Conley Motor Express, Inc.

624 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Conley Motor Express, Inc. and Fraternal Association of Special Haulers, Local No. 100, Petitioner. Case 6-RC-5450 June 16, 1972 DECISION ON REVIEW AND ORDER BY CHAIRMAN MILLER AND MEMBERS KENNEDY AND PENELLO On June 21, 1971, the Regional Director for Region 6 of the National Labor Relations Board issued a Decision and Direction of Election in the above-entitled proceeding in which he found appro- priate the Petitioner's requested unit of over-the-road truckdrivers, rejecting the Employer's contention that owner-operators of equipment leased to it for use in its motor carrier operations are independent contractors and not its employees. Thereafter, in accordance with the National Labor Relations Board Rules and Regulations, the Employer filed a request for review of the Regional Director's Decision on the grounds that, in failing to find that the Petitioner was disqualified by reason of a conflict of interest from acting as a labor organization and in finding that the owner-operators involved are its employees and not independent contractors, he departed from precedent and made findings of fact which are clearly errone- ous. On August 8, 1971, the Board by telegraphic order granted the request for review and stayed the election pending decision on review. Thereafter, the Employ- er filed a brief. Pursuant to the provision of Section 3(b) of the National Labor Relations Act, as amended, - the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. Upon the entire record in this case with respect to the issues under review, including the Employer's brief on review, the Board makes the following findings:1 The Employer operates from a single location in Pittsburgh, Pennsylvania, where it maintains offices and a parking lot. As a common motor carrier licensed under certificates from the Interstate Com- merce Commission (ICC) and the Pennsylvania Public Utilities Commission (PUC), it is engaged in the transportation of certain commodities, mainly 1 The Intervenor, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America , Local 249, took the same positions as the Employer with respect to the issues under review but it filed no brief on review. As in Tryon Trucking Inc, 192 NLRB No 123, and Aetna Freight Lines, Incorporated, 194 NLRB No 120, we find no record support for the contention that the Petitioner is disqualified from acting as a labor organization by reason of a conflict of interest 2 The Employer transports packaged petroleum products to New York and New Jersey 3 The Employer's salaried complement comprises Thomas Conley, steel from steel mills in the Pittsburgh area, to certain points within Pennsylvania, Ohio, West Virginia, New Jersey, and New York.2 The steel is uniformly transported directly from fabricating mills to the consignees, and the Employer maintains only the most minimal warehouse facilities. Virtually all of its transportation is done with leased tractors. At the time of the hearing, the Employer was leasing 27 tractors, 25 of which were owner-operated. Two of the owner-operators leased two tractors and supplied a driver for their second tractor. The Employer owns three old tractors which are driven by three of its salaried employees.3 These tractors are used generally to "jog" trailers4 or for hauling short distance loads and loads which owner-operators do not wish to haul. The Employer leases about 10 trailers from the owner-operators and itself owns 40 trailers, of which 15 are in regular use, 10 are usable as extras, and 15 are "pensioned off," unusable and parked in the lot. The sole witness testifying as to the independent contractor issue was Thomas Conley, Employer's5 president. He testified that the Employer attempts to comply with the PUC and ICC requirements and the Department of Transportation (DOT) rules and regulations in conjunction with its use of leased equipment. Thus, the Employer requires all drivers of tractors used in its business, including the owner- operators of leased tractors, to pass a medical examination and to complete an application form in conformity with DOT rules and regulations. Also, before entering into a leased agreement, it has the applicant's credit standing checked to determine his reliability. Conley stated that, in compliance with ICC and DOT requirements, the Employer executes a stand- ard lease with the owner-operators, effective for at least 30 days and terminable by either party thereafter. The leases provide that the leased equip- ment shall be under the exclusive possession, control, and use of the Employer and that "the lessee assumes full responsibility in respect to the equipment it is operating, to the public, the shippers, and the [ICC]." Other ICC and DOT requirements are incorporated relating to vehicle inspection to insure compliance with safety regulations, periodic medical examina- tion of the drivers, adherence by the drivers to safety president ; his two sons, Thomas, vice president, who does general office work and dispatching, and John, who dnves the Employer's tractors, John Dickson, billing and personnel clerk; Robert Smith, traffic clerk-dispatcher, John Sebesta, mechanic and part-time driver, and William Pagliaro, a part- time employee who drives and does shop work 4 Although not defined in the record, "jogging" apparently involves the movement of trailers locally or from place to place in the parking lot 5 The Employer was incorporated in 1962, with Conley the majority shareholder Before that time, beginning in 1955, Conley operated the same business at the same location as a sole proprietor. 