Melcher & Landau, Inc.

904 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Melcher & Landau, Inc. and District 65, Distributive Workers of America, Petitioner. Case 13-RC- 14045 March 18, 1977 DECISION AND ORDER BY MEMBERS FANNING, PENELLO, AND WALTHER Upon a petition duly filed under Section 9(c) of the National Labor Relations Act, as amended, a hearing was held before Hearing Officer John R. Albrecht. After the hearing and pursuant to Section 102.67 of the National Labor Relations Board Rules and Regulations, this proceeding was transferred to the Board for decision. Both the Employer and Petitioner have filed briefs. Pursuant to the provisions 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. The Board has reviewed the rulings of the Hearing Officer made at the hearing and fords that they are free of prejudicial error. They are hereby affirmed. Upon the entire record in this proceeding, the Board finds:1 1. Melcher & Landau is an Illinois corporation which wholesales infants' and children's apparel. During the last calendar year it purchased and received, at its Illinois facility, goods valued in excess of $50,000 from firms outside that State and shipped goods valued in excess of $50,000 from that facility to firms outside the State. We find that Melcher & Landau is an employer engaged in commerce, or in an industry affecting commerce, within the meaning of the Act and that it will effectuate the purposes of the Act to assert jurisdiction in this proceeding. 2. The labor organization involved claims to repre- sent employees of the Employer. 3. No question affecting commerce exists concern- ing the representation of employees of the Employer within the meaning of Sections 9(c)(1) and (2)(6) and (7) of the Act. 4. The Petitioner, District 65, Distributive Workers of America, seeks to represent the Employer's territo- rial, traveling, commissioned salesmen. The Employ- er argues that those salesmen are independent con- tractors: that it controls the result to be achieved but not the manner or means of attaining that end, which I We deny the Employer's motion for oral argument. In ourjudgment the record, including exhibits and briefs, adequately presents the issues and the positions of the parties. are determined by the salesmen. We find that the salesmen are independent contractors, thus outside the jurisdiction of the Act, and do not reach the Employer's further arguments, primarily that the Petitioner should be disqualified.2 The Employer wholesales domestic and imported infants' and children's apparel and accessories. Sales are made at the Employer's Merchandise Mart showroom in Chicago; through a buying service, which purchases in bulk from the Employer at a reduced price; 3 by salesmen calling on customers; by displaying samples in hotel or motel rooms, at trade shows, or at the Employer's showroom in Chicago; or by means of direct contact between a customer and one of the Employer's officials. Most of the salesmen sought by the Petitioner have contracts with the Employer according them exclu- sive sales' rights within a geographic territory. Two salesmen, at opposite ends of the country in Alaska and New York, maintain showrooms at their own expense and are agreed to be independent contrac- tors. Two other salesmen, of seven in question, have no contract or exclusive territory, but do sell to their "own" accounts, which are in the Chicago area. All seven salesmen in the requested unit live in or around Chicago and all are paid a commission on sales varying from 6 to 7-1/2 percent. The Employer, in practice and as provided in the National Association of Women's & Children's Apparel Salesmen (NAW- CAS) contract, treats the salesmen as employees for the purposes of the Federal Insurance Contributions Act and pays for unemployment insurance. It also pays for group health and life insurance policies and withholds income taxes. The Employer does not pay for vacations, pensions, or holidays. The contracts are based on a standard form approved by the NAWCAS. The contract, inter alia, provides the amount of the commission, which is individually negotiated in each case, and the extent of the salesman's territory. The salesman receives a commission on all goods shipped into his "territory," as defined in the contract, whether or not he has made the sale himself. The exclusive "rights" to the territory are granted to the salesman, who agrees to diligently work the territory to secure business for the Employer. The salesman, not the Employer, controls the merchandising of the Employer's goods within his territory. The salesmen, whether under contract or not, decide how to sell the Employer's goods, select the customers or potential customers within their territo- 2 We also deny the Employer's motions to dismiss the petition as superfluous in view of our disposition of this proceeding. 3 The salesmen have agreed to reduced commissions on goods shipped into their territories which are sold through the buying service. 228 NLRB No. 99 MELCHER & LANDAU, INC. 905 ry, and determine the trade shows in which they participate. One of the salesmen decided to open a showroom in his territory, did so without consulting the Employer, and is individually responsible for the rent. The Employer does not participate in these decisions or the sales unless requested to do so, although it will tell the salesmen of developments or leads. If a sale is made by a management official or by another salesman in the Employer's showroom and goods are shipped to a customer in the sales- man's contractual territory, the salesman receives a commission even though he was not directly responsi- ble for the sale. Salesmen may sell and have sold other products than those carried by the Employer and a number of the salesmen formed their own corporation, J-Belt, for investment and merchandis- ing purposes. The Employer has sales meetings, of greater or lesser formality depending upon the witness, at which the Employer's line and other matters relating to merchandising are discussed. The salesmen are not instructed or directed in their selling efforts, nor are their results formally reviewed, but they may be asked to push, or at least show, items