Frito-Lay, Inc.

FRITO-LAY, INC. 611 Frito-Lay, Inc. and Bakery Drivers, Chauffeurs & Helpers Union Local No. 365, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Petitioner. Case 8-RC-7155 September 24. 1969 DECISION AND DIRECTION OF ELECTION BY MEMBERS BROWN, JENKINS, AND ZAGORIA Upon a petition duly filed under Section 9(c) of the National Labor Relations Act, as amended, a hearing was held before Frank J. Tuk and Richard F. Rice, Hearing Officers of the National Labor Relations Board. The Employer and the Petitioner filed briefs which have been considered by the Board in making its decision in this case. 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. The Board has reviewed the Hearing Officers' rulings made at the hearing and finds that they are free from prejudicial error. They 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 labor organization involved claims to represent certain employees of the Employer. 3. A question affecting commerce exists concerning the representation of certain employees of the Employer within the meaning of Section 9(c)(l) and Section 2(6) and (7) of the Act. 4. The Petitioner seeks a unit of 10 single-truck operators who are engaged in the sale and distribution of the Employer's products and who work out of the Employer's warehouse at Toledo, Ohio.' The Employer contends that all single-truck operators are independent contractors and not employees, 'The Employer's request that it be furnished a copy of the Hearing Officers' analysis of the issues and the evidence is denied, as such analysis is part of the Board's confidential files and is not subject to public inspection P R Mallory & Co , Inc, 89 NLRB 962, J I Case Company, 80 NLRB 217, Kearney & Trecker Corporation. 101 NLRB 1577, 1594, enforcement denied on other grounds 210 F 2d 852 (C A 7); International Longshoremen's and Warehousemen's Union. Local 8 (General Ore. Inc 124 NLRB 626, 629 'while the Employer refers to the truck operators in its business as "distributors," the parties agreed to refer to them as truck operators for the purposes of the hearing At the beginning of the hearing the parties stipulated that the appropriate unit should include all 15 single-truck operator operating within the Employer's Sales District No 43, excluding the multi-truck operators (These is one multi-truck erator who operates 3 trucks ) At the close of the hearing the Petitioner withdrew from the stipulation and stated that the unit should include the 10 single-truck operators operating out of the Toledo warehouse Further, the Petitioner asserted that, if the appropriate unit were found to include the 5 single-truck operators who The Employer is engaged in the manufacture and sale of potato chips, corn chips, and related snack foods throughout the United States. The present case involves only Sales District No. 43, which services the Toledo , Ohio, metropolitan area. District No. 43 is one of three sales districts in Region 4 of the Mid-Central Division , which has its headquarters in Detroit , Michigan . The Employer maintains a plant and regional sales office for Region 4 at Wooster , Ohio, from which location it supplies merchandise to the truck operators in District No. 43. The truck operators are assigned to specific routes or territories in Toledo and the surrounding communities in which they sell and deliver the Employer's products to retail outlets located in these areas.' The Employer maintains a list of most , ii' not all, of these retail outlets and furnishes such outlets with sales racks and displays for its products. It maintains store door contacts with the retail outlets, constantly solicits the supermarket trade, helps the truck operators to get new customers, and works in the market areas trying to find the wants of the customers . The Employer not only determines initially the physical site of the route or territory to which an operator is assigned , but also may change the geographical limits of the route or add a new operator to the territory , depending on the population and food outlets in the area, the area's economy, market research , and the Employer's advertising program , i.e.. the amount of money the Employer is going to spend in the area to promote its products. The Employer leases a central warehouse at Toledo, Ohio, which contains the office of its district manager for District No. 43. The office is supplied with the Employer' s business forms, an adding machine, and a telephone with answering service for the use of the operators . In addition, the office contains for all of the truck operators pigeon-hole areas in which their materials and other things are placed. It appears that the Employer requires all operators who service routes within the immediate Toledo area to lease warehouse space in the central warehouse . Ten of the 15 operators in issue herein are assigned bins in this warehouse for which they pay a monthly rental of S22.50. Each operator has his own lock to his bin , but a separate lock is placed on the bin on nights when the Employer delivers merchandise to the operators from its Wooster plant . On such nights the Employer employs a part-time warehouseman to unload its delivery truck and place the merchandise in the proper bins. The Employer requests that each operator place his merchandise to one side of his bin to avoid confusion between his current inventory and the new merchandise.' operate out of other warehouses, there is a question as to the eligibility of the five, on which the Petitioner took no position 'the truck operators handle other products but the Employer requires that these products be compatible with its own products 'The other live operators appear to lease their own warehouse space in 178NLRBNo.92 612 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The business forms supplied by the Employer to the truck operators are price pads, order forms, cash sales tickets, charge account forms, and "distributor's remittance" forms. It appears that the merchandise items listed on the order and charge account forms are coded by the Employer to facilitate the ordering of its merchandise by the operators and to conform to the Employer's accounting system which is handled by its divisional headquarters in Detroit. The telephone numbers of the Employer's district office at the Toledo warehouse and of its other locations in the Mid-Central