Air Transit

National Labor Relations Board - Board Decisions

Aug 21, 1984

271 N.L.R.B. 1108 (N.L.R.B. 1984)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Air Transit, Inc. and Automotive, Petroleum, Cylin-
der and Bottled Gas, Chemical Drivers, Helpers
and Allied Workers and Public Transportation
Employees, Local Union 922, a/w International
Brotherhood of Teamsters, Chauffeurs, Ware-
housemen and Helpers of America, Petition.
Case 5-RC-11658
21 August 1984
DECISION ON REVIEW AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
HUNTER AND DENNIS
On 9 November 1981 the Acting Regional Di-
rector for Region 5 issued a Decision and Direc-
tion of Election in a unit of all regular and part-
time taxicab drivers at the Dulles Airport taxistand
operated by Air Transit, Inc. (the Company), in-
cluding owner-drivers and second drivers. The
Company filed a timely request for review of the
decision, contending that the Acting Regional Di-
rector erred by failing to find the drivers independ-
ent contractors whom Section 2(3) excludes from
coverage of the National Labor Relations Act.'
The National Labor Relations Board granted the
request for review by telegraphic order dated 21
December 1981. The Company filed a brief on
review.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the entire record in
this case and makes the following findings:
I. THE FACTS OF AIR TRANSIT III
The Company operates a taxicab service at
Dulles Airport in Loudon County, Virginia, under
a contract with the Federal Aviation Administra-
tion (FAA). The Company orally contracts with
some 90 drivers who operate the cabs. The drivers
own their cabs2 and pay weekly stand dues to the
Company in exchange for the right to conduct
business at the Company's Dulles taxistand. Stand
dues are the Company's only source of income
from its Dulles operation.
The drivers receive no wages or benefits from
the Company. Their only source of income is the
fares received from transporting passengers. The
The status of the Company's drivers has previously been reviewed.
In Air Transitr. Inc., 248 NLRB 1302 (1980) (Air Transit I), affd. in the
summary judgment proceeding 256 NLRB 278 (1981) (Air Transit I1),
enf. denied 679 F.2d 1095 (4th Cir. 1982), the Board found that the
owner-drivers and second drivers were statutory employees rather than
independent contractors, but the Fourth Circuit disagreed and reversed.
We refer to the instant case as Air Transit III.
2 The drivers are responsible for the cab's purchase, financing, insur-
ance, and maintenance. "Second drivers" sublease cabs from the owner-
drivers (drivers).
271 NLRB No. 158
drivers make no reports to the Company regarding
the number of trips made, the fares received, their
daily schedule, or the number of hours driven.
The drivers secure the right to operate their cabs
at Dulles by obtaining a "number," which is a slot
or space on the roster of drivers. The Company's
Dulles roster has slots for 89 taxicabs. A number
may be obtained free of charge from the Company
or by purchase on the open market from a depart-
ing driver. A "free" number becomes available
when a departing driver returns his number to the
Company instead of selling it on the open market.
The departing driver receives no remuneration, and
an incoming driver pays no fee for the number.
There are few free numbers available, and anyone
desiring a free number must place his name on a
waiting list.
The purchase of a number from a departing
driver occurs far more frequently. Buying a
number allows the incoming driver to sidestep the
waiting list and begin work immediately.' A num-
ber's selling price is based on supply and demand
and on the profitability of the cab business. 4 De-
parting drivers often sell their vehicles in addition
to their numbers, and vehicles have been sold for
amounts exceeding their market value.
As proved by the FAA contract, all cabs are
identically painted and marked and display the
legend "Airport Cab." The drivers are responsible
for having their cabs painted, and some drivers
have also stenciled their own names on the cab
doors. s
The central feature of the Company's Dulles op-
eration is the "feed line," which functions as fol-
lows: The first cab takes the first person requesting
service, and so on down the line, on a "first-in,
first-out" principle, except for "short hauls." A
driver returning from a short haul takes the first
place in the feed line instead of the last.
The Company provides a dispatcher to regulate
the feed line between 3 and 11 p.m. During the rest
of the day, the drivers themselves maintain the
line." The Company may "spot-check" the cabs'
3 All incoming drivers meet with the Company's general manager to
provide an address for billing of stand dues. The general manager also
determines whether the new driver has sufficient funds to purchase the
cab and whether the requisite insurance has been obtained.
4 One driver testified that she paid $5000 for her number even though
business was slow because "there was a gamble that Congress was going
to bring a lot of flights out from National [Airport]."
° The contract with the FAA also provides that the cabs must be
clean, safe, and suitable; that a minimum of 60 cabs provide heat and air
conditioning; and that each vehicle be less than 2 years old.
