North American Van Lines, Inc.

38 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD North American Van Lines, Inc. and North Ameri- can Benevolent Association, Local #1 and North American Van Lines Commercial Trans- port Advisory Council, Party in Interest. Case 25-CA-16614-2 March 10, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS BABSON AND CRACRAFT On June 27, 1986, Administrative Law Judge Richard H. Beddow Jr. issued the attached deci- sion. The Respondent filed exceptions and a sup- porting brief, 1 and the General Counsel filed an an- swering brief. The American Trucking Associa- tions, Inc. filed an amicus curiae brief. The National Labor Relations Board has delegat- ' ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, 2 and conclusions and to adopt the recommended Order. The Respondent has requested oral argument The request is denied as the record, exceptions, and briefs adequately present the issues and the positions of the parties. 2 The Respondent has excepted to some of the judge's credibility find- ings. The Board's established policy is not to overrule an administrative law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect. Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully examined the record and find no basis for reversmg the findings. The Respondent also asserts that the judge's decision is the result of bias and prejudice and requests an "independent review" by the Board with separate findings of fact and conclusions of law. We find the Re- spondent's allegations and request are without merit. As stated by the Board in Penn Color, Inc. 261 NLRB 395 (1982), "Where is no basis for finding that bias and partiality existed merely because an admimstrative law judge resolved important factual conflicts in favor of the General Counsel's witnesses." Accord: NLRB v. Pittsburgh Steamship Co., 337 U.S 656, 659 (1949) ("[T]otal rejection of an opposed view cannot of itself impugn the integrity or competence of a trier of fact") The North American Benevolent Association's (NABA) status as a labor organization is irrelevant to the findings in this case. Accordingly, we do not pass on the judge's statement that NABA is a labor organiza- tion, or that the Respondent allegedly admitted its labor organization status In sec. IV, par. 9 the judge correctly stated that the General Counsel's burden was to make a prima facie showing of employee status, and that the burden shifted to the Respondent to defend by showing that the per- sons involved were not in faa employees. The General Counsel was then entitled to make a rebuttal presentation. Cf, , e g., Licensed Tugmen's Pilots Protective Assn , 138 NLRB 222, 228 (1962). (The General Counsel has the burden to prove Sec. 2(5) "labor organization" status) We find it unnecessary to pass, therefore, on any of the judge's other characteriza- tions of the respective burdens. In the same section, the judge incorrectly stated that certain documents "were not made available in response to the General Counsel's original subpoena" The error is inconsequential. Final- ly, we affirm the judge's disposition of the "evidentiary matters" raised in sec. IV No party excepted to the judge's treatment of the 10(b) issue. 288 NLRB No. 11 ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, North American Van Lines, Inc., Fort Wayne, Indiana, its officers, agents, successors, and assigns, shall take the action set forth in the Order, except that the attached notice is substituted for that of the ad- ministrative law judge. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice. The Board also found that the owner-operators in the Commercial Transport Division, as a class, are employees within the meaning of the National Labor Relations Act. WE WILL NOT dominate, assist, support, or oth- erwise interfere with the formation or administra- tion of North American Van Lines Commercial Transport Division Drivers Advisory Council or any other labor organization of our employees. WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the exercise of the rights guaranteed by Section 7 of the Act. WE WILL completely disestablish the Drivers Advisory Council. NORTH AMERICAN VAN LINES, INC. J. Frederick Gatzke, Esq. and Cornell A. Overstreet, Esq., for the General Counsel. Duane L. Aldrich, Esq., of Washington, D.C. James H. Coil, III, Esq. and Diane L. Prucino, Esq., of Atlanta, Georgia. — Thomas A. Cox, Esq., of Fort Wayne, Indiana, for the Respondent. Thomas Boswell, of Wood River, Illinois, for the Charg- ing Party. DECISION STATEMENT OF THE CASE RICHARD H. BEDDOW, JR., Administrative Law Judge. This matter was heard in Fort Wayne, Indiana, on vari- ous dates in January, February, March, and September 1985. Subsequently, briefs were filed by the General Counsel and Respondent and, in accordance with a spe- cial procedure, reply briefs also were filed. NORTH AMERICAN VAN LINES 39 The proceeding is based on a charge by the North American Benevolent Association, Local No. 1 (NABA), filed on 13 August 1984. The Regional Director's com- plaint, dated 28 September 1984, alleges that Respondent North American Van Lines, Inc. of Fort Wayne, Indi- ana, violated Section 8(a)(1) and (2) of the National Labor Relations Act by dominating and intefering with the formation and administration of, and rendering un- lawful assistance and support to, a labor organization. On a review of the entire record in this case and from my observation of the witnesses and their demeanor, I make the following FINDINGS OF FACT I. JURISDICTION Respondent is a Delaware corporation, with a princi- pal place of business in Fort Wayne, Indiana. It engages in interstate and intrastate motor transportation, princi- pally as an irregular route common carrier of general commodities. It admits that it annually derives gross rev- enues in excess of $50,000 from the transportation of freight directly from Indiana to points outside Indiana and that it derives annual gross revenues in excess of $500,000, and I find that it is an employer engaged in, commerce within the meaning of Section 2(2), (6), and,. (7) of the Act. It also is admitted that the Benevolent As- sociation is a labor organization within the meaning of Section 2(5) of the Act. II. THE ALLEGED UNFAIR LABOR PRACTICE The Respondent is a well-established, certified motor common carrier of used household goods. Traditionally, it has performed transportation services through the use of agents and drivers who are owner-operators operating under a leasing contract with the carrier. Over the years its operations grew and evolved and, in addition to the transportation of household goods, it became involved with the movement of commodities having similar trans- portation characteristics, such as new furniture (which is transported either "cartoned" or blanket wrapped), as well as electronics and other high value products. Since 1980, with the advent of a .substantial reduction of regu- lation by the Interstate Commerce Commission, the Re- spondent further expanded its scope of operation into the transportation of general commercial freight and it has now become the largest irregular route, motor carrier of truckload traffic. During the course of the hearing, the Norfolk Southern Corporation purchased Respondent and, effective 21 June 1985, it became a subsidiary of that company, along with the Norfolk and Western Rail- way Company and Southern Railway Company. As of the close of the hearing on 5 September one of Respond- ent's vice presidents was unaware of any managerial or operational changes in Respondent, except that he was aware of an advertisement that acknowledged the acqui- sition. Jointly, the railroads comprise the largest rail system in the United States and, at the present time, the parent company also is seeking approval of a proposal to acquire the Conrail system. The Respondent conducts its motor carrier operations through three product-related divisions: commercial transportation division (CT), formerly called new prod- ucts division; household goods division (HHG), recently renamed relocation systems, and high value products di- vision (HVP), which formerly was designated the elec- tronics division. Respondent's headquarters in Fort Wayne utilizes the services of various managerial, operational, clerical, and related employees, not including drivers. It also uses the services of various agents, especially in the household goods area. Although it owns a fleet of over 8000 trailers, Re- spondents does not directly own any tractors. Instead, it enters into leasing contracts, predominantly with individ- uals, described as owner-operators, who provide the tractor and performs the over-the-road driving. These tractors are predominantly acquired by operators through the Respondent's financial services affiliate, which entity holds the title for the vehicle until at least such time as financial obligations for the purchase of the equipment are satisfied, and the driver request transfer of the title. Other than its office, training, dispatching, and related equipment, Respondent's only specific direct cap- ital investment is in its trailers. The high value products division utilized the services of 500 to 600 owner-operators, and derives annual reve- nues of approximately $125 million, while the household goods division has 400 to 500 owner-operators and annual revenues of $230 million. The commercial prod- ucts division has 2500-2600 owner-operators and reve- nues of $230 million annually. Commercial products is further divided into four sepa- rate fleets. The uncartoned fleet (blanket wrap) has ap- proximately 225 owner-operators and specializes in the transportation of new furniture and fixtures that are not packaged in boxes or other containers. The dedicated fleet (turn fleet), utilizes 200 owner-operators and pro- vides services to shippers with regular and time-critical transportation needs. The double-operation fleet, with another 200 owner-operators, also provides transporta- tion services to shippers with timely transit requirements, utilizing two drivers per tractor. The approximately 1800 remaining owner-operators make up the random fleet, which performs the majority of the division's services by transporting freight on a call-on demand, irregular basis. Commercial products primarily utilizes owner-opera- tors with one tractor; however, there are 85 owners of more than 1 tractor with an aggregate of 336 vehicles. The largest of these owners has 61 tractors, several owners have between 13 and 19, and one has about 25. Additionally, 17 owner-operators are incorporated, 12 of which are multiple vehicle owners. In the latter part of 1982, the Interstate Commerce Commission (ICC) began an investigation proceeding to determine whether the Respondent had engaged in un- reasonable practices pertaining to its dealings with owner-operators in violation of applicable rules and reg- ulations. A hearing was held on 16 March 1984, and an administrative law judge issued a decision that set forth a detailed factual summary of Respondent's operations and found that Respondent had engaged in described unrea- sonable practices, and proposed various remedial actions. 