Division are printed on the back of the copies of the cash sales ticket and charge account form which the truck operators give to the customers. The Employer also supplies each truck oeprator with a route book which consists of a binder and route cards. The route cards contain the name, address, and telephone numbers of all the customers located within the truck operator's route or territory, and show the type of establishment, days serviced, the number of racks, back room stock. amount of each item supplied, and other instructions for servicing the account. It appears that the Employer's district manager requests that the operators keep their route cards in the binder in the order that they make their stops so that he will know where to reach them throughout the day. It appears further that the Employer uses the route books to train new operators and on those occasions when it services routes for the operators. The record shows that 45 percent of the truck operators' total sales of the Employer's products consist of authorized credit accounts, 30 percent to chain stores and 15 percent to nonchain stores. The Employer assumes the risk of nonpayment on such accounts. These accounts are handled on a centralized basis by the Employer who grants credit directly to these customers, bills them, and considers their total purchases in order to grant discounts. The Employer unilaterally sets the "store door" price at which its products are to be sold to the customer. There is some evidence that a truck operator may vary the store door price on occasion, as when he may induce a customer to give him advertising space by reducing the price on a lead item. Such practices may occur with cash customers but never with authorized credit customers. However, it appears that the more prevalent practice is for the Employer to vary the store door price when it desires to do so or in accord with its established policy. Thus, the Employer will run special promotions where the price of various items is reduced, or where it offers the consumer a prize, such as ladies hose, with the purchase of a certain number of a given item. The Employer also has an established policy of giving a quantity purchase towns located in the outlying areas they service, but the record does not show the means by which they receive regular delivery of the Employer's products discount to customers who purchase a minimum amount of its products. The Employer unilaterally determines both the amount of the discount and the quantity of merchandise which must be purchased in order to qualify for the discount. The Employer issues its own checks in payment of the discount to the individual customers, although the operator usually delivers the check to the customer. Where the Employer reduces the price or grants a discount to a customer, the cost of the items to the operator is correspondingly reduced. Truck operators receive as their compensation 15 percent-20 percent of the store door price of the Employer's merchandise which they purchase, depending on whether the merchandise is manufactured by the Employer or anothercompany.5 .In' I addition, the operators receive individual prizes from the Employer for increasing sales of specific items, such as pretzels, and may receive a bonus in accord with a formula set by the Employer." The operators also receive an allowance for customer returns of stale merchandise and a weekly sample allowance, which, in the case of an operator with one of the lower purchase averages, amounted to $50 per week.' It also appears that the Employer adopts a lenient policy towards truck operators who do not pay their bills on time. Indeed, some operators appear to carry unpaid balances of several hundred dollars. As noted, the Employer may unilaterally change the boundaries of a truck operator's route or territory. If the change results in a loss of income to the operator, the Employer compensates the operator according to a unilaterally established formula.' A truck operator may "sell" his route only to a person approved by the Employer. While the purchaser may buy the truck, it would appear from the record that the route is transferred to him at no additional cost. Indeed, it appears that the purchaser thereafter goes through the normal routine of an employee-trainee and is assigned the route by the Employer. The Employer may terminate an operator's services for not exercising 'It appears that the operators are billed for the merchandise at the time of delivery but that they do not pay for it until the end of each week it appears further from a perusal of the Employer's "Distributor's Remittance" form that the operators are allowed a credit against their bill for the total amount of sales to authorized credit customers The record shows that the bonus plan currently in effect for truck operators requires an increase of a minimum of 5 percent over the previous year's sales . The bonus plan has the following provisions 5% increase 0.5 of 1% bonus 6% increase 0 6 of 1% bonus 7% increase 0 7 of 1% bonus 8% increase 0 8 of 1% bonus 9% increase 0 9 of 1% bonus 10% increase 1.0% bonus 'The record does not show whether the sample allowance is constant or varies in accord with the amount of each operator's average weekly purchases and other factors 'With the Employer's permission, an operator may transfer from one route to another. However, the record does not chow that the operator is compensated for any loss which may result from this type of change. FRITO-LAY, INC. 613 his primary responsibility, namely, paying for merchandise and taking proper care of customer accounts. In such instances, the Employer normally gives the operator 30 days' written notice and again compensates him according to a set formula.' The operator may terminate his services on 30 days' written notice or less, but if less than 30 days' notice is given, he is entitled tinder the same formula to a proportionately less amount of compensation. The Employer may terminate the operator's services immediately and without compensation for dishonesty or immoral conduct. It appears further that the Employer may terminate an operator who consistently tails to meet his base because of inability to sell. Persons seeking the job of single-truck operator file with the Employer an ordinary application for employment. It appears that no prior sales or business