Deaton, Inc.

780 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Deaton, Inc., and Service Employees International Union, Local #623, AFL-CIO, Petitioner. Case 10-RC-8225 January 11, 1971 DECISION AND DIRECTION OF ELECTION BY CHAIRMAN MILLER AND MEMBERS FANNING, BROWN, AND JENKINS Upon a petition duly filed under Section 9(c) of the National Labor Relations Act, as amended, a hearing was held before Hearing Officer Alan L. Rolnick of the National Labor Relations Board. Following the hearing, and pursuant to Section 102.67 of the National Labor Relations Board Rules and Regula- tions and Statements of Procedure, Series 8, as amended, this case was transferred to the National Labor Relations Board for decision. Thereafter, the Employer and the Petitioner filed briefs, which have been duly considered. The Board has reviewed the Hearing Officer's rulings made at the hearing and finds that they are free from prejudicial error. The rulings 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, and it will effectuate the purposes of the Act to assert jurisdiction herein. 2. The Petitioner is a labor organization claiming to represent certain employees of the Employer. 3. A question affecting commerce exists concern- ing the representation of certain employees of the Employer within the meaning of Sections 9(c)(1) and 2(6) and (7) of the Act. The Petitioner seeks to represent a unit of all over- the-road truckdrivers, city pickup and delivery driv- ers, hostelers, and maintenance employees at the Employer's Birmingham, Alabama, facility. The Employer contends that the petition should be dismissed, primarily on the basis that the unit includes certain over-the-road truckdrivers who, it urges, are independent contractors, and others who, it claims, are employees only of these independent contractors. The Employer is a Delaware corporation with its principal office and place of business located at Birmingham, Alabama, where it is engaged in the transportation of goods in interstate commerce as a common carrier under license from the Interstate Commerce Commission. The Employer utilizes about 400 truckdrivers: about 35 individuals drive Deaton- owned trucks, 16 are local drivers and hostelers (yardmen), and about 355 individuals own and/or drive trucks leased by Deaton. The following are the various categories of owners and drivers of trucks leased by Deaton: a. Single Owner-Drivers: These drivers own and operate a single truck, which they drive and lease to Deaton. b. Multiple Owner-Drivers: These individuals own more than one truck leased to Deaton. A multiple owner-driver normally drives one of his leased vehicles. c. Nonowner-Drivers: These drivers drive the trucks leased by Deaton. The Employer is authorized to operate as an interstate motor vehicle common carrier under a Certificate of Public Convenience and Necessity granted by the Interstate Commerce Commission. In its operations, the Employer is subject to the Inter- state Commerce Act and to the regulations promul- gated by the ICC, and is further subject to pertinent regulations of the Department of Transportation. Under the Interstate Commerce Act, a carrier is permitted to augment its equipment by means of leases, but the carrier is not thereby relieved from certain duties and responsibilities imposed by the Interstate Commerce Act. The relationship between the Employer and the truck owners and nonowner-drivers is based on the terms of a lease entitled "Lease Agreement between Deaton, Inc., and Independent Contractor." The term of the lease is 1 year, and from year to year thereafter, unless terminated by either party upon written notice after having been in effect for 30 days. The lease provides that the "contractor agrees to furnish, upon request of `carrier' the equipment . . . and all labor to operate the same, and to perform all services necessary in the transportation of such commodities as `carrier' may provide." The lease further provides that the "Contractor warrants that the motor vehicle be in safe mechanical and operating condition"; that such vehicle will be maintained by the "contractor"; that said equipment is properly licensed; and that the equipment meets the rules and regulations of the ICC and all other regulating authorities and local, state, and other appropriate agencies. It is further provided that the "Contractor" agrees to pay the entire cost of operating the vehicle, including wages, payroll taxes, workmen's compensa- tion, fuel tax payments, road tax, equipment use fees, equipment license fees, driver's license fees, fuel, oil, gasoline, tires, parts, repairs, driver's salary, fines, tolls, state license tags, and pay collision, fire, and theft insurance premiums. However, Deaton, by virtue of the lease, is authorized to withhold sums from an owner in default on any monetary obligation imposed on him by the lease. It is further provided that the contractor shall "provide all labor and service herein provided for, or 187 NLRB No. 102 DEATON, INC employ all necessary drivers, helpers, mechanics or others competent and qualified to perform the work required hereunder, and meeting the requirements of the rules and regulations of