40 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD A copy of this decision was made a part of the record, over Respondent's objections. Subsequent to the close of this hearing Respondent's counsel forwarded a copy of a decision dated 12 November 1985 in which the entire Interstate Commerce Commission, with three commis- sioners dissenting, discontinued the proceeding on juris- dictional grounds, finding that the dealing between Re- spondent and its owner-operators did not constitute a practice related to transportation or service within the meaning of the statute. Under the circumstances, I take official notice of the latter decision of the Interstate Commerce Commission. Hearings relative to the ICC investigation began in January 1983 and continued on intermittent dates through September 1983. Contemporaneously with these hearings, Respondent began to pursue a concept originat- ed by John Bowron, a former executive vice president for Commercial Transport Fleet Operations. Bowron's concept involved the creation of a "Drivers Advisory Council" designed to provide a means and forum for feedback and communications of ideas and policies be- tween management and drivers. Bowron, who had worked with a similar concept in Respondent's Canadian affiliate, received the concurrence of Respondent's gen- eral counsel and decided in late 1982 that it was time to go ahead with the concept. Preliminary meetings were held among management personnel and then with some owner-operators in various parts of the country. By letter dated 18 April 1983, Vice President of Operations Mark Hobz,ek announced the decision in a special bulle- tin that told of the Company's plan to establish a council of owner-operators that would meet quarterly beginning in June, and he requested that persons interested in par- ticipating let him know. During this same period of time Respondent also became involved in a dispute that resulted in a charge brought before this Board. During November 1982, after a series of disagreements with management, Thomas Bos- well became a member and activist in the Benevolent Association. He was confronted by then Director of Contractor Relations Dick Taylor while distributing as- sociation newsletters in the owner-operator lounge and requested to stop. Subsequently, he again was observed distributing newsletters to tractors parked at Respond- ent's Fort Wayne facility; shortly thereafter, his contract was terminated. A charge was made and a complaint was issued by the Board. The dispute was resolved in a settlement that resulted in Boswell's reaffiliation with Re- spondent. After Boswell returned as an owner-operator in mid- April 1983, he volunteered to serve on the advisory council, but subsequently received a letter saying he had not been selected. The first meeting of the council was held in June 1983. Subsequent regular meetings occurred in October and December 1983 and April, July, and October 1984. Each meeting lasted for 2 days and was attended by 12 owner- operator council members, plus Director of Contractor Relations Kevin Lewis, several other management offi- cials, and a secretary, who took minutes of all the meet- ings. A letter prepared by Lewis was sent to all drivers in the fleet describing the highlights of what occurred at each meeting. Attendance at the meetings was limited to council members and authorized management personnel. Thomas Boswell made an attempt to attend a meeting in July 1984, but was informed by Lewis that it was a closed meeting, and was told to leave. In August, Boswell, on behalf of the benevolent asso- ciation, filed the charge underlying these proceedings. III. ISSUES Section 8(a)(2) and (1) of the Act proscribes conduct by an employer that dominates and interferes with, or provides unlawful assistance and support to, a labor or- ganization. Here, it is shown that Respondent established a "Drivers Advisory Council" of so called owner-opera- tors. The circumstances under which the council was or- ganized and operated raise the issues of (1) whether the council is a labor organization and (2) whether Respond- ent dominated and interfered with the formation and ad- ministration of the council and provided it with unlawful assistance and support. Respondent denies the Council's status as a labor orga- nization and, most specifically, pleads that the drivers in- volved are each independent contractors and are not em- ployees whose working conditions are subject to the pro- visions of the Act. Accordingly, the preliminary issue is presented whether the owner-operators who perform Re- spondent's transportation services are properly classified as employees or independent contractors. IV. EVIDENTIARY MA! MRS On brief, Respondent again raises several evidentiary matters, the first of which relates to the admission into evidence of the initial decision of the administrative law judge in the proceeding before the Interstate Commerce Commission As noted, the Respondent has submitted a copy of a final decision by the Commission dismissing that proceeding. Here, I fmd the admission into evidence of a public de- cision of a Federal agency falls within an exception to the hearsay rules, and that the document is clearly ad- missible. Respondent also argues that the decision is not entitled to be given any weight. In the instant case, the General Counsel has fully developed a record independ- ently of that presented in the ICC proceeding and I therefore rely on this record in reaching my decision re- garding the independent contractor—employee status of Respondent's drivers. Although there was no necessity for turning to any particular factual conclusions reached in this other proceeding, a perfunctory review makes it clear that the General Counsel did utilize that decision in formulating his presentation in this proceeding and there appears to be an obvious repetition of common or similar information. I find such background information espe- cially relevant to any evaluation of the consistency of witnesses testimony in this hearing. The factual finding in the ICC decision in numerous instances has been ex- plained and corroborated on this record and I find that it enhances the inherent trustworthiness of the administra- tive law judges' recitation of facts concerning common NORTH AMERICAN VAN LINES 41 areas of inquiry. Under these circumstances, I find that it is appropriate to give relevant weight to matters set forth in the ICC decision, especially concerning background information and the testimony of common witnesses or evidence of common events. Accordingly, Respondent's request that it be stricken from the record and given no weight is denied. Second, Respondent argues that several exhibits, con- sisting of notes and minutes of the drivers advisory coun- cil meetings and various "Owner-operator Analysis Forms," are unreliable hearsay and should be excluded. First, it is noted that the notes and minutes were pre- pared by Respondent's director of contractor relations, Kevin Lewis, in the course of his duties and retained as general business documents in Respondent's files. Lewis was examined extensively by both the General Counsel and Respondent and, to the extent the notes indicated comments by other individuals, many of these same per- sons, such as Respondent's present vice president, James Phillabaum, also were examined extensively. The testi- mony tends to corroborate the reliability of the exhibits and, otherwise, there is no claim that other declarants, specifically drivers who were members of the Council, could not have been called to testify about particular no- tation of their comments. The information in the analysis form recites, among other things, comments recorded by Respondent's coun- selors concerning their phone discussions with drivers and their actions taken on problems. The counselor's notes paraphrase remarks made by drivers and are re- corded on specific forms supplied by Respondent. They are used by Respondent as support for termination or other actions dealing with drivers and are retained in Re- spondent's business files. Specifically, I find that the exhibits that purport to be statements of council members and other drivers are non- hearsay inasmuch as the notes are offered to show that persons made statements and not to show the specific truthfulness of the comments attributed to them. The no- tation of comments in the context of minutes of the council meetings and reports of phone conversations be- tween a driver and his counselor also convey a present tense impression and, overall, these records of regularly and routinely conducted business activity show not only trustworthiness but also indicate that the information contained is of more probative value than possible other reasonably procurable information. Accordingly, I find that even if the comments were considered to be hear- say, they are relevant, display clear evidence of trust- worthiness, and are otherwise admissible and entitled to consideration under the regular business records excep- tion to the hearsay rule. Accordingly, I affirm my ruling admitting these exhibits. Finally, Respondent objects to the receipt into evi- dence of certain confidential job evaluations made by Respondent of its dispatchers and counselors. These doc- uments were offered at a continued hearing as part of the General Counsel's rebuttal presentation subsequent to the issuance of a subpoena, Respondent's refusal to honor the subpoena, and an order of the United States district court, dated 18 June 1985, that enforced the subpoena. The court also ruled that it was not within the district court's province to make an evidentiary ruling of the propriety of the evidence as rebuttal and it deferred to the administrative law judge the issue of whether the evaluations were properly admissible as rebuttal evi- dence. Otherwise, the court held that the privacy inter- ests of the counselors and the dispatchers could be pro- tected by redacting their names from the evaluations and by using pseudonyms in the place of their real names. At the further hearing subsequent to the court's decision, I received the proffered evaluations, but I reserved a ruling on their admissibility until the matter could be briefed. Respondent argues that the rebuttal process may not be used to present evidence that might appropriately have been introduced in the case-in-chief, and that the presentation of these documents is an effort by the Gen- eral Counsel to reopen his case-in-chief and pursue an entirely new line of inquiry to buttress his contention that Respondent's Commercial Transport disptachers and counselors act as supervisors. As otherwise discussed, a party who claims as a de- fense to an unfair labor practice charge that the persons involved are not in fact employees, bears the burden of proving this claim. Under these circumstances, it is espe- cially appropriate for the General Counsel to utilize the rebuttal process to answer Respondent's defense. Thus, in the light of Respondent's pleaded defense that its driv- ers are not employees, the General Counsel was required only to make a prima facie showing of employee status. The burden then rests on Respondent to support it de- fense and the General Counsel was entitled to make an appropriate rebuttal presentation. Here, as a matter of procedural convenience and as an aid to the timeliness of the hearing process, the General Counsel went well beyond his initial burden in his presentation of a prima facie case; however, by so doing he cannot be precluded from responding to the Respondent's evidentiary thrust in the presentation of its pleaded defense. Here, I also note that the documents apparently were not made avail- able in response to the General Counsel's original sub- poena of documents at the beginning of the hearing. However, subsequent testimony identified the existence of such documents as potentially relevant material perti- nent to the issue of supervisory status of dispatchers and counselors and control, a key element in evaluation of the employee status issues, as well as the possibility of in- consistent testimony by Respondent's witnesses. Under these circumstances, I conclude that the confi- dential job evaluations of Respondent's dispatchers and counselors as introduced into evidence as General Coun- sel's Exhibits 142-211 constitute proper and material re- buttal evidence, and they are admitted into evidence. V. INDEPENDENT CONTRACTOR STATUS- APPLICABLE LEGAL STANDARD Section 2(3) of the National Labor Relations Act pro- vides that coverage is extended to "employees," but not to "individuals having the status of an independent con- tractor." As noted by Respondent, this express statutory exclusion of independent contractors was not contained in the original Act, but was added by Congress in 1974. 