The Vindicator Printing Co.

THE VINDICATOR PRINTING COMPANY 871 The Vindicator Printing Company and Youngstown Newspaper Guild, American Newspaper Guild , AFL-CIO, Petitioner. Case No. 8-RC-5325. April 15, 1964 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 Hearing Officer Joseph A. Szabo on October 14 and 15, 1963, and before Hearing Officer Roger W. Goubeaux on December 9, 10, 11, and 12, 1963. The Hearing Officers' rulings made at the hearing are free from prejudicial error and are hereby affirmed. Pursuant to the provisions of Section 3(b) of the Act,, the Board has delegated its powers in connection with this case to a three-member panel [Members Leedom, Fanning, and Brown]. Upon the entire record in this case,' the Board finds : 1. The Employer is engaged in commerce within the meaning of the Act and it will effectuate the purposes of the Act to assert jurisdiction herein. 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 certain employees of the Employer within the meaning of Sections9(c) (1) and2(6) and (7) of the Act. 4. The Employer is engaged in the publication and distribution of The Youngstown Vindicator, a newspaper having daily and Sunday circulation. The Petitioner seeks a unit of employees in the Em- ployer's outside circulation department, consisting of 3 roadmen, 4 hoppers, 2 deliverymen, 3 shortage haulers, and 33 contract distribu- tors. The Employer contends that the contract distributors 2 should be excluded as independent, contractors and that the hoppers and shortage haulers should also be excluded as having no community of interest with other employees in the unit sought. Petitioner has in- dicated a willingness to participate. in an election in any unit found, appropriate by the Board. . Contract Distributors The contract distributors are engaged in the sale and distribution of the Employer's newspapers to newsstands and carriers 3 within defined 1 The Employer has requested oral argument. This request is hereby denied because the- record and briefs adequately present the views and positions of the parties. ,, Of the 33 distributors , 20 are "city distributors" engaged in circulation of the Vin- dicator within the city limits of Youngstown , while the remaining 13 are "country dis- tributors" whose territories cover the suburban and outlying areas of Youngstown. a At the hearing the parties stipulated that carriers engaged in home delivery are not employees of the Employer. 146 NLRB No. 106. 872 DECISIONS OF NATIONAL LABOR RELATIONS BOARD geographic areas. Substantially all of the Employer's newspapers are presently circulated through the distributors. Before 1955, this func- tion was performed by "district managers" who were employees com- pensated on a wage or salary basis. At that time the Company initiated a program for conversion of the district managers to contract distributors. The transition was accomplished by requiring the dis- trict managers to execute formal contracts setting forth the basic rights and obligations of the distributors under the new arrangement. Such contracts have been executed by all persons awarded distributor- ships since 1955. The contracts are preprinted standard forms with blank spaces for the distributor's name, his territory designation, the term and ex- piration date, the wholesale rates, and the amount of the distributor's bond. They are entered for fixed terms varying from 1 to 5 years. In essence, the contracts provide that the distributor shall have the exclusive right to sell papers in the assigned territory, that he shall purchase sufficient newspapers to serve customers in his district, that he shall exert his best efforts to increase sales and circulation within his territory, that the Company may terminate the contract on 30 days' written notice for unsatisfactory performance, and that rights ac- quired under the contract are nonassignable. The agreement also con- tains a recital designating the distributors as independent contractors. Under the distributorship arrangement, newspapers are purchased by the distributors at a wholesale rate and resold to either newsstands or carriers at established resale rates, with the distributor retaining as earnings the difference between what he pays and amounts realized on sale of the papers, less expenses. Resale rates are generally uni- form and are established by the Employer. The wholesale rate, while ostensibly a figure negotiated between the distributor and the Com- pany, is determined by the Employer in the event of disagreement. This rate is arrived at through a computation which will ensure the distributor a net return which the Company deems reasonable, plus additional amounts which are allocable to such fringe items as vaca- tions, payment of a swing man on days off, six holidays per year, and group insurance premiums. It is also adjusted to provide sums to distributors covering such expenses as salaries and wage increases for helpers; 50 percent of liability insurance premiums on vehicles used in delivery activities; transportation expenses; 4 telephone toll charges; personal social security tax; office space rental; the cost of a telephone answering service; and, at least where the distributors were formerly district managers, the amounts previously withheld under income tax regulations. The Employer will also reduce the wholesale rate to reward distributors for effective performance, to * As is customary in the industry the distributor provides his own transportation. THE VINDICATOR PRINTING COMPANY 873 :allow for increases in the cost of living, and to induce individuals to accept a particular territory.5 The territories are defined by contractual reference to maps main- tained in the circulation office. The distributor acquires no interest in his territory and may not sell or assign the same. Changes in dis- tricts may not be effected without the consent of the Employer. The Company is kept