6 The FAA contract requires that the Company establish and operate a
personnel and taxicab dispatch and control system to provide for effec-
tive scheduling and utilization of cabs and personnel; that all cabs be
loaded and unloaded promptly, carefully, courteously, and efficiently
without cost to the passenger; and that the Company provide readable
Continued
1108
AIR TRANSIT
condition while on the feed line. Cabs without a
valid inspection sticker or working lights have
been denied access to the Company's taxistand
until the condition has been remedied.
The FAA contract requires the drivers to accept
all passenger assignments. The drivers occasionally
"swap" passengers, and some drivers make advance
arrangements with customers to meet a particular
flight. Some drivers carry business cards and dis-
tribute them to fares to develop a clientele. Certain
drivers allow their customers to charge fares on
credit, while others accept personal checks.
The Government controls the fare schedule. The
FAA requires that each cab have a meter, which is
preset according to rates the Washington Metro-
politan Area Transit Commission establishes, and
that fares be posted. The Company, however, has
negotiated "flat-fare" rates with two companies.
Despite fare regulations, drivers often negotiate flat
rates with individual customers and do not run the
meter for the duration of the trip.
As the FAA contract requires, some of the cabs
have two-way radios. The drivers with two-way
radios in the cabs area available for calls to pick up
passengers bound for Dulles. If no radio-equipped
driver is available, the first driver on the feed line
is dispatched. Drivers with two-way radios are not
required to accept a radio call.
The Federal Government oversees the drivers'
operations in other ways. Government regulations
provide that a driver may not solicit passengers,
must permit airport police to inspect his name tag
and rate schedule, must remain in the cab while
waiting to enter the feed line or while in the feed
line, and must obey all lawful directions of dis-
patchers. 7
Subleasing is defined as the driver's use of a
second driver. Only three drivers sublease their
cabs on an "official" basis.8 Subleasing appears to
be "officially" permissible only when a driver is on
vacation. Many drivers do sublease their cabs,
however, without company interference.
The drivers must insure their cabs as required by
the Commonwealth of Virginia and Loudon
County, where Dulles Airport is located. Loudon
name tags and require dispatchers and drivers to be uniformed in a
manner approved by the Government.
Concerning what the FAA contract terms "Employees of Contract,"
the contract provides that the contractor shall,' if the Government in
writing so directs, require uniforms or badges; that the contractor shall
not hire or permit to remain on the premises any person declared unfit
for service or otherwise objectionable; that the contractor shall require
its employees to be impartial and courteous in dealing with the public;
and that the contractor shall prohibit loud, noisy, and persistent an-
nouncement of its services.
See "Motor vehicles carrying passengers for hire on Dulles Interna-
tional Airport," 14 CFR § 159.4 (1981).
8 As to these, each driver and each second driver pays stand dues.
County requires more insurance coverage than
does the Commonwealth.
No formal records are kept of customer com-
plaints. If a complaint is serious, the Company may
ask the driver about the circumstances. The Com-
pany has, on occasion, refunded part of a fare, but
has never asked a driver to reimburse the Compa-
ny. During a 3-month period in 1981, the Compa-
ny's general manager, Van D. Wright, received ap-
proximately 15-18 customer complaints but took
no action against any driver.9
The Company and drivers met in August and
September 1981 to discuss the taxicab operation.
The Company initiated the August meeting to in-
troduce the new general manager (Wright). The
drivers used this occasion to raise other matters,
and voted to eliminate Gate 4 from a list of allow-
able short hauls. One driver raised the issue of pos-
sible sanctions against drivers who refuse short
hauls or cut into the feed line. No decision was
reached.
Wright called the September meeting to discuss
overdue stand dues. The sanction issue was again
raised but not resolved. Wright suggested that the
drivers form a committee to work out guidelines. It
is not clear whether a committee has actually been
formed, although the drivers have discussed the
matter. ' o
II. ANALYSIS AND CONCLUSIONS
The Company contends that the drivers are inde-
pendent contractors and that the Acting Regional
Director erred when he found "no determinative
distinctions between those facts now present and
those relied upon by the Board in [Air Transit I.]"
The Company also contends that the drivers have
always been independent contractors and that the
Board's Air Transit I decision is in error.
The Company's latter contention is correct, and
we shall overrule the Board's Air Transit I holding.
We reject the Air Transit I analysis as well as its
consideration of the evidence." We therefore find
it unnecessary to consider whether the Acting Re-
gional Director erred by finding no determinative
9 On one occasion, an intoxicated second driver hit an airport sign.
The driver dismissed the second driver on the recommendation of the
airport police. Wright merely relayed the police's recommendation to the
driver.