42 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Respondent asserts that the Congressional intent was to remedy what was viewed as the Board's previous overly broad definition of the term "employee," by clarifying the Act to exclude persons having the status of indepe- dent contractors in the traditional sense. The term "inde- pendent contractor" was not defined in the Act; howev- er, the Board and Federal courts have since devised an evaluation based on the common-law agency test to de- termine whether a individual is an employee or an inde- pendent contractor. See NLRB v. United Insurance Co., 390 U.S 254 (1968), and Seafarers Local 777 v. NLRB, 603 F.2d 862, 909 (D.C. Cir. 1978); Tarheels Coals, 253 NLRB 563, 566 (1980). Here, I also find that standard rules of construction generaly place the burden of proof on one who claims the benefit of a statutory exclusion, U.S. v. First City Natl. Bank, 386 U.S. 361 (1967). It also is recognized that exemptions generally are to be narrowly, but sensi- bly construed to give effect to statutory purposes and that such construction should not reach a result at vari- ance with the policy of an Act or serve to destroy the remedial processes of the Act as a whole, Brennan v. Valley Towing Co., 515 F.2d 100 (1975). In Abell Publishing Co., 270 NLRB 1200 (1984), the Board, citing Fort Wayne Newspapers, 263 NLRB 854 (1982), restated the common law "right to control" test as follows: If the alleged employer retains the right to con- trol the manner and means by which the [job] re- sults are to be accomplished, the person who per- forms the service is an employee. If only the results are controlled, the person performing the services is an independent contractor. In Standard Oil Co., 230 NLRB 967 (1977), cited by the General Counsel, the Board used the general provi- sions of the Restatement 2d, Agency 220 (1985), and set forth standards that parallel the Restatement, stating: Among factors considered significant at common law in connection with the "right to control" test in determining whether an employment relationship exists are (1) whether individuals perform functions that are an essential part of the Company's normal operation or operate an independent business; (2) whether they have a permanent working arrange- ment with the Company which will ordinarily con- tinue as long as performance is satisfactory; (3) whether they do business in the Company's name with assistance and guidance from the Company's personnel and ordinarily sell only the Company's products; (4) whether the agreement which contains the terms and conditions under which they operate is promulgated and changed unilaterally by the Company; (5) whether they account to the Compa- ny for the funds they collect under a regular report- ing procedure prescribed by the Company; (6) whether particular skills are required for the oper- ations subject to the contract; (7) whether they have a proprietary interest in the work in which they are engaged; and (8) whether they have the opportunity to make decisions which involve risks taken by the independent businessman which may result in profit or loss. As noted both by the General Counsel and the Re- spondent, the test is not easy or definitive in its applica- tion. Over the years, various incidents of the relationship have been assessed as being most significant in certain circumstances, but no particular factors are decisive. The Board has exercised a wide-ranging discretion in its eval- uation of various factors under varying circumstances, resulting in a history of case law where seemingly inap- posite decisions are not uncommon and here, the respec- tive parties each cite numerous such past evaluations in supoport of their respective positions. Respondent specifically urges that significant indica- tors of independent contractor status are whether the owner-operator has an investment in his equipment and bears the entrepreneurial risks of profit and loss, whether the parties intended to create an independent contractor relationship, and whether the parties' dealings with each other are consistent with such a relationship. Respondent also relies on the Board's recent decision in Don Bass Trucking, 275 NLRB 1172 (1985), especially in regard to the effect of compliance with Government regulations as evidence of employer-type control. The General Counsel also argues that given the com- plex and somewhat novel nature of Respondent's oper- ations, prior cases may be of little precedential value here, and he urges that the case be judged on an ad hoc basis within the frame work of Standard Oil, supra. I have reviewed the record in light of the cases cited, as well as other recent decisions of the Board. The record was developed through detailed examination on numerous documents and direct and cross-examination of many owner-operators, managers, and operational per- sonnel. Despite the lengthy record developed, I find that few basic facts are seriously in dispute. The parties, how- ever, differ sharply on what factual conclusion or inter- pretations are to be drawn. VI. INDEPENDENT CONTRACTOR STATUS-FACTUAL BACKGROUND The principal aspects of Respondent's management- driver relationship cover several major areas, specifical- ly: recruitment and training, fmancing and licensing of equipment, the contractual agreement and its termina- tion; day-to-day operations, and, in a broad scene, the overall nature of Respondent's business. The record will be discussed in terms of predominant or significant oc- currences; however, it is recognized that these conclu- sions are not descriptions of absolutes. Thus, it is ac- knowledged that the record may contain exceptions or examples of conflicting occurrences that tend to indicate that there are some fleet operators of individual owner- operators who, by virtue of their relative financial inde- pendence or other entrepreneurial factors, may have de- veloped and maintained an independence untypical of the vast majority of Respondent's mainstream drivers. Ac- cordingly, the following evidentiary descriptions are di- rected at the predominant management-driver relation- ship and are not intended to preclude recognition of NORTH AMERICAN VAN LINES 43 some individual situations that could show a true inde- pendent status for some owner-operators.1 As noted above, Respondent's commercial transport fleet has undergone major growth over the last several years. Also, the drivers utilized by this fleet show an ex- tremely high annual turnover rate. Specifically, in 1984, 1154 drivers left out of a total of 2589 drivers active at the end of the year, a turnover rate of approximately 45 percent. As a result of these factors, Respondent has en- gaged in extensive recruitment of prospective drivers. While it expresses a preference for obtaining experi- enced, Department of Transportation (DOT) qualified drivers who own a tractor, it recognizes the reality that it can obtain only a few such drivers. Accordingly, it maintains a recruiting department that seeks out new re- cruits on a basically continuous basis for training pro- grams that occur repeatedly through the year. It relies heavily on advertisements in newspapers and magazines. A key feature in such advertisements is an indication that no experience is necessary. For example, in the Army Times, Respondent's advertisement in part reads: We will train you. Free—over 70% our 0-0s had never driven a rig before. We will teach you what you need to know. And teach you right for free. Respondent's ads also play up to a driver's interest in independence, emphasizing Have you ever dreamed of owning and operating your own successful business? If so, we'd like to talk to you. We are North American Van Lines, and we move our shippers' goods—both household goods and new manufactured products—with a fleet of owner-operators. Independent business men who own their own trucks. Run their own lives. Set their own hours. And answer to themselves. Selection for training is done on a first come, first serve basis after an individual has first talked on the phone with a recruiter, reviewed other promotional ma- terial (which included descriptions of the lifestyle of a driver and comments that they run their own business without supervision from Respondent), and returned a signed "Statement of Understanding" that he will oper- ate on a self-employment basis, as well as a DOT request for qualification and certification (including physical and driver's record information), and a credit statement appli- cable to his purchase of a tractor through Respondent. Training generally consists of a 2-week course, which approximately 70 percent of the new drivers attend. Other applicants, who already are DOT-qualified driv- ers, take a shorter course. The training consists of in- struction in DOT requirements, paperwork handling, in- struction on business aspects of working with Respond- ent, and driving instruction. On successful completion of a written and driving test, the new driver signs a con- tractor's hauling agreement. The terms of the agreement are the same for all drivers in the commercial transport 'This, however, could present a situation where a multiunit contractor could be considered to be a supervisor of persons employed to drive his tractors. division and are not negotiable on an individual basis. Some drivers have attempted to Write in changes but they have not been honored. Respondent's director of fleet development testified that the training expenses (drivers pay their own room and board) is outcosted to the various fleets at a rate of $970 per driver. Although Respondent contends that such costs are recouped by a reduced rate of compensation for a driver's first , 65,000 miles, this lower rate is paid to any driver who has not covered 65,000 miles in the previous 12 months. Other- wise, Respondent specifically refers to its payment of 4 cents a mile "hauling premium" for drivers operating over 65,000 miles annually. With rare exceptions, lead drivers for multiunit opera- tors also undergo the training programs. Respondent oth- erwise controls the circumstances under which an exist- ing operator can become a multiunit operator by requir- ing him to have a good operating and safety record and a recommendation from his dispatch, it allows operator to become a multiunit operator. Although Respondent's advertising portrays the driv- er's position as an opportunity to invest in a business, the recruits primarily appear to be persons who liked the idea of having a job where a boss is not always looking over their shoulder and who are otherwise willing to invest in the downpayment of several thousand dollars for a tractor. In effect, this downpayment appears to be comparable to a franchise or the brokerage fee paid to Respondent in exchange for the right to operate under Respondent's authority hauling freight obtained by Re- spondent's solicitation efforts. Respondent considers a driver's willingness to invest in the position as some indication of his reliability; howev- er, it appears that Respondent also makes use of the in- vestment and the corresponding indebtedness as a moti- vational tool to maximize the driver's willingness to comply with the Company's efforts to control the dis- patch of traffic. Respondent presents the driver's "ownership" of a tractor as a principal indication of a proprietary interest in an independent business; however, approximately 95 percent of all drivers obtain and finance a tractor from Respondent, financing it through a division of the Com- pany. The Company generally offers recruits a choice from two new models, the brands of which may change from year to year and, when available, the choice of a used tractor turned in by other drivers. The conditional sales agreement entered into provides for an acceleration of the debt due on the truck on the termination of the driver's hauling agreement with the Company, for what- ever reason. While Respondent does permit drivers to bring their own tractors into the fleet, the tractor must meet basic DOT specifications and, in addition, company specifications regarding age, horsepower, axles, size, and cosmetic condition. Currently, the usual downpayment is 10 percent, with a 5-year term at 8 percent, an effective rate of 14.2 percent. The note is usually transferred by Respondent to a financial institution; however, Respond- ent regularly deducts payments from the driver commis- sions and forwards them to the note holder. 