Bellacicco & Sons, Inc.

National Labor Relations Board - Board Decisions

May 27, 1980

249 N.L.R.B. 877 (N.L.R.B. 1980)

BELLACICCO &r SONS. INC. 877
Bellacicco & Sons, Inc. and Local Union No. 955,
International Brotherhood of Teamsters, Chauf-
feurs, Warehousemen and Helpers of America,
Petitioner. Case 29-RC-4646
May 27, 1980
DECISION ON REVIEW AND ORDER
BY CHAIRMAN FANNING AND MEMBERS
PENELLO AND TRUESDALE
On September 28, 1979, the Regional Director
for Region 29 of the National Labor Relations
Board issued a Decision and Direction of Election
in the above-entitled proceeding in which he found
appropriate the Petitioner's requested unit of all
drivers and distributors, including all franchise dis-
tributors, employed by the Employer at its Queens
Village, New York, location. The Petitioner con-
tends that all these drivers are employees whereas
the Employer contends they are independent con-
tractors. Thereafter, in accordance with Section
102.67 of the National Labor Relations Board
Rules and Regulations, Series 8, as amended, the
Employer filed a timely request for review of the
Regional Director's decision.
On October 25, 1979, the Board by telegraphic
order granted the request for review. The Em-
ployer filed a brief on review.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the entire record in
this case, including the Employer's brief on review,
with respect to the issues under review, and hereby
makes the following findings:
The Employer, a producer and seller of Italian
bread products, services the New York metropoli-
tan area. Approximately 52 individuals distribute
the Employer's products by truck throughout that
area. As indicated above, the Employer asserts that
the record supports its contention that these distrib-
utors are independent contractors, and thus statu-
torily excluded from the definition of employees
under Section 2(3) of the Act. We find merit in the
Employer's contentions.
In early 1976, the Employer employed approxi-
mately 55 drivers. Of that number, some 35 to 40
were route salesmen who drove trucks owned by
the Employer. The route salesmen were hired and
fired by the Employer and received a salary plus
commission for their work. They wore uniforms
supplied by the Employer, and were subject to var-
ious deductions from their wages, such as with-
' Review was granted by a panel of Members Truesdale, Penello, and
Murphy. Member Murphy teook no further part in the Decision
249 NLRB No. 129
holding tax. Social security, unemployment com-
pensation, and workmen's compensation contribu-
tions were also made on their behalf by the Em-
ployer.
During that same period the Employer also en-
gaged the services of 15 to 20 franchised drivers to
distribute its products. Taxes were not withheld
from their wages, and the above-mentioned contri-
butions were not made on their behalf. They
bought or rented their own trucks, and bought the
Employer's products from the Employer, selling
them to customers at such prices as they deemed
appropriate. They wore the Employer's uniforms
and their trucks bore the Employer's name but,
unlike the route salesmen, the franchised drivers
were allowed to carry the products of other com-
panies.
In a Decision and Direction of Election dated
November 10, 1976, in Case 29-RC-3501, the Re-
gional Director found those franchise drivers to be
independent contractors.
In about mid-1976, the Employer began convert-
ing all its route salesmen to franchise drivers. Sub-
sequently, in early 1979, the Employer revised the
arrangements under which franchise drivers operat-
ed. Under the new agreement, the franchise drivers
became known as "distributors". For a price of be-
tween $10,000 and $18,000, each distributor pur-
chased from the Employer exclusive rights to dis-
tribute the Employer's products in a specified geo-
graphical area.2 The distributors may use their
routes as collateral and may transfer or devise
them. Subject to the Employer's right of first refus-
al, distributors may also sell their routes to third
parties and at the time of the hearing two distribu-
tors had contracted to do so. The sales prices for
these two routes represented a gain to the two sell-
ing distributors of approximately $7,500 and
$16,000, respectively. 3
The distributors own their own trucks, and are
responsible for insuring and maintaining them. The
Employer has required the installation of trays in
place of shelves in the distributors' trucks, and the
distributors did not bear that expense.4 The Em-
2 At the time of the hearing in August 1979, approximately 40 of an
expected eventual total of 52 route agreements had been offered by the
Employer and executed by distributors. The remaining 12 routes were
still in the process of being "aligned" to clarify their territorial bound-
aries It as anticipated that agreements as to these 12 would be executed
within 3 to 4 weeks following the hearing.
3 Both distributors also agreed to sell their trucks to the individuals
purchasing their routes These transactions were separate from the sales
of the routes, and additional payments were to be made for the trucks
4 The Employer also reinstalled a bumper on one truck which had
been in a collision, and instructed the truck's owner to clean the inside of
his truck. This same distributor, who stated that he had never signed any
agreement with the Employer, testified that the Employer had required
him to) comply with one customer's request that he supply a particular
Continued
ELLACCCO & SONS. INC.
878 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ployer also paid the cost of having its name painted
on the trucks. In the event that a distributor's truck
breaks down on the route, the Employer will ar-
range for towing or for a mechanic at the distribu-
tor's expense. The Employer will assist in correct-
ing a minor problem such as a flat tire by deliver-
ing a jack to the distributor without charge, and
similarly will not charge the distributor for sending
one of its employees to help the distributor com-
plete his route, if the breakdown has caused him
delay. If, however, a distributor is unable to cover
his route due to illness or vacation and one of the
Employer's supervisors is required to fill in, the
distributor must reimburse the Employer for the
supervisor's time. Many of the distributors routine-
ly employ substitute drivers to cover their routes
