Kreitz Motor Express, Inc.

KREITZ MOTOR EXPRESS, INC. 27 Kreltz Motor Express, Inc. and Teamsters Interna- tional Union and Local 429, and Truck Drivers Union, Local No. 407 a/w International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Petitioners. Case 4-RC-10526 April 10, 1974 DECISION AND ORDER BY MEMBERS JENKINS, KENNEDY, AND PENELLO Upon a petition duly filed under Section 9(c) of the National Labor Relations Act, as amended, a hearing was held on October 17 and 18, 1973, before Hearing Officer Joan F. Homer. Following the hearing and pursuant to Section 102.67 of the National Labor Relations Board Rules and Regula- tions, Series 8, as amended, and by direction of the Regional Director for Region 4, this case was transferred to the National Labor Relations Board for decision. Thereafter, the Employer filed a brief and a request for oral argument," and Petitioners filed a brief.2 The Board has reviewed the Hearing Officer's rulings made at the hearing and finds that no prejudicial error was committed. 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 labor organizations involved claim to represent certain employees of the Employer. 3. No question affecting commerce exists con- cerning the representation of employees of the Employer within the meaning of Sections 9(c)(1) and 2(6) and (7) of the Act. The Petitioners seek a unit of all single owner- operators and nonowner drivers and helpers operat- ing throughout the Employer's system. The Employ- er (Kreitz) contends that the unit sought is in^ppro- priate in that the single owner-operators are inde- pendent contractors and the nonowner drivers are employees of the multiple owner-operators who are also independent contractors. We agree with the Employer's contention. Kreitz is an "irregular route' 13 common carrier, operating under authority issued by the Interstate $ The Employer's request for oral argument is hereby denied, since the record, including the briefs, adequately presents the issues and positions of the parties. 2 We do not rule on Intervenors prayer to intervene, inasmuch as we are dismissing the petition as requested by the Intervenors. Commerce Commission, engaged in the interstate transportation of heavy machinery and other bulky items, which because of their weight and dimensions require special handling or rigging. Kreitz maintains its principal offices in Wyomissing, Pennsylvania, and sales offices in Cleveland, Ohio; Winston- Salem, North Carolina; and New York City. In addition to the sales offices, Kreitz has commission salesmen throughout the area it serves. As an irregular route common carrier, Kreitz is subject to Interstate Commerce Commission and Department of Transportation regulations, as well as related state restrictions. These regulations control, to a great degree, the Employer's relationship with the owner-operators. At the time of the hearing in this case, Kreitz owned no tractors, but rather leased this equipment from owner-operators (both single and multiple). Kreitz has lease agreements with approximately 30 single owner-operators (some of whom also lease trailers to Kreitz) and 3 or 4 multiple owner- operators who collectively lease approximately 14 tractors. The terms of the lease are spelled out in a document supplied by Kreitz entitled "Equipment Lease Agreement." The term of the lease is for a minimum of 30 days, after which it can be terminat- ed immediately by written notice sent by either party, or if breached by either party. The lease provides, inter alia, that the owner will provide equipment in good, safe, and efficient operating condition; that the equipment shall be maintained at the owner's expense; and that the owner is responsible for all costs of operation, including: (a) fuel, oil, lubricants, tires, chains, binders, and tarpulins, etc; (b) wages or other remuneration of operators, drivers, and helpers; (c) payments for injury or damages to the operator, driver, and helpers. and to the equipment whether the equipment is being operated in Kreitz's service or otherwise; (d) public liability insurance and insur- ance for fire, theft, and collision; (e) workmen's compensation, social security, and other payroll taxes, and (f) licenses, registration fees, toll fees, use permits, and other fees and taxes. The lease also provides that if Kreitz must make any of these payments for the driver, it can reimburse itself from moneys owed to the owner. The lease further provides that the owner must submit his vehicle for inspection by Kreitz at the time of the signing of the lease and periodically thereafter, and must allow Kreitz to place its identification on the vehicle. As to 3 As an irregular route carrier, Kreitz can travel any route in the States in which it is authorized to operate These States are Ohio, New York, Connecticut, Rhode Island, Massachusetts, New Jersey, Pennsylvania, Maryland, Delaware, Virginia, West Virginia, and North Carolina. 