44 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Shippers make damage claims against the Company rather than individual drivers, but most cargo claims in- volving driver's negligence are charged back to the driver at a maximum of $50 per shipment, while claims resulting from failure to follow "seal procedure" are shared by Respondent and the drivers up to a maximum charge back of 50 percent. With the exception of the base plate license, Respondent pays for and "assists" the drivers in obtaining all other required permits and li- censes at no cost. The General Counsel emphasizes that Respondent's conditional sales contract differs from that of a typical sales contract by the absence of a late-payment penalty provision. In contrast, Respondent's contract authorizes the secured party to advance payments on behalf of the debtor, requiring only that the debtor repay these ad- vances. Thus, when a driver's mileage commission is in- sufficient to cover the installment payment due on the tractor, Respondent, who otherwise automatically de- ducts the payment from the commission, advances pay- ment penalty free. This, in effect, amounts to an interest- free loan provided to drivers whose commissions do not cover the amount of the installment payment, a proce- dure that lessens the risk of loss in the investment that would normally be borne by an independent contractor. Respondent also finances for free all other debits that a driver may accumulate, with the exception of the interest it charges on specifically issued sidenotes. The actual av- erage debit balance per driver in the commercial trans-. port fleet is near $300 per week, an average total financ- ing of driver operations by Respondent of approximately $780,000 weekly. All company-financed tractors are registered in Indi- ana under Respondent's name and the title remains in Respondent's name, even after all payments are made, unless a driver then makes a specific effort to request that the title be issued in his own name. Although excep- tions are sometimes authorized, Respondent also requires that drivers who operate financed tractors conffilt with it before making repairs and it often requires drivers to return vehicles to Fort Wayne for repair. Of current drivers in the commercial transport division, 100 origi- nally had their own titles and 100 others had titles trans- ferred to them on completion of payment. The tractor purchase-finance arrangement also is contingent on the driver maintaining his hauling agreement with the Com- pany and the agreement specifically provides that all fi- nancing be satisfied at the time of contract termination. If outside financing is not arranged, Respondent will either "buy back" the driver's equity or repossess the unit. Respondent also requires each contracting driver to maintain a $3000 "reserve fund," started by a $500 de- posit and increased with a $20 weekly withholding. This fund is designed to offset any debit balance existing at the time of termination. Respondent points out that the Company goes to great lengths to ensure that every driver who signs a contract intends to assume the status of an independent contractor and each driver must sign a statement of understanding in which he acknowledges that he will be self-employed. The contract also provides that the drivers shall not be treated as employees of North American for purposes of the Federal Insurance Contributions Act, the Social Se- curity Act, the Federal Unemployment Tax Act, or income tax withholdings, and Respondent makes no withholdings from payment to drivers for these purposes. In 1973, the Internal Revenue Service issued a memoran- dum of technical advice in which it concluded that the Company's owner-operators constituted independent contractors rather than employees for Federal employ- ment tax purposes. That memorandum also concluded that, to the extent owner-operators hire assistants to per- form services under their direction and control, they constitute employers of such assistants for purposes of Federal tax liabilities. Respondent also points out that its drivers do not enjoy the numerous benefits and other attributes of em- ployment enjoyed by its many clerical and other compa- ny personnel, who admittedly are employees. Instead, the drivers' direct compensation is based on a cents-per- miles formula that decreases as the length of a trip in- creases, and it varies whether the trailer is carrying freight or empty (deadhead). The rate increases by 4 cents a mile after a unit runs 65,000 authorized miles in a 12-month period, and additional compensation is provid- ed for performing accessorial services, such as making multiple pickup and delivery stops, or for authorized de- tention of layover time. Also, the payment of cash bo- nuses as an inducement for hauling critical loads also occurs frequently and the total amount of such payments by the commercial transport division in 1984 was in excess of $750,000. Respondent provides a variety of programs and means to support the drivers in the performance of their haul- ing services. It has established several fleet service facili- ties where, in addition to providing a convenient place for drivers to purchase fuel and obtain oil changes, lubes, and trailer repairs, there are shower facilities, laundry fa- cilities, and a lounge, all of which Respondent provides free of cost. Respondent also issues owner-operator bul- letins and other guidelines that apprise the drivers of its policies and procedures and offer suggestions on how to accomplish the job. It also has a fleet registration depart- ment that assists drivers in obtaining any Federal or state permits and licensing that are required. Respondent provides drivers with all necessary freight documents and other necessary paperwork as well as all required forms for their obtaining collision, comprehen- sive, public liability and property damage, bobtail insur- ance, and medical and dental coverage. The driver is re- quired to have collision insurance and comprehensive is required if he finances his tractor through the Company. Bobtail insurance is mandatory whether the tractor is purchased through Respondent or outside. If the driver decides to procure the mandatory public liability and property damage insurance through a source other than Respondent, he receives increased compensation from Respondent at the rate of 1 cent per dispatched mile. De- ductions for workman's compensation coverage are also mandatory and when this practice began about 3 years ago, Respondent correspondingly increased compensa- NORTH AMERICAN VAN LINES 45 tion to 7 cents per mile to offset the increased cost to the driver. Respondent provides a comprehensive system of ad- vances and loans to its drivers, which are authorized by the dispatcher after a driver has agreed to take a particu- lar load. Generally, the advance is made through a "Comecheck" system with a service charge paid by the driver. Advances generally are at a rate of 30 cents a mile plus $50 up to $1000, and are debited by the Re- spondent against the mileage commission paid for that load when the weekly statement is made out. Other ad- vances and side loans can be obtained through permis- sion of a driver's "counselor" in order to cover special expenses, such as fines and major repairs, that are unre- lated to a particular load. Respondent's statistics for 1983 and 1984 show that the commercial transport division had 2501 and 2589 active contractors, respectively, at the end of each year, and that during the same years it terminated 622 and 1154, respectively. While the turnover for 1984 approached a rate of 50 percent, Respondent indicated that an average for the 2 years is approximately 26 percent. Respondent's records of terminations have a space for indicating whether the termination was initiated by the Company or the driver, and Respondent contends that approximately 95 percent of the contract terminations that occurred during these 2 years were actually owner- operator initiated. Many different reasons are listed for both driver-initiated and admitted company-initiated ter- mination, including: fleet changes, 254; away from home, 174; family, 128; unknown, 127; dissatisfied/not suited, 115; insufficient income, 105; health, 105; accident, 24; abandoned unit, 50; other, 512; disqualified, 58; poor per- formance, 49; and high debit, 22. Respondent contends that only the latter three reasons truly reflect termination at the Company's initiative. I find, however, that the so- called driver initiated termination, such as "away from home," dissatisfied/not suited, and "insufficient income," as further discussed below, appear to be highly influ- enced by Respondent's manipulation of the drivers through its dispatch procedures and therefore reflect ter- minations that can be considered relevant to the matter of company control over drivers. With the exception of an initial period of 35 days, the lease agreement entered into between Respondent and its drivers continues in effect indefinitely, subject only to the rights of either party to terminate upon 30 days' notice and the Company's further right to terminate for any of six reasons specified in the contract. As part of its termination process and its apparent effort to influence the manner in which drivers operate under their hauling agreement, the commercial transport fleet administration department uses a form letter, commonly referred to as a 30-day letter, admittedly to attempt to motivate im- proved performance by drivers who have incurred a high debit balance or caused customer service failures. The letter informs the driver that the Company views the problem in a serious light and will review his run- ning record at the end of 30 days to determine whether it wishes to continue the contractual relationship. Such letters usually are read to and discussed with the driver over the telephone by his counselor. Respondent