on Sundays and during their vacations. Such substi-
tutes are paid by the distributors and are not sub-
ject to the Employer's approval, although the Em-
ployer is given the substitute's name and telephone
number to facilitate communications in the event
some problem arises with respect to the route.
Under the current agreements between the dis-
tributors and the Employer, distributors are not
prohibited from engaging in other businesses or
from distributing products other than the Employ-
er's. Several distributors do distribute other prod-
ucts, including breads, butter, and eggs, to their
customers.5
The customers with whom the distributors do
business fall into two categories. "Charge" custom-
ers are those, such as large chain supermarkets,
which do not pay the distributor in cash upon ac-
cepting a delivery, but instead are billed through
the Employer, who in turn credits the distributor
accordingly. Such charge customers make up, on
the average, between 55 percent and 70 percent of
the total accounts on a route. The remaining ac-
counts are "cash" accounts, from which the distrib-
utor personally collects. The distributors are free to
set prices when selling the Employer's products to
cash customers, and are not required to observe its
suggested prices. 6 The Employer sets the prices
which "charge" customers are charged, and the
distributors do not vary these. The Employer also
occasionally offers promotional discounts or spe-
cials. In such cases the distributors may deliver ad-
ditional products without additional compensation,
and absorb the discounts offered to cash customers,
bread product, despite his contention that it was not profitable for him to
do so.
B In addition, although the Employer offers bagels as one of its whole-
sale items, two distributors buy bagels from other companies ilstead, and
distribute these to some of their customers.
6 Although the record reveals that the Employer has, on occasion,
asked distributors to adjust the price a customer was being charged, such
a request was also shown to have been rejected by one distributor with-
out sanction by the Employer.
while the Employer absorbs discounts offered
charge customers.
The distributors occasionally extend credit to
cash customers, and although the Employer has
sometimes assisted in trying to resolve cases in
which customers fail to make proper payment, it
does not assume liability for credit extended by the
distributors. Some distributors have suffered losses
fiom customer defaults. Distributors are also liable
for losses due to damage to the consigned bread
products where the loss results from the distribu-
tor's failure to use reasonable care.
The Employer does not withhold income tax for
the distributors, nor make social security, unem-
ployment compensation, or workmen's compensa-
tion contributions on their behalf. Although the
distributors are covered by medical insurance and
disability plans for which the Employer contracts,
each distributor reimburses the Employer for his
share of this coverage on a weekly basis, unlike the
Employer's employees, who receive similar cover-
age as a fringe benefit. The distributors are not
provided with company manuals, do not attend
employee meetings, and their hours are dictated
only by the demands of their routes; the Employer
keeps no record of when they begin or complete
their work each day. Distributors are not required
to wear the Employer's uniforms, and those that do
so pay for the uniforms themselves.7
In our view the facts outlined above and the
record as a whole establish that the Employer's dis-
tributors are independent contractors rather than
employees. Applying the right-of-control test from
the common law of agency, we find that the Em-
ployer has reserved the right to control the ends to
be achieved, i.e., the distribution of its products,
but not the manner and means to be utilized by the
distributors in achieving those ends. s As the Re-
gional Director found, the distributors are free to
work their routes in the manner they see fit. There
is no evidence that they are subject to discipline by
the Employer, nor that the Employer applies work
rules to the distributors. They do not attend em-
ployee meetings, are not issued company manuals,
may hire their own substitute drivers, and the Em-
One distributor wears the uniform jacket of a different company, and
the Employer does not interfere with this practice.
"N.LR.B. v. United Insurance Co. of America, 390 U.S. 254 (1968);
Gold Medal Baking Co., Inc., 199 NLRB 895 (1972). We note that the
facts in Gold Medal were strikingly similar to those in the instant case.
To the extent that the two cases are distinguishable, a finding of inde-
pendent contractor status is even more compelling on the present record.
Thus the Gold Medal distributors, unlike those of the Employer here,
were required to obtain permission from the employer in order to sell
products from other bakeries, and their agreements provided for a speci-
fied amount to be paid to the employer as liquidated damages in the
event such purchases were made without the employer's permission. In
addition, they became distributors without making the sizeable initial in-
vestment in their routes required of the distributors here.
BELLACICCO & SONS, INC. 879
ployer does not concern itself with their hours of
work. Although most distributors apparently buy
uniforms, they are not required to do so. The dis-
tributors are further responsible for the manner of
sale in that they may both vary prices and extend
their own credit.
Moreover, in addition to the freedom from em-
ployer control enjoyed by the distributors there are
other factors which support the conclusion that
they are independent contractors. Thus, they have
a substantial investment in their trucks and their
routes, which they have the right to sell. They also
have the opportunity to increase their earnings by
adding new customers on their routes or increasing
sales to existing customers. Conversely they have a
potential for loss in their investment in, and servic-
ing of, their routes.
Accordingly, we conclude that the distributors
are independent contractors rather than employees,
and we shall vacate the directed election and dis-
miss the petition herein.
ORDER
It is hereby ordered that the election be vacated
and that the petition filed herein be, and it hereby
is, dismissed.