210 NLRB No. 11 28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD remuneration, the lease provides that the owner will be paid 60 percent of the line revenue for use of a tractor and 70 percent for the use of a tractor and trailer.4 In addition, the lease agreement provides that Kreitz can sublease the owner's equipment when permitted by applicable regulations. The record establishes that, in practice, Kreitz never subleases an owner's equipment without first obtaining the owner's permission. All prospective Kreitz drivers (both owner-opera- tors and nonowner drivers) are required to complete a Kreitz application.5 Thereafter, the applicant must obtain a physical examination and submit a physi- cian's certificate to Kreitz. If the results of the physical examination are satisfactory, the driver then takes a driving test administered by Kreitz.6 Subse- quently, Kreitz' operations manager inspects the vehicle to see if it meets I.C.C. and D.O.T. standards. Kreitz requires that all drivers have a knowledge of state and Federal motor carrier laws and regulations. Kreitz also requires all drivers to provide $50,000/100,000 public liability insurance against bodily injury and property damage, including a minimum of $10,000 of insurance covering the owner's equipment while the vehicle is being operat- ed by the owner for purposes other than Kreitz' business. The record indicates that Kreitz does not withhold any Federal, state, or social security taxes, nor does it cover unemployment or workmen's compensation, for either the owners or their drivers. Furthermore, neither the owners nor the drivers receive vacation or holiday pay or any of the other benefits provided by Kreitz to its regular salaried employees. Kreitz does, however, provide special bonuses for drivers. These include a safety bonus, and a bonus for introducing new drivers to Kreit2,. The safety bonus consists of 1 percent of the driver's line haul revenues for each 12 consecutive months that his cargo claims do not exceed $1,000.7 For cargo claims in excess of $1,000, the bonus is calculated by subtracting 10 percent of the claims over $1,000 from 1 percent of the previous 12 month's line haul revenue. In addition t" the monetary safety bonus, the drivers also receive either a pair of pants or a shirt for 6 successive months without an accident. For each new driver introduced to Kreitz, an owner-operator receives $5 after the new driver has completed a 90-day probationary period. The owner- operator also receives an additional $10 if the new 4 It appears that these rates are inflexible. Owner-operators can, however, obtain additional amounts under certain circumstances discussed, infra 5 D.O.T regulations require that potential dnvers fill out an application on which they are required to give a 3-year employment history. Kreitz' driver completes 6 months of service and $5 for each month of service thereafter, up to 6 months. Kreitz also provides its owner-operators with the option of receiving an additional 1 percent of the line haul rate if the owner-operators provides insurance coverage for the first $1,000 of cargo damage, rather than just the first $500, which is a minimum required of all drivers. If an owner-operator does not have sufficient funds to purchase the minimum coverage, Kreitz will advance this money to him. Kreitz also advances part of the revenues from a shipment to help the drivers cover expenses in route. However, Kreitz does not loan money to drivers for any other purpose and provides no financial assistance for the purchase of tractors or trailers. In addition to the bonuses mentioned above, owner-operators also receive amounts in excess of those mentioned in the lease if they have to make multiple stops, if they solicit their own load, and for detention time. Thus, they receive an additional 5 percent of their line revenues for soliciting their own loads and 85 percent of the tariff for detention time. The owner-operators also receive additional amounts for delivering "rush" loads. The drivers are not required to wear uniforms nor are the trucks required to be painted a particular color. As previously mentioned, Kreitz does reserve the right to require the owners to put a Kreitz sign on the trucks. Once an owner has signed a lease with Kreitz, he will generally telephone the Wyomissing, Pennsylva- nia, office to learn of available loads. It appears that drivers can refuse loads, in which case they are offered the next available load. Kreitz also allows drivers to "trip lease"; i.e., drivers soliciting their own loads. Once a driver has agreed to take a load, Kreitz instructs the driver as to the time, place, and date of pickup, and any other instructions necessary for the driver to have. When the driver arrives at the shipper's location, he is required to call Kreitz and give them a detailed description of the shipment. The driver is solely responsible for the loading of the shipment, including any special rigging or tarpaulins. Once the truck is loaded the driver will call Kreitz to receive instructions as to which "gateway" he is to pass through in order to obtain the necessary papers and permits. These gateways are areas maintained by Kreitz in order to make it convenient to pass the permits and paperwork to the drivers. If the driver is unable to go through one of the designated gateways, application requires dnvers to submit a full employment history 6 D.O.T. regulations require that a driver be tested on Federal Highway Authority rules and regulations. 