asserts that the issuance of a 30-day letter does not indicate that a decision has been made to terminate and, at the conclu- sion of the 30-day period, the driver's record is re- viewed, usually by his counselor, and a decision is made whether to continue the contractual relationship, to issue another 30-day letter, or to terminate. Despite the high turnover rate, many drivers adjust successfully to the lifestyle and practices involved and, as evidenced by the work histories of several witnesses, the "indefinite" contract term can continue for as many as 12 years. Moreover, as indicated, 254 drivers "termi- nated" from the commercial transport fleet during 1983 and 1984 actually did not leave completely but "changed" or transferred, to one of Respondent's other fleets or divisions. The change or transfer from one fleet to another is generally understood by drivers to be a form of advance- ment. Although some recruits may initially enter another fleet, the vast majority of new drivers begin with the commercial transport division "random" fleet. Respond- ent, however, tells recruits about the possibility of trans- fer and, in fact, its recruiting brochure specifically uses the phrase "request transfer," and recruits are told that it is an advancement opportunity. Respondent, however, argues that selection by another division is an independ- ent contractual event and is not a transfer. One driver specifically testified that his class was repeatedly told that if they kept their nose clean, were accident free, did their job, and were not troublemakers that they could be up for better runs and for opportunities in the dedicated fleet, which made more money. Also, regular company bulletins to the random fleet drivers emphasizes the op- portunity for increased income in the "uncartoned" fleet. The "uncartoned" gets 90 percent of its drivers from random and it holds out to transfers the opportunity for increased income, more personalized dispatch proce- dures, and working more with the same customers. During the period 1 January 1983 through 14 January 1985, 183 commercial transport drivers transferred to the "high value products" division (18 went in the reverse). The selection process involves a review of the factors re- corded in the driver's file and the driver's "counselor" or dispatch supervisor is usually questioned by management personnel in the hiring fleet of division. Inquiries are made regarding the driver's performance record in rela- tion to factors such as on time pickup and delivering and effective "communication" with dispatchers and custom- ers. In this connection, the General Counsel argues that in the context used, the term "effective communication" means "getting along" and that it should be inferred that it indicates an evaluation of how well the driver has co- operated with Respondent's efforts to dispatch traffic. A vice president of operations and administration testi- fied that most random drivers perceive the "dedicated" fleet as something better as it invloves more stable runs, and that most dedicated fleet drivers do not desire to go back to random, and that such drivers have more activi- ty than random drivers. A communication to random drivers in the company newsletter for January-February 1983 stated that the minimum qualifications for consider- ation for selection to the "turn fleet" (dedicated) were 46 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1500 miles per week, be in the top 25 percent of the fleet according to "quality assurance" ratings, and be recom- mended by their "supervisor." Although Respondent dis- claims the aecurracy of matters ,printed in its newsletters, especially the use of the term "supervisor," and it further asserts that the procedures discussed were not followed or have since been changed, there is no indication that Respondent published any correction of this information. Otherwise, I find that the newsletter article is generally consistent with testimony describing the selection proc- ess and is indicative of the Company's managerial proce- dures and practices. And, although some company wit- nesses disclaim their use or reliance on "quality assur- ance" ratings, I find that these ratings, as further dis- cussed below, are accepted managerial tools used to evaluate the performance of drivers. The manager of the dedicated fleet testified that in the selection process he would review the driver's personal file, looking for such things as delay forms and customer complaints, time out of service, miles per week, and utili- zation, which is a driver's loads in a week. With regard to miles/week, Respondent indicated that 1500 miles!- week would be an acceptable figure. One former driver testified he was rejected for turn fleet consideration be- cause of insufficient miles, but was told that if he brought his miles up, to call back. The manager also tes- tified that he would send a memo to the random fleet counselors seeking drivers who lived in a particular area and would request they submit names of those interested, preferably those who had a proven track record. One of the Respondent's internal memorandum sets forth its then-current policy for transfer to the high value products division stating: 4. The next step, probably one of the most impor- tant, is to contact the driver's current dispatcher in New Products. This is vital because the dispatcher porbably knows the driver as well as anyone does at NAVL. The dispatcher knows how many loads the driver has refused, if he consistently complains, why he is in debit balance, his current statement balance, if he runs as hard as New Products ex- pects, etc. I always try to get the dispatchers to give me their own personal opinion of the driver. This can be extremely helpful because a driver's personality does not show up in any records, but is vitally important to his success in One former driver was told by high value products that he would need a good quality assurance rating and no debit. Another driver testified a favorable recommenda- tion from his dispatch supervisor was withdrawn after a problem with a delayed load and some load refusals Re- spondent's assessment records show that numerous per- formance standards and attitudes are evaluated and noted as well as notations about physical appearance that in- cluded comments such as ones that said the drivers would agree to shave his beard or get haircuts Similar comments and evaluations also were made on internal transfer request forms for Respondent's household goods division. In the conduct of its day-to-day business, Respondent has formulated practices whereby driver contacts with the Company are channeled through dispatchers and "counselors." Respondent makes special efforts to avoid the use of terms or titles that relate to the root "super- vise" in relation to any dealing between the Company and drivers. Respondent asserts that it employs no one to supervise the drivers; however, testimony shows that the role of the counselors was specifically designed to "en- hance" the driver's performance of his freight hauling. While Respondent's titles for various jobs have changed, "fleet administrator" or "senior fleet administrator" have engaged in similar functions and "dispatch supervisors" alsb appear to have influential contact with drivers. The counselors serve Respondent as the equivalent of supervisors. They are assigned to a list of drivers and their main function is to perform a variety of duties in- cluding managing the drivers relation with the Company, approving and issuing advances and purchase orders, handling corrections to items on the drivers' quality as- sur ance reports, receiving questions and complaints from drivers, negotiating with drivers over sidenotes, perform- ing a weekly financial analysis for each of their drivers, initiating calls to drivers about shipper's complaints, delays, and cargo claims, initiating calls to discuss with drivers the reasons for their being out of service, coun- seling drivers into returning to service and maximizing their handling of loads, and answering general questions a driver has about the business. New drivers apparently are required to contact their counselors weekly. This continues until they establish regular weekly mileage over 2000 miles. The counselors regularly make evalua- tions of their assigned drivers; these evaluations are uti- lized by Respondent in transfers, quality assurance rat- ings, and terminations. Respondent also evaluates the counselors. Its records, describing the abilities of the counselors, which makes use of euphemisms avoiding specific "supervisory" terms, reflect the use of phrases such as: was conscientious and expected driver to be stern and made drivers increase their performance; "uses tools (30 day letters, etc.) to control debts; needs to take disciplinary action towards repeated offenders; push drivers; can solve their prob- lems and make them understand the correct way to do things relating to their business—can be firm when [she] has to; will work on keeping the drivers in service and pushing them to run harder when the tonnage is avail- able; and able to determine the times that it is not neces- sary to have tight reigns on the out of service." Respondent points out that drivers spend the majority of their time on the road, unaccompanied by a company representative and thus under no direct personal supervi- sion. This situation, however, is inherent in the very nature of the job and I find that it is not indicative, one way or the other, of independent contractor status. The representative of the Company that drivers most fre- quently have contact with is one the many dispatchers employed by Respondent. When a driver completes a run or when he otherwise wishes to come back to work from an "out of service" period (when he has not been hauling freight for reasons such as vehicle repairs, illness, NORTH AMERICAN VAN LINES 47 time off, etc.), he phones a "callback" operator, and pro- vides the Company with basic information that includes his identity, phone number, and location. The driver's name is then added to the bottom of a continuously maintained computerized list of drivers who are waiting to be contacted by a dispatcher assigned to the particular geographic region of the country from which the call originated. Dispatchers generally return calls to drivers by consulting the callback list and returning the oldest call listed. Drivers, however, may be contacted at the initiative of a counselor or a dispatcher, especially those that have been in an out-of-service category. Respondent describes the next stage in the dispatch process as the be- ginning of "negotiations" between driver and dispatcher. Respondent's extensive computer system monitors the available freight, the assignment of loads, and the per- formance of each driver. Thus, when a dispatcher talks with a driver regarding the assignment of his next load, his display screen tells him not only information about loads available in a particular origin/region but also the most recent information on the driver, including such things as the location of his residence, his length of serv- ice, type of contractor, identification of his counselor, details of his last several loads, and amount of yearly av- erage and last figure for each of the items: "cash home" payment, deficit balance, number of shipments, mileage, days home, and days out of service.2 The dispatchers are specifically trained not only in the functions and use of the computer, but also in the art of how to "sell" loads to the drivers, how to "stress" bene- fits, and