Frito-Lay, Inc.

National Labor Relations Board - Board Decisions

Sep 24, 1969

178 N.L.R.B. 611 (N.L.R.B. 1969)

FRITO-LAY, INC. 611
Frito-Lay, Inc . and Bakery Drivers, Chauffeurs &
Helpers Union Local No. 365, International
Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America,
Petitioner . Case 8-RC-7155
September 24. 1969
DECISION AND DIRECTION OF
ELECTION
BY MEMBERS BROWN, JENKINS, AND ZAGORIA
Upon a petition duly filed under Section 9(c) of
the National Labor Relations Act, as amended, a
hearing was held before Frank J. Tuk and Richard
F. Rice, Hearing Officers of the National Labor
Relations Board. The Employer and the Petitioner
filed briefs which have been considered by the Board
in making its decision in this case.
Pursuant to the provisions of Section 3(b) of the
Act, the Board has delegated its powers in
connection with this case to a three-member panel.
The Board has reviewed the Hearing Officers'
rulings made at the hearing and finds that they are
free from prejudicial error. They are hereby
affirmed.'
Upon the entire record in this case, the Board
finds:
1. The Employer is engaged in commerce within
the meaning of the Act and it will effectuate the
purposes of the Act to assert jurisdiction herein.
2. The labor organization involved claims to
represent certain employees of the Employer.
3. A question affecting commerce exists
concerning the representation of certain employees
of the Employer within the meaning of Section
9(c)(l) and Section 2(6) and (7) of the Act.
4. The Petitioner seeks a unit of 10 single-truck
operators who are engaged in the sale and
distribution of the Employer's products and who
work out of the Employer's warehouse at Toledo,
Ohio.' The Employer contends that all single-truck
operators are independent contractors and not
employees,
'The Employer's request that it be furnished a copy of the Hearing
Officers' analysis of the issues and the evidence is denied, as such analysis
is part of the Board's confidential files and is not subject to public
inspection P R Mallory & Co , Inc, 89 NLRB 962, J I Case Company,
80 NLRB 217, Kearney & Trecker Corporation. 101 NLRB 1577, 1594,
enforcement denied on other grounds 210 F 2d 852 (C A 7); International
Longshoremen's and Warehousemen's Union. Local 8 (General Ore. Inc
124 NLRB 626, 629
'while the Employer refers to the truck operators in its business as
"distributors," the parties agreed to refer to them as truck operators for
the purposes of the hearing
At the beginning of the hearing the parties stipulated that the
appropriate unit should include all 15 single-truck operator operating
within the Employer's Sales District No 43, excluding the multi-truck
operators (These is one multi-truck erator who operates 3 trucks ) At
the close of the hearing the Petitioner withdrew from the stipulation and
stated that the unit should include the 10 single-truck operators operating
out of the Toledo warehouse Further, the Petitioner asserted that, if the
appropriate unit were found to include the 5 single-truck operators who
The Employer is engaged in the manufacture and
sale of potato chips , corn chips, and related snack
foods throughout the United States. The present
case involves only Sales District No. 43, which
services the Toledo , Ohio, metropolitan area.
District No. 43 is one of three sales districts in
Region 4 of the Mid-Central Division , which has its
headquarters in Detroit , Michigan . The Employer
maintains a plant and regional sales office for
Region 4 at Wooster , Ohio, from which location it
supplies merchandise to the truck operators in
District No. 43.
The truck operators are assigned to specific routes
or territories in Toledo and the surrounding
communities in which they sell and deliver the
Employer 's products to retail outlets located in these
areas.' The Employer maintains a list of most , ii' not
all, of these retail outlets and furnishes such outlets
with sales racks and displays for its products. It
maintains store door contacts with the retail outlets,
constantly solicits the supermarket trade, helps the
truck operators to get new customers, and works in
the market areas trying to find the wants of the
customers . The Employer not only determines
initially the physical site of the route or territory to
which an operator is assigned , but also may change
the geographical limits of the route or add a new
operator to the territory , depending on the
population and food outlets in the area, the area's
economy, market research , and the Employer's
advertising program , i.e.. the amount of money the
Employer is going to spend in the area to promote
its products.