7 The 12-month period does not begin until the driver has been under contract with Kreitz for 3 months. KREITZ MOTOR EXPRESS, INC. 29 Kreitz will send a person out to meet a driver on his route and give him the necessary papers. With the exception of passing through gateways and restric- tions caused by the size of the load, drivers are free to choose their own routes. If a customer has specified that he wants delivery at a specific time and place, this information will be communicated to the driver and he will be expected to meet this schedule if at all possible. When no delivery is specified, the driver is free to use his own discretion in scheduling delivery. While in route, Kreitz drivers are subject to inspection by the Better Driving Institute. This organization is under contract to Kreitz' insurance carrier. Although Kreitz receives copies of B.D.I.'s reports, it has not terminated any lease based on them. In determining whether an individual is an employ- ee or an independent contractor, the Board has consistently applied the common law agency right of control test. N.L.R.B. v. United Insurance Co., 390 U.S. 254 (1968). When 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 results sought, the relationship is that of an independent contractor. After carefully analyzing the facts presented in the case we have concluded that they are almost identical to those in George Transfer and Rigging Co., 208 NLRB No. 25, in which we found (Members Fanning and Jenkins dissenting) that the owner- operators were independent contractors. Therefore, we must conclude that the owner-operators involved herein are independent contractors. As we stated in George, supra, it would appear that the degree of control over the owner-operators and their equip- ment required by Federal and state regulations, and the fact that Kreitz unilaterally sets the rates of compensation would appear, at first glance, to require a finding that the owner-operators are employees. However, we do not believe that they establish that Kreitz controls the means by which the owner-operators perform their day-to-day duties. We note, in this regard, that one of the main factors mitigating in favor of a finding in George, supra, that the owner-operators were employees was the employ- er's refusal to allow the owner-operators to trip €^e Unlike George, Kreitz allows its owner-operators to trip lease.8 In addition to the right of the owner-operators. to trip lease the following factors indicate that the controls exercised by Kreitz relate solely to the results to be achieved under the leases: (1) the owner- operators exercise a substantial degree of freedom in scheduling the use of their equipment in that they determine what days and hours they work, when and where to purchase fuel and have repairs made, and where to park their tractors when not in use; (2) the owner-operators can refuse loads without penalty, and with the exception of passing through gateways, are free to choose their own routes; (3) the owner- operators decide whether to hire or fire a driver, what work rules to impose on their drivers, and what rates of pay and benefits the drivers will receive; (4) the owner-operators pay virtually all costs of operation and maintenance; (5) the owner-operators are subject to only minimal day-to-day supervision by Kreitz; (6) owner-operators and their drivers do not participate in benefits provided to other employees; and (7) the owner-operators are free to purchase whatever type of equipment they desire (as longasit complies with Federal regulations) and Kreitz does not loan money to the owner-operators to purchase this equipment. In view of the foregoing, we conclude that the single and multiple owner-operators are independent contractors, and that the nonowner drivers are employees of the independent contractors rather than of the Employer.9 In light of the fact that there are no employees driving directly for the Employer, we shall dismiss the petition. ORDER It is hereby ordered that the petition herein be, and it hereby is, dismissed. MEMBER JENKINS, dissenting: For the reasons stated in my dissent in George Transfer and Rigging Co., 208 NLRB No. 25, I would find the drivers to be employees and would direct an election. e Conley Motor Express, Inc., 197 NLRB 624. George Transfer and Rigging Co., supra; Conley, Motor Express, Inc., supra; Fleet Transport Company, Inc., 196 NLRB 436.