Federal, State, and local regulatory authorities," and shall "Direct and control his employees, including selecting, hiring, supervising, firing, training, setting wages, hours and working conditions and paying and adjusting the grievances of his employees." The lease agreement provides that the "carrier" shall pay the "contractor" certain set percentages of the gross revenue, which, in practice, the record indicates, amounts uniformly to 70 percent for the lease of a tractor and trailer, and 60 percent for the lease of a tractor alone. Under the lease arrangement, certain duties and responsibilities are imposed upon the "Contractor" vis-a-vis the "Carrier." Thus, the "Contractor" agrees, at his expense, to furnish "Carrier" with the driver's current medical certificate, copy of all daily drivers' logs, driver's trip report and manifest, and such other reports or forms as may be required by the Interstate Commerce Commission and United States Depart- ment of Transportation, and in such detail as may be required by such rules and regulations; the "Contractor" agrees on delivery of any property transported by him to secure signed delivery receipt therefor and on completion of trip, furnish same to "carrier"; and "Contractor" further agrees to collect all moneys due "carrier" for transportation service rendered pursuant hereto. The record also reflects that the owner of a vehicle leased to Deaton may not drive that vehicle for another Company. The drivers report to the Employer's dispatcher for the various hauls. They "sign in" when they desire to make a haul. The lease owners hire their own drivers, but the drivers are, nevertheless, "checked out" by the Employer's personnel office. In the event a driver does not perform to Deaton's expectations, such as being consistently late, being insulting to the custom- ers, drinking on the job, Deaton asks the lease operator not to utilize the driver on the Employer's runs. The owners of the leased vehicles invest about $20,000 in each truck. The multiple owner-drivers may, apparently, lease to the Employer as many trucks as they may wish, consistent with the Employ- er's requirements. Thus, for example, one multiple owner-driver leases about 43 trucks to the Employer, and the record indicates that while some multiple i Oui dissenting colleague does not appear to question our reliance on the common law right-of-control test as the proper means of resolving the independent contractor issue before us Yet, our colleague's own conclusions are based upon an application of the more restrictive standards set forth in U S v Silk (Harrison, Collector of Internal Revenue v Greyvan Lines, Inc ), 33l U S 704 The relevancy of this test to issues arising under the National Labor Relations Act has been previously considered by the Board in its earlier decision involving the same employer and the identical 781 owner-drivers are successful operators, others have gone into bankruptcy. The leased trucks normally bear decals stating "leased to Deaton." All pay and conditions of employment of drivers are a matter of agreement between the truck owner and the driver he employs. Thus, the employment terms of company drivers and drivers of leased equipment are not necessarily uniform. The Company does not withhold any state or Federal income tax or social security tax from the sums paid owners or their drivers, nor does it cover their workmen's compensa- tion or unemployment compensation. Owners and their drivers receive no vacation or holiday pay from the Company and do not participate in welfare plans or other company benefits enjoyed by the Company's employees. In making determinations as to whether an individ- ual is an independent contractor or employee, the Board has frequently stated that it will apply the common law right-of-control test.' Under this test, the employer-employee relationship exists when the employer reserves the right to control not only the ends to be achieved, but also the means to be used in reaching such ends. The Board has made it clear that the application of the test is not a "perfunctory exercise" but demands a balancing of all the evidence relevant to the relationship.2 In Deaton Truck Lines, Inc., supra, the Board considered this very issue, and concluded, with court approval,3 that the lease owners and their drivers were not independent contractors but employees of Dea- ton. The Employer now claims that changes in operations occurring after that decision have materi- ally altered the nature of its relationship with the lease owners and that they now have the status of independent contractors. In this connection the Employer relies upon the facts that (1) wages and benefits of lease drivers are determined by the lease owner and hence are not necessarily the same as those enjoyed by company drivers; (2) unlike company drivers, lease drivers purchase gas where they please, may vary routes, and may take their trucks home; and (3) the Employer no longer maintains a pool of drivers, nor a road patrol. In our opinion, the foregoing are insufficient to negate the considerable control exercised and re- served in the Employer over the manner and means by which the lessors perform their services on the Employer's behalf. The Employer remains obligated issue now before us See Deaton Truck Lines, Inc, 143 NLRB 1372 For the reasons set forth in that decision , we shall continue to adhere to the common law right-of-control test as the standard for determining independent contractor status. 