The Employer leases a central warehouse at
Toledo, Ohio, which contains the office of its
district manager for District No. 43. The office is
supplied with the Employer ' s business forms, an
adding machine, and a telephone with answering
service for the use of the operators . In addition, the
office contains for all of the truck operators
pigeon-hole areas in which their materials and other
things are placed. It appears that the Employer
requires all operators who service routes within the
immediate Toledo area to lease warehouse space in
the central warehouse . Ten of the 15 operators in
issue herein are assigned bins in this warehouse for
which they pay a monthly rental of S22.50. Each
operator has his own lock to his bin , but a separate
lock is placed on the bin on nights when the
Employer delivers merchandise to the operators
from its Wooster plant . On such nights the
Employer employs a part-time warehouseman to
unload its delivery truck and place the merchandise
in the proper bins. The Employer requests that each
operator place his merchandise to one side of his bin
to avoid confusion between his current inventory
and the new merchandise.'
operate out of other warehouses, there is a question as to the eligibility of
the five, on which the Petitioner took no position
'the truck operators handle other products but the Employer requires
that these products be compatible with its own products
'The other live operators appear to lease their own warehouse space in
178NLRBNo.92
612 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The business forms supplied by the Employer to
the truck operators are price pads, order forms, cash
sales tickets, charge account forms, and
"distributor's remittance" forms. It appears that the
merchandise items listed on the order and charge
account forms are coded by the Employer to
facilitate the ordering of its merchandise by the
operators and to conform to the Employer's
accounting system which is handled by its divisional
headquarters in Detroit. The telephone numbers of
the Employer's district office at the Toledo
warehouse and of its other locations in the
Mid-Central Division are printed on the back of the
copies of the cash sales ticket and charge account
form which the truck operators give to the
customers. The Employer also supplies each truck
oeprator with a route book which consists of a
binder and route cards. The route cards contain the
name, address, and telephone numbers of all the
customers located within the truck operator's route
or territory, and show the type of establishment,
days serviced, the number of racks, back room
stock. amount of each item supplied, and other
instructions for servicing the account. It appears
that the Employer's district manager requests that
the operators keep their route cards in the binder in
the order that they make their stops so that he will
know where to reach them throughout the day. It
appears further that the Employer uses the route
books to train new operators and on those occasions
when it services routes for the operators.
The record shows that 45 percent of the truck
operators' total sales of the Employer's products
consist of authorized credit accounts, 30 percent to
chain stores and 15 percent to nonchain stores. The
Employer assumes the risk of nonpayment on such
accounts. These accounts are handled on a
centralized basis by the Employer who grants credit
directly to these customers, bills them, and considers
their total purchases in order to grant discounts.
The Employer unilaterally sets the "store door"
price at which its products are to be sold to the
customer. There is some evidence that a truck
operator may vary the store door price on occasion,
as when he may induce a customer to give him
advertising space by reducing the price on a lead
item. Such practices may occur with cash customers
but never with authorized credit customers.
However, it appears that the more prevalent practice
is for the Employer to vary the store door price
when it desires to do so or in accord with its
established policy. Thus, the Employer will run
special promotions where the price of various items
is reduced, or where it offers the consumer a prize,
such as ladies hose, with the purchase of a certain
number of a given item. The Employer also has an
established policy of giving a quantity purchase
towns located in the outlying areas they service, but the record does not
show the means by which they receive regular delivery of the Employer's
products
discount to customers who purchase a minimum
amount of its products. The Employer unilaterally
determines both the amount of the discount and the
quantity of merchandise which must be purchased in
order to qualify for the discount. The Employer
issues its own checks in payment of the discount to
the individual customers, although the operator
usually delivers the check to the customer. Where
the Employer reduces the price or grants a discount
to a customer, the cost of the items to the operator
is correspondingly reduced.