current on changes in circulation within each terri- tory through a weekly report, which the distributors are required to submit, indicating fluctuations within the district. Also, each dis- tributor is required to maintain a current route list of subscribers within his district which remains the property of the Company. Distributors are required to draw sufficient newspapers to serve cus- tomers in their districts. They pay on Wednesday for papers drawn in the preceding week. The Company grants credit on returns, but requires a reduction in draw where returns exceed 10 percent. - To pro- tect the Company against delinquencies, the distributor posts a cash bond which draws interest, and is returned to him, absent outstanding obligations, when the relationship is terminated. However, interest is forfeited in calendar quarters in which a distributor has failed to make his weekly payment on a timely basis. The bond itself was financed by a cash bonus provided by the Employer to those electing to become distributors in 1955, which on receipt was immediately re- turned to the Employer and credited against the distributor's bond account. The Employer also assists the distributor to comply with the bond requirement by reducing the wholesale rate so as to allow the distributor an additional amount over and above his normal earn- ings, fringe benefits, and expenses, which amount is remitted to the Employer and credited against the bond. In addition to the practice of lowering the wholesale rate in order to reimburse distributors for fringe benefits and expenses, similar ad- justments are made to overcome any loss of earnings that may result from extraordinary expenses and circulation problems affecting par- ticular territories. As a result, the rates paid by distributors vary from a low of 3.1 cents per copy to a high of 5.01 cents per copy for the daily edition, and from a low of 5 cents per copy to a high of 10 cents per copy for the Sunday edition.' The Company. has also increased the wholesale rate to reduce a distributor's weekly 'earnings by $20 where expanded circulation in his territory increased his return abnormally above other distributors. In the actual distribution of the newspapers, the distributor receives his draw through delivery to certain designated points by the Com- s Because the resale rate is established by the Employer and the volume of circulation within a distributor's district is a known factor, the amount that the wholesale rate must be' reduced to provide a given number of dollars to a-distributor is determined by simple computation. 874 DECISIONS OF NATIONAL LABOR RELATIONS BOARD pany's employees or trucking concerns under contract with the Com- pany, or by the distributor picking up his papers at the plant proper in accordance with a schedule established by the Company. The Com- pany supplies shortages without'question. Upon receipt of the papers, the distributor is required to make prompt and efficient delivery to customers within his district. Collections are made by the distributor in any manner he chooses, and he bears the risk of bad debts.' The distributors are required to maintain regular contacts with supervisory personnel in the circulation department, varying from daily communications in the case of city distributors to twice weekly in the case of the country distributors. Occasionally supervisors ac- company the distributors while they service their districts, providing advice on 'techniques for improved circulation and criticizing ineffi- cient practices. A "pigeonhole" or mail slot is maintained in the circulation office for each of the distributors, which must be checked on a regular basis and which is used to transmit information, includ- ing customer complaints, bills, and other materials pertaining to the circulation of newspapers. Customer complaints are generally re- ceived by the Employer and transmitted by a form, which is com- pleted in triplicate with the circulation office retaining a copy. Dis- tributors are required to report back to supervisory officials on action taken respecting serious complaints. In discharging his duties, the distributor engages carriers to effect home delivery, substitutes to replace him on days off and vacations, and helpers whose wages are indirectly paid by the Company. He is required by the Company to maintain adequate employment stand- ards and to conduct his affairs in a lawful manner.' He makes the usual payroll deductions for his helpers. The Company has objected to substitutes chosen by distributors, and has informed a distributor that he could not give an employment reference to a former carrier who was seeking another job. In securing carriers, the distributor may use material supplied by the Company which describes the advantages of such work. Selec- tion of carriers must accord with minimum age requirements an- nounced by the Company. The distributor must execute a lease with the carrier and his parents which is standard in form and prepared by the Company. This instrument sets forth the relationship between the distributor and the carrier. Through its control over the contents of the lease, the Company reserves its property interest in the route lists, and sets up a carrier bond system which protects the distributor against defaults in payment by the carriers. The bond value is set at 9 Losses to the distributor are reduced considerably by the Company's carrier bond pro- gram, discussed below, pursuant to which carriers post a cash bond equal to twice the value of their weekly draw. THE VINDICATOR PRINTING COMPANY 875 twice the cost of a,carrier's weekly draw. The distributor is required to collect carrier bond payments and transmit such sums to the Em- ployer, who assumes control over, and, administers receipts, and dis- bursements under the bond fund: , At the end of each month, the Company provides the distributor with a 'list of amounts paid and balances due to the carrier ,bond. The Company also maintains a group accident insurance policy in which,the carriers may participate: The distributors are required to explain the program to new carriers and to secure either "participa- tion" or "rejection" cards from the carrier, which, together with the lease and a form containing personal data on the carrier's background, are submitted to and retained by the. Company. The distributors are also responsible for the initial processing of claims under this program. The Board has,frequently held that in determining the status of persons alleged to be independent contractors, the Act requires ap- plication of the "right of control" test. 