2 National Freight, Inc, Federal Freight, Inc, and Sun Transportation, Inc, 153 NLRB 1536, 1538-39 3 Deaton Truck Line, Inc v NLRB, 337 F 2d 697 (C A 5) 782 DECISIONS OF NATIONAL LABOR RELATIONS BOARD to comply with ICC and Department of Transporta- tion regulations relative to the operation of all vehicles used in its operations on the Nation's highways and concededly, exercises the control over operation of leased equipment necessary to assure compliance with said requirements. Furthermore, the Employer, being answerable to its customers for any unsatisfactory performance by a lease operator or his driver, will, in turn, take corrective steps with the lease owner to avoid any repetition of such incidents. More specifically, the Employer's control over the means by which the lease owners perform their tasks is evidenced by its initial determination of qualifica- tion of any driver hired by a lease owner, by its disqualification of any driver who fails to perform satisfactorily, by its requiring leased equipment to be inspected every 20 days, by its exclusive use of all leased equipment for the term of the lease, and by its performance of all dispatching services for both company and lease drivers alike. Also, the lease drivers are required to submit a daily driver's log and trip report and manifest to the Company; each truck is required to exhibit the Employer's name and identification number; and Deaton maintains a personnel file on all drivers with respect to accidents and qualifications. Furthermore, the Employer, through its authority to terminate the lease at will 30 days after the commencement thereof, retains poten- tial authority to control virtually every aspect of the means by which the lease owners conduct their operations in its behalf. It is true, as the Employer points out, that the truck owners have an opportunity to increase their profits. Thus, for example, the owners may save money on the purchase of their trucks and minimize maintenance costs; they may purchase as many trucks for leasing purposes as they can afford; and they may engage in other business activity on their own behalf. But, as we have seen, by virtue of the uniform system of remuneration provided in all the leases between the Employer and the lessors, the Employer in practical effect sets the amounts the truck owners receive from the Employer for hauling the Employer's freight. Moreover, the fact that the truck owners may earn extra money through purchase of additional trucks, or through other business activity, although a factor to be considered, does not preclude an employee relationship with the Employer.4 In view of the foregoing, and on the basis of the 4 See Indiana Refrigerator Lines, Inc, 157 NLRB 539 S Indiana Refrigerator Lines, supra 6 In order to assure that all eligible voters may have the opportunity to be informed of the issues in the exercise of their statutory right to vote, all parties to the election should have access to a list of voters and their addresses which may be used to communicate with them Excelsior Underwear Inc, 156 NLRB 1236, N L R B v Wyman-Gordon Co, 394 U S 759. Accordingly, it is hereby directed that an election eligibility list, entire record, we find that the single owner-drivers and the nonowner-drivers, including those driving for the multiple owners, are employees of the Employer.5 4. Although we find that the multiple owner- drivers are not independent contractors, we conclude that they are supervisors within the meaning of the Act. The record shows that the multiple owner- drivers, as in the prior Deacon case, supra, have the power to hire and fire the drivers of their trucks, and otherwise responsibly to direct their work and work assignments . We shall therefore exclude them from the unit. Accordingly, and since no other issues have been presented concerning the scope of the unit, we find that the following employees constitute an appropri- ate unit for the purposes of collective bargaining within the meaning of Section 9(b) of the Act: All over-the-road truckdrivers, city pickup and delivery drivers, hostelers, and maintenance em- ployees at the Employer's Birmingham, Alabama, plant, excluding all office clerical employees, salesmen, guards, and supervisors as defined in the Act. [Direction of Elections omitted from publication.] CHAIRMAN MILLER, dissenting: Contrary to the majority, I would find that the owners of equipment leased to the Employer are independent contractors and hence would dismiss the petition seeking an election in a unit which includes them. The majority, in finding that the owner-operators are employees, applies the right-of-control test and concludes that Deaton has retained sufficient control over the manner and means by which the owner- operators perform their duties to establish an employ- ment relationship. In so finding, the majority relies in essence