Truck operators receive as their compensation 15
percent-20 percent of the store door price of the
Employer's merchandise which they purchase,
depending on whether the merchandise is
manufactured by the Employer or anothercompany.5
.In' I addition, the operators receive individual prizes
from the Employer for increasing sales of specific
items, such as pretzels, and may receive a bonus in
accord with a formula set by the Employer." The
operators also receive an allowance for customer
returns of stale merchandise and a weekly sample
allowance, which, in the case of an operator with
one of the lower purchase averages, amounted to
$50 per week.' It also appears that the Employer
adopts a lenient policy towards truck operators who
do not pay their bills on time. Indeed, some
operators appear to carry unpaid balances of several
hundred dollars.
As noted, the Employer may unilaterally change
the boundaries of a truck operator's route or
territory. If the change results in a loss of income to
the operator, the Employer compensates the
operator according to a unilaterally established
formula.' A truck operator may "sell" his route
only to a person approved by the Employer. While
the purchaser may buy the truck, it would appear
from the record that the route is transferred to him
at no additional cost. Indeed, it appears that the
purchaser thereafter goes through the normal
routine of an employee-trainee and is assigned the
route by the Employer. The Employer may
terminate an operator's services for not exercising
'It appears that the operators are billed for the merchandise at the time
of delivery but that they do not pay for it until the end of each week it
appears further from a perusal of the Employer's "Distributor's
Remittance" form that the operators are allowed a credit against their bill
for the total amount of sales to authorized credit customers
The record shows that the bonus plan currently in effect for truck
operators requires an increase of a minimum of 5 percent over the previous
year's sales . The bonus plan has the following provisions
5% increase 0.5 of 1% bonus
6% increase 0 6 of 1% bonus
7% increase 0 7 of 1% bonus
8% increase 0 8 of 1% bonus
9% increase 0 9 of 1% bonus
10% increase 1.0% bonus
'The record does not show whether the sample allowance is constant or
varies in accord with the amount of each operator's average weekly
purchases and other factors
'With the Employer's permission, an operator may transfer from one
route to another . However, the record does not chow that the operator is
compensated for any loss which may result from this type of change.
FRITO-LAY, INC. 613
his primary responsibility, namely, paying for
merchandise and taking proper care of customer
accounts. In such instances, the Employer normally
gives the operator 30 days' written notice and again
compensates him according to a set formula.' The
operator may terminate his services on 30 days'
written notice or less, but if less than 30 days' notice
is given, he is entitled tinder the same formula to a
proportionately less amount of compensation. The
Employer may terminate the operator's services
immediately and without compensation for
dishonesty or immoral conduct. It appears further
that the Employer may terminate an operator who
consistently tails to meet his base because of
inability to sell.
Persons seeking the job of single-truck operator
file with the Employer an ordinary application for
employment. It appears that no prior sales or
business experience is required and that little capital
is needed since the Employer does extend credit for
the initial inventory. Although the successful
applicant makes his own arrangements for the
purchase of a truck, he usually purchases the truck
owned by the operator who previously serviced the
route to which he is assigned. If not so purchased,
the Employer recommends that the new operator
paint his truck in the Employer's colors, in which
case the Employer supplies its decals which are
affixed at the Employer's expense.