'o A similar meeting took place before Wright's arrival, the drivers
then made a decision concerning sanctions to be taken against a driver
who was speeding on Xerox property. The drivers also voted to alternate
driving days during the holidays. The minutes of a December 1979 com-
pany-driver meeting details decisions, mutually reached, concerning feed
line operations, the waiting pad, and scrip-pricing (use of the meter when
transporting a group paying with airline scrip).
i We agree generally with former Member Penello's Air Transit I dis-
sent, which concluded that the drivers were independent contractors.
1109
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
factual distinction between Air Transit I and Air
Transit 111. 12
A. The Applicable Legal Principles
Section 2(3) excludes independent contractors
from coverage by the National Labor Relations
Act. A determination of independent contractor
status is governed by normal agency principles,' 3
most importantly the "right of control" test the
Board set forth in News Syndicate Co., 164 NLRB
422, 423-424 (1967):
Where the one for whom the services are per-
formed retains the right to control the manner
and means by which the result is to be accom-
plished, the relationship is one of employment;
while, on the other hand, where control is re-
served only as to the result sought, the rela-
tionship is that of an independent contractor.
The resolution of this question depends on the
facts of each case, and no one factor is deter-
minative.
The Court of Appeals for the District of Colum-
bia Circuit refined the meaning of "right of con-
trol" in a leading case involving the independent
contractor status of taxicab drivers who leased
their vehicles for a flat fee. In Seafarers Local 777
(Yellow Cab) v. NLRB,14 the court stated:
Although this test essentially requires an "all
of the circumstances" approach and no one
factor is determinative . . . the extent of the
actual supervision exercised by a putative em-
ployer over the "means and manner" of the
workers' performance is the most important
element to be considered in determining
whether or not one is dealing with independ-
ent contractors or employees.
The court concluded: l 5
When a driver pays a fixed rental, regardless
of his earnings on a particular day, and when
he retains all the fares he collects without
having to account to the company in any way,
there is a strong inference that the cab compa-
ny involved does not exert control over "the
means and manner" of his performance. This
12 Member Hunter agrees that Air Transit I was decided incorrectly.
Contrary to his colleagues, however, Member Hunter concludes that the
evidence of changed circumstances in this case, set forth infra, provides
an additional basis for finding that the taxi drivers are independent con-
tractors.
13 NLRB v. United Insurance Co., 390 U.S. 254 (1968).
14 603 F.2d 862, 872-873 (D.C. Cir. 1978). Accord: Yellow Taxi of
Minneapolis v. NLRB, 721 F.2d 366 (D.C. Cir. 1983), denying enf. to 249
NLRB 265 (1980). The Board issued a Supplemental Decision and Order
at 262 NLRB 702 (1982) affirming its Order at 249 NLRB 265.
Is 603 F.2d at 879. Accord: Air Transit v. NLRB, 679 F.2d 1095, 1099
(4th Cir. 1982).
conclusion is justified because under such cir-
cumstances, the company simply would have
no financial incentive to exert control over its
drivers, other than such as is necessary to im-
munize the proprietor of a cab from liability
which arises from its operation by virtue of
the lessor's ownership. However the driver
conducts his occupation, the company has re-
ceived its financial reward and the cab driver's
self interest in the success of his venture and
the municipal regulations are some assurance
that the cab service will continue to be attrac-
tive to customers.
The surrender of the right to make the drivers
account for their earning causes a fundamental
change in the relationship between the compa-
nies and their drivers which will usually
remove the latter from the category of "em-
ployees."
In sum, the Yellow Cab court identified the two
dispositive elements as, first, the company's lack of
control over the manner and means by which the
drivers conduct business after leaving the garage
and, second, the lack of any relationship between
the company's compensation and the amount of
fares collected. 6
The court rejected the argument that Govern-
ment-imposed regulations constitute company con-
trol over drivers. Stating that "Government regula-
tions constitute supervision not by the employer
but by the state," the court reasoned that more ex-
tensive governmental regulations afford less oppor-
tunity for control by the putative employer "be-
cause the employer cannot evade the law either
and in requiring compliance with the law he is not
controlling the driver. 17
B. Application to Air Transit III
The drivers here own their vehicles but pay the
Company "stand dues," a fixed rental bearing no
relationship to daily earnings."' The drivers keep
what they earn, provide no accounting or trip
sheets to the Company,' 9 and generally conduct
16 603 F.2d at 880. The court acknowledged the existence of some
characteristics of "minor importance" favoring a finding of employee
status, such as the unilateral setting of lease terms by the company, a pro-
hibition against subleasing, and the good will inuring to the company
from operation of the cabs. Id. at 878 fn. 45.