how to "overcome" objections. The actual process of "negotiation" by the dispatcher follows the training format. A driver's reluctance to accept an offered load is met with a "selling" of load, utilizing available computer data pertaining not only to the load, but also information that relates to the driver's performance record. Although Respondent disclaims that dispatchers utilize "threats," it is clear from the testimo- ny of some drivers and dispatchers that threats do occur and the driver is faced with the future prospect of not obtaining a timely load or a load with attractive mileage not getting trips to desirable locations and having his debit balance grow if he rejects the load suggested by the dispatcher. Also, he is placed in a position in which his nonacceptance of a load may be entered on the com- puter record as a "refusal." Once a load is accepted, the driver chooses his own route and running hours; however, estimated pickup and delivery times are established and transmitted to Re- spondent's customers, and drivers are expected to meet these goals. There is no indication that drivers are allowed to oper- ate (and lease to Respondent) their own trailers. Thus, although drivers may paint or decorate their tractor as they wish, the trailer utilized carries the prominent colors and logo of the Company. The overall impact of the unit conveys the impression that it represents the 2 The cash home information apparently is no longer initially available to the dispatcher but may be called up, especially by a counselor. This change apparently was made as a result of a complaint discussed at an advisory counsel meeting. Company and customers look to and deal with drivers as representatives of the Respondent. On occasion, especially in certain geographical areas, when the Respondent has a shortage of out-bound freight, some drivers have sought to personally deal with potential cutomers by attempting to arrange a "trip lease" or to haul freight that is exempt from economic regulations. The basic agreement between the Company and driver provides that drivers can trip lease, but only subject to Respondent's prior authorization. Dispatchers apparently are not authorized to grant such approval and, in practice, approval from an authorized official is very rarely given. On rare occasions, Respondent has sometimes arranged lease loads for drivers in order to re- locate a unit from a slow loading area to a heavier traffic lane. Respondent's drivers's records contains some trip leasing forms; however, there is no suggestion that these trip leases were arranged by the driver and then ap- proved by Respondent. Respondent also requires that the credit rating of the potential shipper be confirmed before authorization can be given and, in practice, the experi- ences encountered by drivers show a lack of any coop- eration by the Company. Also, for any trip leasing or in- dependent hauling of a load, Respondent applies a penal- ty of a $150 trailer rental fee and reserves the right to terminate the driver for ones unauthorized trip. Respondent's operations vice president testified that drivers can trip lease as long as they operate under Re- spondent's authority. He admitted that it did not encour- age trip leasing, as the trailer belonged to Respondent, and it appears that its real policy is not to grant requests for permission to trip lease, regardless of the circum- stances. _ VII. INDEPENDENT CONTRACTORS STATUS— CONCLUSIONS My review of the record and the cases cited by the parties as well as other recent decisions of the Board lead to the conclusion that the prevailing relationship be- tween Respondent and its drivers vest the right to con- trol the manner and means by which the service is per- formed in Respondent and therefore precludes the driv- ers from status as independent contractors. As a preliminary finding, I conclude that the status of Respondent's drivers under the regulation of other agen- cies is not determinative here. In this connection, it is concluded that the holdings of the Interstate Commerce Commission and the Internal Revenue Service (IRS) are not of relevant value inasmuch as the ICC recently de- clined to exercise jurisdiction and has made no formal findings on the independent contractor issue, and the IRS condsideration was in the primary form of a memo- randum of technical advice issued in 1973, when Re- spondent was primarily a hauler of household goods and related commodities, well before Respondent's operations had expanded to the size and scope of its current nation- wide transportation of general commodities. Respondent emphasizes its "intent" and its contractual agreement with the drivers; however, the record shows that Respondent's "intent" in designating its drivers as independent contractors is an obvious effort to clothe the 48 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD relationship with the outward appearance of seeming in- dependence. This intent does not control the ultimate re- ality of Respondent's dealings with its drivers and it does not control the evaluation of the relationship as it falls within the applicability of the National Labor Relations Act. Here, a constant theme of Respondent's organizationl and administrative process is to reiterate the concept of independence and to avoid terminology that might infer an employee-supervisor relationship. I find that this por- trait of an independent relationship is a deliberate illusion presented to drivers to induce them to perform basic over-the-road driving services for the Company so that the Company in turn may perform its common carrier obligations. As an incident of this form of relationship, the Respondent gains the perceived benefits of avoiding direct and indirect labor cost and of avoiding significant capital cost investment in costly tractor equipment, while the driver obtains a cents-per-mile commission for the time he spends in performing the service and for his ini- tial investment in a downpayment on the tractor utilized. Here, Respondent operates with a daily dispatch of thousands of drivers to serve thousands of customers and it does not allow the daily accomplishments of its oper- ations to be left to chance or to the uncontrolled person- al whims of individual drivers. Respondent does not limit its control of the operation to the ultimate result of its service—the delivery of the customer's freight. In actual- ity, Respondent has carefully and thoroughly structure its organization to allow the exercise of control over its total business endeavor, including the manner in which its drivers perform their , services. In this connection the record shows that Respondent's counselors act as the driver's supervisors. Also, both counselors and dispatchers regularly manipulate the dis- patch and work assignment process and exercise control over any driver to attempt to operate in an independent manner. A review of Respondent's transfer, recruiting, training, financing, licensing, and termination procedures and practices shows a clear attempt by Respondent to give the impression that drivers obtain an independent status; however, the substance of the relationship does not per- suasively indicate an independent contractor relationship between the Compnay and its drivers. The actualities of its practices show that drivers are selected and treated in a manner that is not inconsistent with status as an em- ployee. This is especially true in that drivers are effec- tively prohibited from trip leasing or other independent use of their tractors and are otherwise made solely de- pendent on Respondent for any profit opportunities Moreover, drivers are presented with advancement possi- bilities that are coupled with evaluation of the manner and means by which they perform their daily task, fac- tors that tend to be indicative of a permanent relation- ship and employee status. Respondent places special reliance on the drivers pro- prietary interest or investment in the business; however, it is recognized that it is not uncommon for employees in various trades and occupations to provide their own basic education and training, to provide their own tools, equipment, or special clothing, or to make monetary in- vestments through stock purchase programs. Thus, even if the owner-operator is considered to contribute his own tractor, free of domination or influence by Respondent, the mere contribution of a worker's capital investment alone is not inconsistent with status as an employee. Here, Respondent supplies the total investment in the trailer portion of the tractor-trailer unit, and its colors and logo give a dominant impression that it is Respond- ent's vehicle. Significantly, it or its affiliate holds title to, sells, fmances, and otherwise dominates control of the vast majority of the driver's tractors. Respondent also supplies necessary paperwork and other material and provides drivers with the numerous accessorial services discussed above. As noted, Respondent effectively pre- vents drivers from trip leasing or making any independ- ent use of the vehicles. Although a driver may ultimately secure full title and ownership in his tractor (or receive some reimbursement for their payments when a vehicle is turned in), Respondent's records show that only 100 of the current drivers have obtained this proprietary inter- est in company-financed tractors, while only 100 others independently held or received vehicle ownership. Thus, the vast majority of the tractors used are held by the Company with the driver being in a position substantially equivalent to that of a leasee. As noted, the trailer por- tion of the unit is unequivocally owned by the Company, and drivers are not allowed the option of owning a com- plete unit. Under these circumstances, I find that the pro- prietary interest of the predominant number of drivers is so qualified as to be more indicative of employee status than of status as an independent contractor, see H & H Pretzel Co., 277 NLRB 1327 (1985). Significantly, mileage rates and other terms of the driver-management contract are not negotiated with indi- vidual owner-operators or representatives, but are unilat- erally dictated by Respondent. Driver dissatisfaction in the terms are not resolved by the process of independent business negotiation, but become reflected in the obvi- ously high driver turnover rate. In 1984, this turnover rate approached 50 percent and I find it to be indicative of Respondent's position of uni- lateral control and the nonnegotiability of the purported independent relationship between the drivers and Re- spondent. While some efforts may be made by Respond- ent's counselors to retain drivers by including them to run more miles and thereby satisfying their equipment obligations, drivers must relinquish their independence and accede to effective acceptance of Respondent's dis- patching control in order to succeed. The conclusion reached is supported by Respondent's records of turnover reasons, despite its claim that 95 per- cent of the drivers leave on their own initiative. Some of these drivers obviously fall into a category in which their financial situation, lack of sufficient income, and equipment indebtedness, coupled with their lack of suc- cess under Respondent's controlled dispatch procedures, dictate their departure. Other drivers admittedly are ter- minated at the Respondent's initiative and here again it appears that the root cause of such terminations often is based on their failure to cooperate with Respondent's ex- ercise of control over their operations. NORTH AMERICAN VAN LINES 49 