations is limited to routine instructions as to the time and place of delivery and to exhortations as to driver courtesy. The lessee provides no booklet of company policies for drivers, does not issue driver orders, or in anywise control the lease drivers' routes or manner of equipment operation. In these circumstances, it is clear that the lessors and not the lessees stand in the relationship of employer to the drivers of ]eased equipment. Accordingly, we find that the lease drivers are employees of the equipment lessors who hired them, and not employees of the lessee.' The equities, we believe, strongly support our position. The lessee pays a substantial amount of its gross income to secure rental equip- ment and drivers. The rental arrangements consist of bona fide leases 7 with equipment lessors who as businessmen protect their sub- stantial investment in equipment and labor through the continual exercise of primary control over the equipment and over the hire, hours of work, pay, and operations of their leased drivers. In such circumstances, we perceive no equitable justification for a decision which, by its own fiat, would impose on the equipment lessors, not even parties to this proceeding, the burden of becoming involuntary bargaining agents for the lessee and would require the lessee to as- sume the burden of a labor force which it has no desire to employ. For the foregoing reasons, we would exclude the lease equipment drivers from the appropriate unit herein on the ground that they are not the lessee's employees. 6Greyvan Lines, Inc v. Harrison, 156 F. 2d 412 (CA. 7), affd. sub nom . U.S v. Silk, 331 U.S 704; U.S. v. Mutual Trucking Company, 141 F. 2d 655 ( C A. 6) ; and National Van Lines, Inc. v. N.L R B, 273 F. 2d 402 ( C.A. 7), setting aside 123 NLRB 1272; Pure Seal Dairy Company, 135 NLRB 76 ; Hugh Major Truck Service, 124 NLRB 1387; Bob, Inc, 116 NLRB 1931; Chemical Tank Lines , Inc., 115 NLRB 221; De Hart Motor Lines. Inc, 111' NLRB 1252; Cement Transport, Inc., 111 NLRB 175; Eldon Miller, Inc., 107 NLRB 557; Malone Freight Lines, Inc , 107 NLRB 501 ; Chauffeurs, Teamsters, Ware- housenien S Helpers Local Union No. 135, etc. (Hoosier Petroleum Company, Inc.), 106 NLRB 629, and Oklahoma Trailer Convoy, Inc, 99 NLRB 1019. 6 U.S v Mutual Trucking Company, supra ; Oklahoma Trailer Convoy, supra ; Cement Transport, Inc, supra ; De Hart Motor Lines, Inc., supra; Chemical Tank Lines, Inc, supra 7 Compare these leases with the highly artificial so-called leases in N L R.B v Nu-Ca? Carriers, 88 NLRB 75, enfd. 189 F. 2d 756 ( C.A. 3), cert. denied , 342 US 919, on the basis of which both the court and the Board reached a result contrary to that of the other cited cases.