upon the following: the overall effect of ICC regulations, which require a degree of company control over the equipment and certain safety factors applicable under the law administered by that agency; the lease agreement providing for the Company's exclusive use of the leased equipment (also required by ICC regulations); the fact that either party may terminate the lease on 30 days' notice; drivers are required to submit a daily driver's log and a trip report manifest to the Company (again an ICC requirement); each truck is required to exhibit the Company's name and identification number; the Company may effectively remove a driver from containing the names and addresses of all the eligible voters, must be filed by the Employer with the Regional Director for Region 10 within 7 days of the date of this Decision and Direction of Election The Regional Director shall make the list available to all parties to the election No extension of time to file this list shall be granted by the Regional Director except in extraordinary circumstances Failure to comply with this requirement shall be grounds for setting aside the election whenever proper objections are filed DEATON, INC. 783 company work (but only when required because of noncompliance with ICC regulations); and, finally, the fact that the Company maintains a personnel file on the drivers with respect to accidents, etc. I have no quarrel with the relevance of the common law "right-of-control" test to the issues at hand. My disagreement centers upon the majority's application of this test to the facts of this case, coupled with its failure also to consider and give weight to factors establishing the entrepreneurial status of those they find to be employees. Soon after passage of the Wagner Act, the Board with Court approval,7 adopted liberal standards, designed to afford as many individuals the protection of the Act as would be consistent with industrial realities. "The standard was one of economic and policy considerations within the labor field. Congres- sional reaction to this construction of the Act was adverse and Congress [in 1947 ] passed an amendment specifically excluding `any individual having the status of an independent contractor' from the defini- tion of `employee' contained in Section 2(3) of the Act. The obvious purpose of this amendment was to have the Board and courts apply general agency principles in distinguishing between employees and independent contractors under the Act." N.L.R.B. v. United Insurance Co. ofAmerica, 390 U.S. 254 at 256. Also in 1947, but before the effective date of the 1947 amendments, the Supreme Court in U.S. v. Silk (Harrison, Collector of Internal Revenue v. Greyvan Lines, Inc.), supra,8 considered this issue, and on facts strikingly similar to those presented here, concluded that owner-operators under contract with a common carrier subject to regulation by the Interstate Com- merce Commission were independent contractors and not employees. The facts in Greyvan were: Respondent operated a trucking business pursuant to ICC regulations. The driver-owners were required to haul exclusively for the respondent, to furnish their own trucks and all equipment and labor necessary for pickup, to handle and deliver shipments, to pay all expenses of operations, to furnish such insurance as the respon- dent might specify, to pay for all loss or damage to shipments and to indemnify the company for any loss caused by the acts of the truckmen, their servants, and employees, to paint the respondent's name on their trucks, to collect money, to post bonds, to drive their trucks personally or to be present on their trucks except in emergencies, when a substitute might be employed with approval by the company, and to follow the rules and regulations of the company. They were paid on a percentage of revenue basis. The contract between the company and the owner-drivers was terminable at will. The company maintained dispatchers but did not specify the routes to be used. Permits, certificates, and franchises required by law were obtained at the company's expense. On these facts the Court concluded: "where the arrangements leave the driver-owners so much re- sponsibility for investment and management .. ., they must be held to be independent contractors. These driver-owners are small businessmen. They own their own trucks. They hire their own helpers. In one instance they haul for a single business, in the other for any customer. The distinction, though important, is not controlling. It is the total situation, including the risk undertaken, the control exercised, the opportunity for profit from sound management, that marks these driver-owners as independent contractors." 