which are not selling. Because of the number of items involved, most of the salesmen cannot-or do not-carry samples of the entire line. The salesman, not the Employer, decides which items the salesman will carry samples of and show to prospective customers. The samples-like the bags and cases, etc., in which they are carried-are provided at the Employer's expense, but the salesman is expected to return them. Prices, credit, etc., are determined by the Employer, and a salesman receives a commission only on items actually shipped. A salesman may reduce a price on his own initiative only by taking it out of his commission. In some instances the salesman and the Employer may agree to share the cost of reducing prices in order to make a sale. Salesmen are requested to indicate where they will be while on the road, but are not required to do so. Whether or not they leave an itinerary, they make frequent phone calls to the office about the availabili- ty of an item, pricing, etc. The business expenses incurred by the salesmen are reported by them as business expenses to the Internal Revenue Service and are paid by them, not the Employer. Transportation; trade show, hotel or motel room costs; entertainment; insurance, etc.; and the direct expenses typically incurred by traveling sales- men are all the responsibility of the salesmen. Certain other expenses are shared by the Employer and the salesmen. The costs of Christmas cards and gifts to a salesman's accounts are shared as, for example, are the costs of phone calls made by the salesmen to or from the Employer's Chicago office. Salesmen are not charged for use of the Employer's Chicago office nor for office supplies, which are provided by the Employer. The Employer also pays for the salesmen's membership in the Chicago Merchandise Mart, where it has its office and showroom, and for the listings in the Mart's directory. The salesmen normally come into the office at least 1 day a week and perhaps as many as 5 when not on the road. In the office they check on the shipment of orders to their customers, solicit orders over the telephone, wait on customers who come into the showroom-even though a sale may result in a commission for another salesman-or perform inci- dental tasks for the Employer. The salesmen are at times asked to help with inventory, but participation is sporadic at best and no action is taken against salesmen who do not help. In deciding whether individuals are independent contractors or employees the Board determines the right of control, employing common-law agency principles. If Melcher & Landau controls only the end to be achieved, not the manner or means of attaining that end, the salesmen are independent contractors. Conversely, if it controls not only the result to be achieved, but also directs the salesmen in the manner and means of attaining it, then the salesmen are "employees" within the meaning of the Act. Each case turns on its own facts. However, the Board has frequently held that commissioned sales- men, dependent on their own initiative and skills for income and who bear the financial burden of any lack in those areas, are independent contractors, particularly where they participate in NAWCAS trade shows, as here .4 The Board recently has considered this issue in circumstances similar to those here, Joyce Sportswear,5 finding the salesmen involved were independent contractors. Contrary to Melcher & Landau's practice, which is required by its NAWCAS contracts, Joyce did not withhold income taxes or social security. That, however helpful a detail in resolving close cases, is not controlling where the record nonetheless establishes the right to indepen- dent decision and action which distinguishes the independent contractor from the employee. The salesmen operate at their own risk and expense, hire and pay their own employees at their own discretion, establish their own work schedules, decide which items to show, which accounts to visit and which shows to participate in, and the manner in which the merchandise is presented to the prospective custom- er. The salesmen are not bound exclusively to 4 Bambury Fashions, Inc., et a!, 179 NLRB 447 (1969). 5 Joyce Sportswear Company, 226 NLRB 1231 (1976). 906 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Melcher & Landau, but also sell noncompetitive items on their own. There is no showing that Melcher & Landau exercises substantial day-to-day control over the salesmen. The record indicates that the salesmen control their own work schedules and the manner in which Melcher & Landau's goods are sold under their auspices. Melcher & Landau encourages the salesmen to increase their efforts and familiarizes them with the strong points of its line, but that does not alter their status. The Company and salesmen share an interest in maximizing sales. The issue is not whether Melcher & Landau provides what help it can toward that goal, but whether the salesmen may decide for themselves what use, if any, to make of that help. The same is true of the occasional help provided by management to the salesman with respect to specific accounts, 6 Bambury held on the facts of the case that traveling salesmen, who, as here, participated m NAWCAS trade shows, were independent contractors. r Hunt & Mottet Company, 206 NLRB 285 (1973). 8 Member Fanning concurs in this result. Unlike Joyce Sportswear Co., which may include accompanying the salesman. It is not a condition of employment imposed on the salesman, but is done only at his request or with his consent. As the salesmen control the manner and means by which sales are made, and in light of our previous decisions in such cases as Bambury Fashions, supra,e Hunt & Mottet,7 and Joyce Sportswear, supra, we find that the salesmen in the unit sought by the Petitioner are independent contractors. Accordingly, we shall dismiss the petition.8 ORDER It is hereby ordered that the petition in Case 13- RC-14045 be, and it hereby is, dismissed. sypra, a unit clarification can, where he dissented, the salesmen are members of NAWCAS, participate in NAWCAS-sponsored trade shows, had not been treated as employees in the past, and there is no history of bargaining on their behalf.