Respondent, citing Don Bass, supra, urges that control aspects of the relationship relative to compliance with the regulation of other governmental agencies cannot be considered applicable. As found above, however, Re- spondent's management of its drivers' activities goes beyond those required by other regulations. The Board's most recent evaluation of owner-operator employee status occurred in Precision Bulk Transport, 279 NLRB 437 (1986), citing Don Bass supra, in which a number of factors similar to some of those involved were considered, including restrictions on independent "trip leasing." In Precision the Board found that such restric- tions gave the Company control beyond that imposed by other Federal regulations and limited the drivers' enter- preneurial freedom. Because this factor essentially stood alone, the Board found it insufficient to support a finding of statutory employee status in light of other factors. The other facts in the instant case, however, differ significant- ly from those discussed in Precision. For example, in direct contrast to the instant case, the Precision drivers received no instructions about the type of vehicle to buy, and the Company did not finance or maintain other con- trols over the vehicle. Here, Respondent not only has fi- nancial and other controls over most of the drivers' trac- tors, including retention of title and direction over repair work, but it also owns the trailer portion of the tractor- trailer unit necessary to perform the service involved. Other factors that differ from the Precision case in- clude the fact that Respondent's drivers are shown to be subject to adverse personal actions such as being placed out of service, receiving refusal notations on their records, being threatened with termination, and being denied recommendations for promotion or transfer when they refuse or attempt to refuse loads. Here, Respondent retains specific approval rights over the hiring of addi- tional or replacement drivers and it has provided major assistance in obtaining licenses, insurance, tires, fuel, and other accessorial aids. Respondent does not allow drivers to furnish their own trailers and it effectively disallows drivers the opportunity to arrange an independent back haul. Here, the record shows that drivers who are not ter- minated gain a permanent working arrangement with Re- spondent and can transfer between divisions. They do business in Respondent's name and with its assistance and guidance, they operate under an agreement that is not negotiated but is promulgated and changed unilaterally by Respondent, and they use the skills expected of ordi- nary truckdrivers, all factors consistent with employee status. See Standard Oil, supra. Here, despite the fact that some 200 drivers have inde- pendent ownership of their tractors and others are multi- unit operators (who, along with a few other experienced operators, tend to be allowed to exercise a quarter degree of independence), such exceptions are not repre- sentative of the vast majority of the 2800 drivers in Re- spondent's commercial transport division. Thus, an over- view of the entire record leads to the ultimate conclusion that a majority of Respondent's drivers are part of a highly controlled relationship in which the Respondent effectively manipulates and controls the daily manner and means of its drivers' operations in a fashion that is not typical of the traditional independent contractor. Accordingly, I conclude that the Respondent has not met its burden of showing that its owner-operators are independent contractors in the traditional sense. I other- wise find that the predominance of evidence shows that the drivers of Respondent's commercial transport divi- sion, as a class, are statutory employees within the mean- ing of Section 2(3) of the Act and are not independent contractors within the meaning of the statutory exclu- sion. VIII. DRIVERS' ADVISORY COUNCIL The idea for a drivers' council was originated by an executive vice president for the commercial transport di- vision and implemented with the concurrence of Re- spondent's general counsel following exploratory meet- ings between other management personnel and some drivers, and was designed to provide Respondent with a means and forum for feedback and communications of ideas and policies. As noted above, a total of 6, 2-day meetings were held in 1983 and 1984, each attended by 12 driver members of the council, as well as Respond- ent's director of contractor relations, Kevin Lewis, sev- eral other management personnel, and a secretary, who took minutes at all the meetings. And after each meeting Lewis sent a letter to all fleet drivers setting forth high- lights of what occurred at the meeting. Respondent initially received requests to be on the council from 90 to 100 drivers. Its dispatch manager then made out a file card with information about each driver's weekly mileage and "cash home" records as well as his addresses, starting date, and fleet designation. Some com- ments about the driver's suitability for the council were also noted. The final selection of members was made by management and was arrived at by attempting to select a cross-section of the fleet, taking into account the statis- tics on the cards and information about the candidates. Respondent attempted to select drivers it thought were "good businessmen" and some drivers selected were "Vanguard" award-winning drivers, specifically known to management. A manager also testified that there were a couple of individuals they positively knew they did not want. One of these individuals was Boswell, who they felt would not provide an acceptable dialogue that would facilitate communication between management and drivers. After the initial formation of the council, Respondent selected replacement members when an original member left. Vice President Bruce testified that he suggested Moats, a driver he had known from a pre- vious Vanguard trip and who had visited him in his office. After a conversation either he or the Respond- ent's director of operations decided to select Moats. Fur- ther examination by the General Counsel, however, dis- closed that Moats also was known to management be- cause he had been a witness who testified on behalf of Respondent in the investigation proceeding before the ICC. When a Council member objected to Respondent's unilateral action in selecting Moats, the director agreed that the selection method had to have "credibility" and thereafter a system was devised that required Lewis to 50 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD develop a list of drivers and candidate profiles. Members of the director's staff prepared the profiles. This proce- dure was followed when the council next selected re- placements; however, Lewis also informed the council that "if management agreed with their selection" or the alternate, Lewis would then contact them. On a day-to-day basis, the council was actively man- aged by Lewis, who opened and responded to all corre- spondence it received. As noted, he also prepared the summary of meetings sent to all drivers. On his own ini- tiative, Lewis also prepared "Rules of Order," which he said were designed not only to provide a productive at- mosphere, but also to limit any discussion of compensa- tion or grievance issues, to limit members to one crack at a topic, and to require the presentation of a unified front by the council once a decision was reached. The meetings of the council were generally conducted at a local Fort Wayne hotel or motel. Respondent paid the bills for the lodging and meals of the council mem- bers and the meeting rooms and it otherwise provided complete fmancial support for the council's functioning. Although the driver-council members were not paid while at meetings, this factor is not significant as the drivers were not salaried, but rather were compensated on a mileage basis. Here, the driver-council members were assigned specific loads to bring them to the Fort Wayne area or were paid loaded miles, regardless of whether they hauled any freight, and they were prefer- entially dispatcheed with return loads at the end of the 2- day meeting. Respondent further added to its financial support and oversight involvement by preparing and dis- tributing to all drivers a summary of what it considered to be the main discussions of the meeting. Although some council members had an opportunity to review the distribution, there is no indication that they could or did make any in the material prepared by management. The record shows that Respondent's council had no charter, no regular offices (the position of chairman ro- tated for various meetings), and no provisions for fund- ing. It also is shown that the meeting schedules were set and coordinated by Respondent. Although members pur- portedly suggest topics for the next agenda, the meetings were dominated by presentations by management, with only a minor amount of the time set aside for drivers to meet without officials. Otherwise, it appears that Lewis and the stenographer were always present. Respondent attempts to minimize the fact that the council has suggested changes in company operations, but it does acknowledge that this did occur and that some suggestions were favorably acted on by manage- ment, including such things as reimbursement for ex- penses in washing Respondent's trailer equipment and ex- panding the availability of tire sale services. Respondent also acknowledges that it publicly attributed several other policy changes to the council, including restoration of a 30-day notice in its contract termination clause, but states that these were changes it had already decided on and that they were not actual accomplishments of the council and thus did not tend to demonstrate that the council existed for the purpose of dealing with the Com- pany concerning working conditions. Here, I find that the council was created to be a vehi- cle for use by management in the dissemination of infor- mation and also for the exchange of information between driver and management concerning operations and, almost implicitly, working conditions. Once the council was created, it was then carefully and knowingly manip- ulated by Respondent in a transparent attempt to avoid any obvious display of dominance. Although the Respondent denies that its Drivers Advi- sory Council is a labor organization, the record, especial- ly minutes of the several council meetings, unquestion- ably show that the council engaged in discussions and sought resolutions of matters dealing with working con- ditions, grievances, and compensation. Section 2(5) of the Act defines a labor organization as any organization of any kind, or any agency or em- ployee representation committee or plan, in which employees participate and which exist for the pur- pose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work. Here, the record shows that Respondent's driver-em- ployees participated in the meeting, but that some of the drivers' ideas and recommendations were adopted by management and some complaints were favorably acted on. Accordingly, I conclude that the Drivers' Advisory Council clearly falls within the statutory definition of a labor organization. See Clappers Mfg., 186 NLRB 324 334 (1970), and Texas Bus Lines, 277 NLRB 626 (1985). Section 8(a)(2) of the Act provides: It shall be an unfair labor practice for an employ- er . . . (2) to dominate or interfere with the forma- tion or administration of any labor organization or contribute financial or other support to it. . . . The critical factors for evaluation of illegal