331 U.S. at 719. The majority here, in finding a degree of control fatal to the independence of the contractors, errs first in failing to note that virtually the only controls retained were those required by the ICC. For example, it notes that the Company may "effectively remove a driver from company work." An examina- tion of the facts reveals, however, that such a removal can be effectuated only when required by the law, and that in all other cases, as provided in the lease, "Contractors shall . . . direct and control his employ- ees, including selecting, hiring, supervising, firing, training, setting wages, hours and working conditions and paying and adjusting the grievances of his employees." As further specifically delineated by the lease: Parties hereto agree that "carrier" has no authority to or right to control the details of the operation of the leased equipment, and any agent or servant of "carrier" is without authority to control said operation, except to the extent required by law and to accomplish the end result for which this lease is executed. The majority thus fails to observe the teaching of Greyvan that the retention of only so much control aS is required by operation of law (when a carrier is subject to ICC regulations) clearly does not establish an employer-employee relationship. In any given case, therefore, it becomes necessary to examine beyond this point, and to explore and analyze what degree of control is retained and exercised beyond that required by the law of transportation. This the 7 N L R B v Hearst Publications, 322 U S I I I standard set forth in the earlier Hearst case, subsequently modified by A Though the Silk and Greyvan cases arose under the Social Security Congress, the ruling, that those who perform services on behalf of another Act, the Court, at page 713, specifically stated that it would follow the and bear all the earmarks of independent businessmen , do so as principles applied in making similar determinations under the National independent contractors, remains valid law Labor Relations Act Although the Court relied upon the more liberal 784 DECISIONS OF NATIONAL LABOR RELATIONS BOARD majority fails to do, and this would be reason enough for me to dissent. But the majority, in its haste to find employee status, also ignores the other test set forth in Greyvan, which is given emphasis under our law by the legislative history of the 1947 amendments to our Act. Consistent with Greyvan, that legislative history clearly implies that the distinction between employer and independent contractors cannot, in any event, be based solely upon the element of control. Thus, as stated in House Report No. 245: In the law, there always has been a difference and a big difference, between "employees" and "independent contractors." "Employees" work for wages or salaries under direct supervision. "Independent contractors" undertake to do a job for a price, decide how the work will be done, usually hire others to do the work, and depend for their income not upon wages, but upon the difference between what they pay for the goods, materials, and labor and what they receive for the end result, that is, upon profits.9 Upon examination of the instant facts in the light of the foregoing, the conclusion that the lease owners are independent contractors appears inescapable. The lease owners invest substantially-about $20,000 per truck. Some are profitable, others have gone bank- 9 See I Leg. Hist 309 ( 1947) See also H R Conf Rep No 510, 80th Cong 1st Sess 33, 1 Leg Hist 536-537 (1947) tU It is true that the Board in an earlier case involving this Employer found the driver-owners to be employees See Deacon Truck Line, Inc, supra That decision was enforced by the Fifth Circuit at 337 F 2d 697 However, in the interim, significant changes have been made through which the Employer relinquished considerable control over the wages and benefits of lessee drivers , over route designations, and over the source rupt. The opportunity for profit or loss clearly depends on the initiative and the ability of the owners to operate their trucks efficiently and economically; the expenses are largely borne by them, not Deaton (fuel, oil, tires, repairs, wages of other drivers and helpers, taxes, etc.). The business-like nature of the opportunity for the owner-drivers is shown by the fact the more successful ones become multiple owners and may own, as does one contractor here, as many as 43 trucks (the investment for such an owner would be over three-quarters of a million dollars). The fleet owners have complete autonomy in establishing the wages and working conditions under which their drivers perform. None of the typical indicia of an employment relationship are present. The lease owners and their employees are not subject to the wage or fringe benefit policies applicable to Deaton's own employees. They are engaged in an independent enterprise performing services under contract with Deaton. When the instant record is measured against the standards set forth in Greyvan and the legislative history to the 1947 amendments, the lease owners must be found to be independent contractors. Accordingly, I would dismiss the petition seeking to include them in the unit.I0 through which owner-drivers obtain their employees, and appears to have retained only such control as is required by the ICC. Furthermore, the court's decision in that case was made pursuant to limited standards of review which bound the court to accept the Board's determination ". even though the Court would justifiably have made a different choice had the matter been before it de novo."See N LR B v United Insurance Co of America, supra.