197 NLRB No. 57 CONLEY MOTOR EXPRESS, INC. 625 regulations, and identification of the vehicle with the Employer's name and serial number. The Employer carries cargo insurance and liability insurance on the equipment. The Employer's liability insurance covers the leased equipment on the way to the destination and, after delivery, during a direct return to Pittsburgh. However, Conley testified that drivers of leased equipment never pay for damages caused by them. "Bobtail" insurance is carried by the Employer covering tractors operating without trailers only when the owner-operator is on a mission for the Employer; the owner-operators arrange for their own insurance to cover driving for themselves or for others. Collision insurance is not provided, the owner-operators being free to purchase this on their own if they wish. The facts as to actual operation of the equipment indicate a high degree of informality and the formal terms of the leases appear to have little practical relationship to the day-to-day operations. The dispatching system appears to be one of mutual accommodation between customer needs and the desires of the owner-operators. In time, dispatchers become familiar with the desires of owner-operators as to destination and type of load and, when a load is available which it is believed an owner-operator would probably accept, he is called. Owner-operators are free to, and do, make their own decisions as to whether they wish to accept any such offered load. The provisions of the lease indicating that the equipment is under the sole control of the Employer for the 30-day prescribed period are at odds with the facts, which show that owner-operators may and do make their equipment available to the Employer only when they wish to accept loads. Further, instances were cited wherein owner-operators ceased entirely accepting loads for this Employer and began hauling for others, with little or no advance notice to the Employer. Only the owner-operators decide who shall drive their leased tractors. After an owner-operator accepts a dispatch and his trailer is loaded, he alone selects the route to follow to the destination. If he has a tractor breakdown on the road, he is responsible for its repair, though on occasion the Employer has arranged for a loan of one of its tractors to complete the delivery. When the Employer's dispatcher re- ceives a collect call from a driver at his destination, the practice is to refuse the call unless another load is available for the driver or an emergency exists. 6 Conley stated he pays the going rags. On some trips, where the distance is short or the loads longer or wider than usual , or where an hourly rate for detention time at the mill or the destination point is paid, the customer is billed at an hourly rate However , the compensation for the lessor remains the same percentage of gross amount billed r They also pay fines for traffic violations 8 Conley is liberal in giving advances to the drivers for their personal About half of the owner-operators, instead of returning with an empty trailer, attempt on their own to trip-lease the rigs to carriers which have loads to transport to the Pittsburgh area, paying the Employ- er a 10-percent fee for the use of its trailer for this purpose. The Employer objects to such trip leases only when they curtail its own business opportuni- ties, but even where the Employer makes such an objection, it has never ordered owner-operators not to trip-lease or disciplined them for doing so. With respect to safety regulations, Conley stated that he is safety-minded and "preaches" safety to all the drivers. The only regular implementation of this, however, relates to the equipment. The Employer, in compliance with the regulations, requires inspection of leased equipment every 2 months. These inspec- tions are made at a local garage. The Employer's salaried mechanic checks the leased equipment for safety defects before departure on trips and advises the drivers of any needs for mechanical repairs. The Employer is a member of the Better Driving Institute which conducts safety meetings and makes road checks. All drivers of leased equipment are urged to attend safety meetings but their attendance is not compulsory. The Employer maintains drivers' logs of all trips in its files, again, in compliance with ICC and DOT rules and regulations. However, Conley stated that drivers of leased equipment are frequently tardy in submitting their trip logs and that the Employer does not attempt to verify the authenticity of the logs or to discipline drivers who are late in submitting them. Compensation for the leasing of the equipment and the driving is set by the Employer at 75 percent of the gross amount billed to the customer for the load if the lessor leases both tractor and trailer, and at 70 percent if the Employer's trailer is used .6 The lessors pay the costs of operation and maintenance of their tractors and trailers.? They are discouraged from having such expenses billed to the Employer, but in some instances when an owner-operator is having financial problems, arrangements can be made for such billing, in which case, repayment to the Employer is arranged through deductions from the settlement checks to the owner-operators, which are usually made out once a week.8 Settlements are usually made on Fridays or Saturdays, but this too is flexible. The Employer absorbs certain state taxes incurred by reason of the use of the leased equipment in its needs. He is also liberal in stretching out the deductions from their compensation checks, particularly if the check is small in a given week He has also made interest-free loans to three individuals for the purchase of a used tractor for lease to the Employer . In each instance, the Employer retains title to the tractor as security until the loan is paid off by deductions from the borrower's compensation checks. 