experience is required and that little capital is needed since the Employer does extend credit for the initial inventory. Although the successful applicant makes his own arrangements for the purchase of a truck, he usually purchases the truck owned by the operator who previously serviced the route to which he is assigned. If not so purchased, the Employer recommends that the new operator paint his truck in the Employer's colors, in which case the Employer supplies its decals which are affixed at the Employer's expense. The successful applicant is hired normally as an employee and is paid a salary during his training. It appears that during this training period the regional manager familiarizes the trainee with the Employer's business forms, explains a load sheet and how his merchandise comes in. The trainee is assigned a specific route or territory and then is trained by the district manager, or, in an emergency, by the route foreman."' The district manager explains the daily procedure, gets on the truck with the trainee and rides with him, taking one phase of the business at a time. In the first days the trainee learns the merchandise, the color of the tapes, and the site of the boxes, where the stops are, where the racks are in the store, some basics on how to merchandise. how to make out the bill, how to check the merchandise to the merchant and how to collect for the bill. It appears from the record that the time required to train a man varies, depending on the individual, his territory, and background. The Employer's regional manager testified that "it takes an average man two weeks until he feels that he can load his truck somewhat properly, find his accounts, finish in time to keep up the pace, because it is a fairly fast pace, and not to make too many errors he 'When an operator is assigned to a route , he is given a base which is the average weekly purchases at the store door price for that route during the preceding 3 months Upon termination, he receives 1 1/2 times the amount, if any , his average weekly purchases for the 3 months immediately preceding his termination exceed the base similarly, where the Employer changes the boundaries of a truck operator's route and this change results in a reduction of his average weekly purchases for the 3-month period immediately preceding the change, he is paid 1 1/2 times the difference can't correct." During the training period the Employer puts the route together the way it thinks it should be serviced, pointing out the frequency of the stops and the importance of taking care of the accounts in the most efficient manner. After the operator gains experience, he may rearrange the route to suit his own feelings and needs. In addition to training new truck operators, the district manager runs routes for operators in emergencies (sickness, death, etc.) at no additional expense to the truck operators and suggests to the operators ways of improving their routes. It appears that he holds "more or less" weekly sales meetings with the operators who work out of the Toledo warehouse. These meetings last about 45 minutes at which such matters as the distribution of promotional information and notification of the Employer's future product promotions are discussed. The district manager also discusses procedures at these meetings and gives the various operators information pertaining to chain store customers, such as new credit authorizations, deletions, or additions to the customers' lists of the Employer's products, and the customers' request that the operators make their deliveries by a certain time of day. The district manager also works with the operators individually, helping them with racking of the Employer's products." He works with the individual operator on problems in his territory and reviews his individual accounts with him periodically. As noted, the truck operators own their own trucks12 and provide the necessary oil, gasoline. maintenance, and repairs. They pay their own license tees and obtain liability insurance from any source they desire. However, the Employer requires that they carry a 5100,000/$300,000/$25.000 policy which must include coverage of the Employer as its interest may appear. Except as noted above, the operators, it necessary, hire and pay their own help, which. in at least one instance, has been a part-time employee of the Employer. The Employer makes no payroll deductions, the operators being responsible for their own Federal income taxes and social security' payments. Nor does the Employer provide the operators with any fringe benefits such as holidays, vacations, or insurance benefits. The operators have their own bank accounts and appear to have some control over the hours13 and vacations. "it appears that the regional manager presently has under his direction a route foreman who is not assigned to any particular district but works out of District No. 41 most of the time His function is to service routes when operators are ill, have a breakdown or other emergency , service "swing' routes, vacation routes, break in new men, and otherwise assist the operators with such things as racking in large markets and "lining" markets "The record discloses that racking is a time-consuming task, especially in large markets "It appears that some of the operators have purchased new trucks "An operator testified, however, that his hours were set by the tact that he worked until he had finished serving his route It further appears that the hours worked by an operator are established , in large part, by the 614 DECISIONS OF NATIONAL LABOR RELATIONS BOARD However, the record shows that the district sales manager trained one man, apparently at the Employer's cost, to serve as a substitute for the various operators while they took vacations. The record shows further that the operators do provide some promotional items at their own expense, such as pencils and pens bearing their names as well as the Employer's name. They may also give customers gifts or samples to increase goodwill. The Board has frequently held that, in determining the status of persons alleged to be independent contractors, the Act requires application of the "right to 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 reserved 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 arc satisfied that the single-truck operators are not independent contractors. While