1? 603 F.2d at 875. Accord: Air Transit, supra at 1100; SIDA of Hawaii
v. NLRB, 512 F.2d 354, 359 (9th Cir. 1975).
18 Stand dues must be paid each week without regard to a driver's
earnings.
19 Trip sheets show the number of trips made, the destinations, and the
amount charged for each trip.
1110
AIR TRANSIT
their business without company supervision. These
facts give rise under Yellow Cab to a "strong infer-
ence" that the Company does not control the
"means and manner" of the drivers' performance,
and that the drivers are not employees within the
meaning of the Act. 20
Nearly all the factors allegedly demonstrating
control over the manner and means of the drivers'
performance of their duties stem from requirements
imposed by the FAA contract, Federal regulations,
and the Transit Commission, which are detailed
above, and thus do not constitute evidence of em-
ployer control. The only controls not imposed by
the Government appear to be (1) the official prohi-
bition against subleasing (widely ignored in prac-
tice), (2) the flat-fare charge to certain corporate
customers, and (3) the Company's requirement that
the drivers maintain insurance coverage. 21 We find
these to be "minor" factors insufficient to support a
finding that the drivers are statutory employees. 2 2
We therefore conclude that the drivers are inde-
pendent contractors not subject to coverage by the
Act.
C. A Reconsideration of Air Transit I
We recognize that the Board reached the oppo-
site conclusion on similar facts in Air Transit I. As
stated previously, however, we have decided to
overrule that decision.
The facts of Air Transit I and Air Transit III are
substantially the same. In Air Transit I, however,
there were some additional factors arguably sup-
porting a finding of employee status. Thus, the
Company arranged financing for the purchase of
most cabs, although there is no indication that pro-
spective drivers were required to obtain financing
from the Company. The Company also prohibited
drivers from working a double shift, and could
alter the particular shift a driver worked; prohibit-
ed socializing with "outlaw" cabs;2 3 prohibited
drivers from picking up fares at National Airport;
required all flights to be covered; and required
drivers to sign a register before starting work. The
Company also kept records of customer complaints
and driver misconduct. 2 4
20 603 F.2d at 879.
21 As noted above, the Commonwealth and County require certain
levels of insurance coverage. The record does not clearly reflect whether
the Company requires more insurance than the levels set by governmen-
tal regulations.
22 See generally the Fourth Circuit's decision denying enforcement to
Air Transit 11, 679 F.2d at 1100.
23 "Outlaws" apparently do business at Dulles without a company
number or slot.
24 Member Hunter, as noted, finds that Air Transit I is distinguishable
from the present situation based on these facts.
In agreement with the Fourth Circuit's decision
denying enforcement to Air Transit II, we hold that
such factors do not outweigh the dispositive factors
of the Company's lack of control over the means
and manner of the drivers' performance and the
drivers' nonaccountability to the Company for
their earnings. We particularly stress that the Com-
pany's earnings were based on the number of driv-
ers paying stand dues.
Finally, we conclude that Air Transit I's reliance
on United Insurance Co., 390 U.S. 254, is misplaced.
The United Insurance Court examined the relation-
ship between insurance debit agents and the com-
pany, and concluded that the agents were statutory
employees. Rejecting United's contention that the
agents were independent contractors, the Court
relied on the following evidence: The agents were
company-trained, paid by commission, and serviced
company customers. The company required that
agents turn in all premiums collected and file a
weekly report. Agents who failed to maintain their
weekly accounts were "cautioned." The company
provided detailed written instructions regarding the
performance of their duties, and agents were sub-
ject to investigation and corrective measures based
on complaints. 2 5
Contrary to the facts of Air Transit I, United's
income rose or fell as a direct result of its debit
agents' efforts. United thus had a significant inter-
est and involvement in the manner and means by
which the debit agents carried out their duties. Air
Transit I and III are distinguished by the drivers'
payment of a flat fee (stand dues) that has no rela-
tion to driver earnings and their freedom from
company control in conducting business. The Com-
pany's income is therefore determined by the
number of available slots, and not by driver earn-
ings. As a result, the Company's interest in the
manner and means of the drivers' performance is
virtually nil.
We therefore overrule Air Transit I, find that the
Air Transit I and III drivers were and are inde-
pendent contractors, and shall order that the Air
Transit III petition be dismissed.
ORDER
The petition is dismissed.
25 The court also noted that the district managers filed weekly reports
with the home office that identified agents with below average records,
noted their debits, collection percentages, arrears, and production, and
specified any remedial action taken. If an agent's statistics did not im-
prove, the "Agent's Commission Plan" allowed the company to fire the
agent at any time.
!111