626 DECISIONS OF NATIONAL LABOR RELATIONS BOARD business, such as the fees for bimonthly vehicle inspections, costs of road permits to States through which the equipment travels, and state gasoline taxes based on mileage.9 The Employer makes no deductions from compen- sation checks for tax withholding, social security, or unemployment compensation on behalf of leased equipment drivers. Such drivers do not receive any of the fringe benefits received by the Employer's salaried employees, such as paid holidays or vaca- tions,10 or health insurance. Owner-operators are covered by the Employer under the state workmen's compensation law, but owner-operators are responsi- ble for obtaining such coverage for any drivers they themselves employ. Those owner-operators who wish may participate, at their own expense, in the Blue Cross and Blue Shield plan covering the Employer's employees. If they choose to participate, the Employ- er is reimbursed through adjustments in the settle- ment checks. No other benefits are available to owner-operators, except that at Christmas time the Employer has a practice of giving gifts to its customers, suppliers, contractors, and employees, and includes the owner-operators, in its largesse. There is considerable evidence in the record indicating that the Employer is willing to, and has, on a number of occasions made cash advances and interest-free loans to owner-operators to assist them in purchasing equipment, repairing equipment, and to help them out of personal financial problems. Under the common law right-of-control test which the Board applies in resolving contentions that individuals sought to be represented for collective- bargaining purposes are independent contractors, it finds an employer-employee relationship to exist when it is shown that the named employer reserves the right to control not only the ends to be achieved by the individuals, but also the means to be used in reaching such ends. The Board has made it clear that application of the test is not a "perfunctory exercise" but demands a balancing of all the evidence relevant to the relationship.)) In the instant case, while the record is not free of ambiguity as to certain aspects of the relationship, we are unable to agree with the Regional Director that the Employer has in fact created an employer- employee relationship between itself and the owner- operators of equipment leased by it in its business. 9 Owner-operators reimburse the Employer for Ohio gasoline taxes but receive credit for Ohio turnpike tolls they pay . Because West Virginia gives credits for gasoline purchased within the State, the Employer requests, but does not require, drivers whose tractors use gasoline to assist the Employer in minimizing its tax liability there by buying gasoline in that State The following are the only factors which tend to support the conclusion that the owner-operators are employees of the Employer: (1) the overall effect of the degree of control over equipment and personnel required by state and Federal regulation of motor carriers, including the effect of certain lease provi- sions which appear to preserve to the Employer a degree of control consistent with the ICC and DOT rules and regulations; (2) the fact that the Employer unilaterally sets the rates of compensation for the owner-operators; and (3) evidence that the Employer has rather liberal policies with respect to cash advances, interest-free loans, and loans of its own equipment to owner-operators in emergencies, with- out charge. However, these factors alone do not, in our opinion, establish that the Employer controls the means by which the owner-operators perform their day-to-day transport and delivery duties under the lease agreements. Indeed, the following factors suggest that the controls exercised by Conley relate solely to results to be achieved under the leases, and that an employer-employee relationship has not been established: (1) the owner-operators exercise a very substantial degree of freedom in scheduling the use of their equipment and in rejecting loads offered them by the Employer which they consider to be undesirable; (2) they are free to, and frequently do, trip-lease their equipment to other carriers; (3) they pay virtually all the costs of operation and mainte- nance of their equipment; (4) they are subject to almost no day-to-day supervision or control by the Employer; and (5) there is no pattern whatever of regular discipline of owner-operators for acting contrary to any prescribed means or method of operation designed by the Employer. In view of the foregoing, and balancing the factors present in the record of this case, we find that the owner-operators herein are independent contractors and may not, therefore, be included in the unit sought by the Petitioner. ORDER Accordingly, as the two nonowner-operators are employed by independent contractors , and as the Petitioner has not indicated an interest in represent- ing a unit comprised of the salaried drivers of the Employer, we shall dismiss the petition herein. whenever possible io Those owner-operators who decide to take a vacation usually give the Employer advance notice of their plans ii National Freight, Inc., Federal Freight, Inc., and Sun Transportation, Inc, 153 NLRB 1536, 1538-39.