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 relationship is one of employment; while on the other hand, where control is re- served only as to the result sought, the relationship is that of an independent contractor. The resolution of this question depends on the facts of each case, and no one- factor is determinative.? On the basis of the foregoing and the entire record, we are satisfied that the distributors are employees of the Company. In so finding, we are mindful that the evidence discloses several factors usually pres- ent in independent-contractor relationships. However, these factors are not peculiar to such status and are,not uncommon in employment relationships. Thus, we are not persuaded by and do not regard as controlling the fact that (1) a written agreement provides the basis for the distributorship, (2) said agreement defines the, relationship as one of independent contractor, (3) the distributor provides his own equip- ment, (4) the Employer does not make the usual payroll deductions for distributors, or (5) the Employer may terminate the relationship for unsatisfactory performance only after providing 30 days' written notice. 7 There is no merit in the Employer's contention that the "right of control" test as ap- plied by the Board Is inconsistent with the intent manifested by Congress in amending Section 2(3) expressly to remove independent contractors from the scope of the Act. Con- trary to the Employer's view the modification was merely intended to establish that the Board follow ordinary tests of the law of agency in determining whether individuals are employees covered by the Act. In giving effect to the congressional intent, the various circuit courts of appeals , even in cases where the courts have disagreed with the Board's conclusions, have widely approved the "right of control" test as the governing standard. See National Van Lanes, Inc. v N.L.R.B., 273 F. 2d 402 (C.A. 7) ; N.L.R.B. v. Keystone Floors, Inc., d/b/a Keystone Universal Carpet Co., 308 F. 2d 560 ( CA. 3) ; Minnesota Milk Co . v. N.L.R.B., 314 F. 2d 761 (C.A. 8) ; N.L.R.B. v. Lindsay Newspapers, Inc., 315 F. 2d 709 (C.A. 5) ; N.L.R.B. v. A., S. Abell Company and Hearst Consolidated Publications, 327 F. 2d 1 (C.A. 4). 876 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On the other hand, the result to be accomplished through the dis- tributorship arrangement is the circulation of the Employer's news- papers for resale to the general public. 'In accomplishing this result,, the' distributor bears slight resemblance- to the independent business- man whose earnings are controlled by self-determined policies, per- sonal investment and expenditure, and market conditions. He must resell his newspapers at the price set by the Employer, and within a territory determined and controlled by the Employer. Normal operat- ing expenses are of no serious concern to the distributor for they are- reimbursed through proportionate reductions in the rate he pays for the papers. One example of Employer interference with a distribu- tor's opportunity for gain is an incident where the employer precluded resale to a newsstand that planned to retail the papers at discount prices. The Company has also required a distributor to service new- subscribers despite the distributor's opposition, and has increased a distributor's draw against his wishes. In addition, the distributor's risk of loss, opportunity for personal investment, and capacity to draw upon personal initiative to increase his earnings are minimized to a significant extent by the Employer's financial contribution toward the distributor's bond obligation, its practices and policies which are calculated to prevent competition between distributors, its acceptance of returns for credit and furnishing of shortages, its exten- sion of credit,' its implementation and control over the carrier bond program which protects the distributor against bad debts, and its practice of adjusting the wholesale rate to compensate distributors for fringe benefits, expenses, effective performance, cost-of-living- changes, and fluctuations within a territory affecting a distributor's- earnings. Of utmost significance, however, is the record evidence establishing that the Company has retained, and in fact exercises, a substantial measure of control over the manner and -means by which the distribu- tor performs his duties. Thus, it has instructed distributors to pro- tect newspapers in inclement weather and requires the distributor to perform various duties in connection with the Employer's carrier bond, accident insurance, and promotional programs. Distributors are restricted from engaging in outside employment and distributing other periodicals and are required to maintain regular contacts with supervisory personnel in the circulation department; to make periodic reports on a weekly, monthly, and annual basis, reflecting circulation changes in their respective territories; and to report on action taken to correct serious customer complaints. In connection with the selec- 8 As the distributor is required to post a cash bond to protect the Company against de- linquencies and since the Company advances newspapers to be paid for in the following