the evidence discloses several factors usually considered to indicate an independent contractor status, the presence of these factors does not alone establish such status. Thus, we are not persuaded by and do not regard as controlling the fact that the truck operators provide their own trucks and the expenses of their operation and upkeep, that they may on occasion hire helpers if needed; that the Employer does not make the usual payroll deductions for the operators; that the operators extend some personal credit to customers and give them gifts or samples to increase goodwill; or that they may have sold products, on occasion, at other than the "store door" price and handle products other than those of the Employer. We find, rather, that these factors are outweighed by others which amply demonstrate the effective control the Employer maintains over the operations of the truck operators, from its initial indoctrination of new operators in the use of the Employer's merchandising techniques and business forms through its continued supervision of the operators' daily activities. In this regard we are particularly cognizant of the following: (1) The routes are controlled by the Employer in terms of location, size, and sales practice. (2) The truck operations in practice are limited principally to the sale of the Employer's products." (3)The Employer establishes the prices of its products, granting reductions and discounts according to its own policies. (4) At its own expense, the Employer assists the operators in the solicitation of new outlets, services their routes in emergencies, helps them with such things as racking, and assists them generally in resolving the problems which arise on demands and requirements of the customers indeed, as noted elsewhere herein, an operator may be terminated for not taking proper care of the accounts serviced their routes. (5) The Employer undertakes completely all billing and collection of authorized credit accounts which comprise almost half of the operators' income and the Employer assumes the credit risk of nonpayment of these accounts. (6) Realistically, the operator retains no proprietary rights in the route or territory which he can sell to a third party.15 (7) The Employer reserves the right to terminate the relationships upon notice without cause and immediately for cause. Moreover, the record indicates that the truck operators' compensation is not controlled primarily by their efficiency or industry in performing the work but is in substantial part affected by decisions and actions of the Employer.1' Regardless of whether this control is exercised by means of suggestions, requests, inducements, assistance, or systemized methods of operating, we are satisfied that the Employer has reserved the right to control, when and as it sees fit, the manner and means, as well as the result, of the operators' work. We therefore find that the truck operators are employees of the Employer." As to the composition of the unit, a total of 15 single-truck operators work in Sales District No. 43. From the record there appears to be no substantial difference in the duties and working conditions of the 10 truck operators working out of the Toledo warehouse and the 5 truck operators who rent warehouse space in nearby towns, except the arrangement for and the location of their warehouse space. In these circumstances, we find that the appropriate unit should include all 15 single-truck operators.1e We therefore find that a unit of the following employees is appropriate for the purposes of "The Employer has a clear cut policy of terminating operators for not exercising their primary responsibility , one of which is to take proper care of customer accounts, and the evidence shows that an operator must maintain a fairly fast pace in order to service his route in a manner satisfactory to the Employer Thus, it does not appear that the Employer tolerates the operators' sale of other products where such activities detract from their ability to sell and promptly deliver the Employer's products. Moreover, we do not find persuasive the evidence that a former operator employed others to take care of his route while he devoted his full time to an outside business Not only is such practice an exception to the normal manner in which the operators handle their routes but it is also inconsistent with the Employer's fixed policy of approving personally each individual serving one of its routes. "As the Employer has an established formula for compensating operators upon termination of their services, it appears that the only proprietary right the operator has is in his truck Indeed, the amount of compensation to which an operator is entitled upon termination appears substantially less than what he could obtain for sale of the route in an oven market "Thus, the Employer decides when a territory has become too large for an operator to handle and itself decides to add a new operator rather than leaving the decision to the operator to buy another truck and hire an employee The Employer determines the extent and terms of credit to be allowed a substantial portion of the operators' customers, the discounts to be allowed to quantity purchase customers and when a customer may so qualify, and the percentage allowance to be given the operators for their customers' return of stale products "Frito-Lay, Inc . 167 NLRB No 11 "As the parties have agreed to exclude one multi-truck operator, we shall not include that operator in the unit. FRITO-LAY, INC. 615 collective bargaining within the meaning of Section 9(b) of the Act: All single-truck operators' of the Employer in Toledo, Ohio, Sales District No. 43, excluding all multi-truck operators, office clerical employees, professional employees, guards, and supervisors as defined in the Act. [Direction of Election" omitted from publication.] 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 t.ommunicate with them . Excelsior Underwear Inc. 156 NLRB 1236, N L R B v. Wyman-Gordon Company. 394 U S 759 Accordingly , it is hereby directed that an election eligibility list, containing the names and addresses of all the eligible voters, must be filed by the Employer with the Regional Director for Region 8 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 "in order to assure that all eligible voters may have the opportunity to objections are tiled.