company as- sistance and domination of a labor organization are dis- cussed in Homemaker Shops, 261 NLRB 441 (1982), revd. in part at 724 F.2d 535 (1984). These include consider- ation of the organizational bylaws and governing rules; whether there are regular officers and provisions for dues; who had authority to schedule meetings, election procedures, and grievance handling; and whether the Company pays wages and other cost. Respondent, while admitting that it originated the con- cept of the council, suggests that it did not unilaterally implement the concept but acted only after getting "en- thusiastic" endorsement of the idea and requests by 90 to 100 volunteers to serve. It suggested that there is no evi- dence of driver opposition to the council concept; how- ever, it does not address the fact that the drivers were never presented with any opportunity to vote for or against the concept. It also failed to recognize the nega- tive corollary that can be implied by the fact that of some 2500 drivers in the commercial transport division, 2400 failed to volunteer their endorsement of the council. On brief, the Respondent also suggested that no infer- ence should be drawn that the selection of replacement NORTH AMERICAN VAN LINES 51 council member Moats was based on its knowledge that he had testified on Respondent's behalf in the ICC pro- ceeding. My review of the record, however, indicates that Vice President Bruce was a reluctant witness who attempted to minimize his knowledge of events, and I be- lieve that both his testimony and that of then Director of Operations Phillabaum are sufficiently ambiguous to allow room for a valid inference that Moats was selected to be on the council because he was a driver whose fa- vorable and cooperative attitude toward Respondent was known to management. As noted, Respondent selected the original members of the council, it played a substantial role in determining re- placements, and it appears that it also reserved to itself the power to veto the council's selection of replacement members. Also, when a body of rules governing the op- eration of meetings was created, it was proposed by management. These rules, in addition to providing a pro- cedural framework for the conduct of meetings, also made an attempt to control discussions dealing directly with issues of compensation or grievances, two specific factors that would clearly tend to indicate that the coun- cil functioned as a labor organization. Here, I find that Respondent's action in establishing these restrictive rules also is indicative of Respondent's exercise of coercion, and restraint of the council in order to prevent it from effectively representing the interest of employees. This factor in particular distinguishes the instant case from the situation discussed by the court in the Homemaker case, supra, relied on by Respondent. In connection with the issue of funding, it is clear that the council existed solely at Respondent's sufferance. Motel accommodations as well as meals and meeting fa- cilities for driver members and attending management personnel were completely paid for by Respondent and clearly go beyond the minimal compensation discounted by the court in Homemaker, supra at 547. Under the circumstances, I find that the reality of the Company's involvement in the initial formation of the council, in June 1983, in the early operation of the coun- cil, and through the period of subsequent modification in 1984 requires a conclusion that Respondent has dominat- ed and interfered with both the formation and adminis- tration of a labor organization. Respondent, however, urges that its creation of the council and its most active involvement in council affairs occurred in 1983, a time outside the 10(b) limitation period. A review of the record of council meetings during portions of 1984, a timeframe that unquestionably falls within the 10(b) period, shows the following: During the Council meeting on 4 April 1984, Director of Contractor Relations Lewis served as chairman, rather than any employee member. The discussion cov- ered numerous questions and complaints on operational conditions, including a complaint that phone clerks were too arbitrary in dealing with drivers. Respondent replied with an assurance that rules would be loosened. Also, a company representative gave a presentation of "things that were changed as a result of the last meeting" and, among other things, listed the following: Tractor purchase/Saturdays Wash bay quality/quantity Fort Wayne off site work schedule Credit cards and personnel checks accepted Los Angeles off site Modified weekend purchase orders Vehicle service adding two more phones Expanding vehicle service inbound Watts lines from 5 to 7 Mastercharge-Visa benefits April 23, 1984 in Fort Wayne Expand third shift at tractor shop Tractor shop will have Watts line April 16, 1984 At that same meeting council also replaced the hus- band-wife team members and another member of the council, and selected an alternate. Lewis' notes for that meeting stated: I told council I would contact Mr. and Mrs. Bingham if management mutually agreed. [and] will get management approval for new members (or al- ternate) contact new members to see if they are in- terested, then ask them to be members. During the meetings on 10 and 11 July 1984, Charging Party Boswell attempted to attend but was asked to leave. He left after further being asked if he wanted them to call the police. The council then replaced a member after receiving candidate profiles prepared by manage- ment. It also brought up and discussed expansion of group insurance participation and vehicle insurance cost. "Call back" problems with dispatchers were raised and management replied that improvement would be attempt- ed. A member questioned whether drivers had a choice where to have tractors repaired and an example was given in which driver was not given a choice. Manage- ment promised to see what could be done. During the meetings of 30 and 31 October 1984, the council discussed the renovation of Respondent's facility in Los Angeles with phones and laundry equipment, and management gave assurance of improvements. Other problems, including a specific discussion of dispatchers placing drivers out of service to force them to take loads, were discussed and a statement was made that the council did not want the benevolent association at coun- cil meetings. This brief summary of events at council meetings during the 10(b) period shows that the council discussed conditions of employment that were acted on by the Company, and that the Company exercised domination over the council through such activities as chairing a meeting and controlling selection of replacement council members. Also, direct expenditures by Respondent of several thousand dollars occurred for these meetings and, accordingly, I conclude that Section 10(b) is not a bar to this proceeding. Moreover, these latter factors do not stand alone but exist together with Respondent's original actions in orga- nizing, assisting, and dominating the council prior to the 10(b) period, and it is shown that the 1984 actions of the council otherwise were a continuation of Respondent's 52 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD - original improper activities. Compare Al Bryant, Inc., 260 NLRB 128, 135 (1982). Under these circumstances, I conclude that the Gener- al Counsel has shown by a preponderance of the evi- dence that Respondent has unlawfully formed, dominat- ed, and rendered assistance to a labor organization in violation of Section 8(a)(2) and (1) of the Act, as alleged. CONCLUSIONS OF LAW 1. Respondent North American Van Lines, Inc. is an employer within the meaing of Section 2(2) of the Act and has engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The owner-operators who perform transportation services for and under contract with Respondent's Com- mercial Transport Division are employees under Section 2(3) of the Act and collectively do not have status as in- dependent contractors. 3. North American Van Lines Commerical Transport Division Drivers Advisbry Council is a labor organiza- tion within the meaning of Section 2(5) of the Act. 4. By dominating, assisting, supporting, and interfering with the formation and administration of the council, Re- spondent has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(a)(2) and (1) of the Act. THE REMEDY Having found, as set forth above, that the Respondent has engaged in certain unfair labor practices, it will be recommended that it cease and desist therefrom and take certain affirmative action set forth below designed to ef- fectuate the policies of the Act. It having been found that the Respondent has dominat- ed and interfered with the formation and administration of the employees' advisory council, and has contributed support thereto, it is recommended that the Respondent cease and desist from such conduct and it is further rec- ommended that it be ordered to completely disestablish the council. As part of the relief sought, the General Counsel also seeks imposition of a so called visitatorial clause whereby the Board would be authorized to engage in certain dis- covery activities in order to monitor compliance. Al- though the imposition of such a provision recently has become a common practice, there is no showing that it is of particular applicability or usefulness in dealing with the type of unfair labor practices involved in this pro- ceeding. Accordingly, the request is denied and no visita- torial clause will be imposed as part of the Order. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed3 ORDER The Respondent, North American Van Lines, Inc., Fort Wayne, Indiana, officers, agents, successors, and asssigns, shall, jointly and severally 1. Cease and desist from (a) Dominating or interfering with the administration of North American Van Lines Commercial Transport Division Drivers Advisory Council, or with the forma- tion or administration of any other labor organization of its employees, and contributing support to North Ameri- can Van Lines Commercial Transport Division Drivers Advisory Council or to any other labor organization of its employees. (b) Recognizing, or on any manner dealing with, North American Van Lines Commercial Transport Divi- sion Drivers Advisory Council, or any reorganization or successor thereof, as a representative of any of its em- ployees for the purpose of dealing with the Respondent concerning grievances, labor disputes, wages, rate of pay, hours of employment, or other conditions of work. (c) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Completely disestablish North American Van Lines Commercial Transport Division Drivers Advisory Coun- cil. (b) Post at its Fort Wayne, Indiana facilities copies of the attached notice marked "Appendix." 4 Copies of the notice, on forms provided by the Regional Director for Region 25, after being signed by the Respondent's au- thorized representative, shall be posted by the Respond- ent immediately upon receipt and maintained for 60 con- secutive days in conspicuous places including all places where notices to employees are customarily posted. Rea- sonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material. (c) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. 3 If no exceptions are filed as provided by Sec 102.46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses 4 If this Order is enforced by a judgment of a United States court of appeals, the words in the notice reading "Posted by Order of the Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board."