week, we reject the general testimony to the effect that the Company does not extend credit to the distributors. THE VINDICATOR PRINTING COMPANY 877 tion of carriers, the Company prepares and defines the terms of the lease which must be used, thereby determining the basic relationship between the distributor and the carrier, and requires the distributor to,comply_with minimum abe standards in selecting carriers and sub-' stitutes. On the basis of supervisory observation of individual per- formance, the Company has required the distributors to take various steps within their territories which in the Company's view will result in more effective circulation? On these facts, and the record as a whole, we cannot accept the Employer's contention that its control is limited to the end to be achieved. As we are satisfied that the Employer has retained substan- tial control over the manner and means as well as the result of the distributor's work, 10 we find the distributors to be employees and shall include them in the appropriate unit." The Part-time Employees The Company presently employs four hoppers and two shortage haulers who are assigned to the outside circulation department and work on a part-time basis. The hoppers assist the four city newsstand distributors in deliver- ing the late city edition to newsstands during rush hour traffic. They are hired for an indefinite period, ,work about .14 hours per week, and are salaried, but do not participate in the Company's various fringe benefit programs. The shortage haulers are engaged in delivery of extra papers and bundles to carriers who report shortages in their draw. At present the Company employs one shortage hauler who works 2 hours each weekday and 6 hours on Sunday, and another who works 3 to 5 hours each Sunday. Both provide their own transportation and receive a car allowance plus salary. Like the hoppers, the shortage haulers do not participate in the Company's' fringe benefit programs. ° We need not resolve the variance in testimony concerning the manner by which, the Company 'asserts control over the distributors . Witnesses for the Company have re- peatedly described such action as taking the form of "suggestions," while those testifying on behalf of Petitioner view them as "instructions." As many of the above factors indicate that the Company retains substantial control over the duration of the relationship, and that the distributor 's compensation is not controlled primarily by his own industry and effort but by the decisions and actions of the Employer , it is immaterial whether the Com- pany's control is exercised by means of suggestion , request, or direct order . Buffalo Courier-Expre88, Inc., 129 NLRB 932 , 935-936. 10 San Antonio Light Division, Hearst Consolidated Publications, 130 NLRB 619, 624- 629; and Lindsay Newspapers, Inc., 130 NLRB 680, enfd . 315 F. 2d 709 ( C.A. 5) ; hold- ing individuals situated similarly to the distributors involved here to be employees. Cf. A. S. Abell Company and Hearst Consolidated Publications, 137 NLRB 238, 240-247, en- forcement denied 327 F. 2d 1 (C.A. 4). .At the hearing, the Employer moved to dismiss the petition on the ground that the unit described, in the petition includes individuals who are not employees of the Employer, but who are ,independent contractors. As we have found that the distributors are em- ployees, the Employer's motion is hereby denied. 878 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The record shows that of the 4 hoppers, 2 were hired in September 1963; 1 in March 1963; and the fourth in August 1962; and that since 1958 some 32 individuals have occupied these positions. As to the 2 shortage haulers currently employed, 1 was hired in March 1959 and the other in May 1963, and since 1958 some 10 individuals have been employed in the Company's normal complement of 3 shortage haulers. The Employer, relying upon its turnover experience with respect to these jobs and the fact that shortage haulers and hoppers are not granted fringe benefits, contends that these positions bear such an inconsequential relationship to the unit as to require their exclusion. We disagree. Employees are hired in these classifications for in- definite periods and their work is both functionally related to, and a regular and continuous part of, the operations of the circulation department. Accordingly, and as the evidence of turnover is incon clusive and does not impair the fact that those presently occupying the disputed positions of hoppers and shortage haulers have a sub- stantial and continuing interest in terms and conditions of employ- ment in the circulation department, we shall include them in the ap- propriate unit.12 Accordingly, we find that the following employees constitute a unit appropriate for the purposes of collective bargaining within the mean- ing of Section 9 (b) of the Act : All employees, including regularly employed part-time employees, of the Employer who are employed in the distribution and circula- tion of the newspaper constituting the outside circulation department, excluding all persons who deliver newspapers to homes, office clericals, and all other employees of the Employer, and all guards, professional employees, and supervisors as defined in the Act. [Text of Direction of Election omitted from publication.) 12 See Lewis & Coker Super Markets, Inc., 145 NLRB 970. Walter Schimmel, A. Q. Schimmel, Edward Schimmel, and Bernard Schimmel, d/b/a Schimmel Hotel Company and Hotel, Motel, Restaurant Employees and Bartenders Local Union No. 747, affiliated with Hotel and Restaurant Employees and Bartenders International Union, AFL-CIO. Case No. 17-C.4- 2155. April 16, 1964 DECISION AND ORDER On January 24, 1964, Trial Examiner Benjamin B. Lipton issued his Decision in the above-entitled proceeding, finding that the Re- spondent had engaged in and was engaging in certain unfair labor 146 NLRB No. 108.