The successful applicant is hired normally as an
employee and is paid a salary during his training. It
appears that during this training period the regional
manager familiarizes the trainee with the
Employer's business forms, explains a load sheet
and how his merchandise comes in. The trainee is
assigned a specific route or territory and then is
trained by the district manager, or, in an emergency,
by the route foreman."' The district manager
explains the daily procedure, gets on the truck with
the trainee and rides with him, taking one phase of
the business at a time. In the first days the trainee
learns the merchandise, the color of the tapes, and
the site of the boxes, where the stops are, where the
racks are in the store, some basics on how to
merchandise. how to make out the bill, how to
check the merchandise to the merchant and how to
collect for the bill. It appears from the record that
the time required to train a man varies, depending
on the individual, his territory, and background. The
Employer's regional manager testified that "it takes
an average man two weeks until he feels that he can
load his truck somewhat properly, find his accounts,
finish in time to keep up the pace, because it is a
fairly fast pace, and not to make too many errors he
'When an operator is assigned to a route , he is given a base which is the
average weekly purchases at the store door price for that route during the
preceding 3 months Upon termination, he receives 1 1/2 times the
amount, if any , his average weekly purchases for the 3 months immediately
preceding his termination exceed the base similarly, where the Employer
changes the boundaries of a truck operator's route and this change results
in a reduction of his average weekly purchases for the 3-month period
immediately preceding the change, he is paid 1 1/2 times the difference
can't correct." During the training period the
Employer puts the route together the way it thinks
it should be serviced, pointing out the frequency of
the stops and the importance of taking care of the
accounts in the most efficient manner. After the
operator gains experience, he may rearrange the
route to suit his own feelings and needs.
In addition to training new truck operators, the
district manager runs routes for operators in
emergencies (sickness, death, etc.) at no additional
expense to the truck operators and suggests to the
operators ways of improving their routes. It appears
that he holds "more or less" weekly sales meetings
with the operators who work out of the Toledo
warehouse. These meetings last about 45 minutes at
which such matters as the distribution of
promotional information and notification of the
Employer's future product promotions are discussed.
The district manager also discusses procedures at
these meetings and gives the various operators
information pertaining to chain store customers,
such as new credit authorizations, deletions, or
additions to the customers' lists of the Employer's
products, and the customers' request that the
operators make their deliveries by a certain time of
day. The district manager also works with the
operators individually, helping them with racking of
the Employer's products." He works with the
individual operator on problems in his territory and
reviews his individual accounts with him
periodically.
As noted, the truck operators own their own
trucks12 and provide the necessary oil, gasoline.
maintenance, and repairs. They pay their own
license tees and obtain liability insurance from any
source they desire. However, the Employer requires
that they carry a 5100,000/$300,000/$25.000 policy
which must include coverage of the Employer as its
interest may appear. Except as noted above, the
operators, it necessary, hire and pay their own help,
which. in at least one instance, has been a part-time
employee of the Employer. The Employer makes no
payroll deductions, the operators being responsible
for their own Federal income taxes and social
security' payments. Nor does the Employer provide
the operators with any fringe benefits such as
holidays, vacations, or insurance benefits. The
operators have their own bank accounts and appear
to have some control over the hours13 and vacations.
"it appears that the regional manager presently has under his direction a
route foreman who is not assigned to any particular district but works out
of District No. 41 most of the time His function is to service routes when
operators are ill, have a breakdown or other emergency , service "swing'
routes, vacation routes , break in new men, and otherwise assist the
operators with such things as racking in large markets and "lining"
markets
"The record discloses that racking is a time-consuming task, especially
in large markets
"It appears that some of the operators have purchased new trucks
"An operator testified, however, that his hours were set by the tact that
he worked until he had finished serving his route It further appears that
the hours worked by an operator are established , in large part, by the
614 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
However, the record shows that the district sales
manager trained one man, apparently at the
Employer's cost, to serve as a substitute for the
various operators while they took vacations. The
record shows further that the operators do provide
some promotional items at their own expense, such
as pencils and pens bearing their names as well as
the Employer's name. They may also give customers
gifts or samples to increase goodwill.
The Board has frequently held that, in
determining the status of persons alleged to be
independent contractors, the Act requires
application of the "right to control" test. Where the
person for whom the services are performed retains
the right to control the manner and means by which
the result is to be accomplished, the relationship is
one of employment; while. on the other hand. where
control is reserved only as to the result sought, the
relationship is that of an independent contractor.
The resolution of this question depends on the facts
of each case, and no one factor is determinative
On the basis of the foregoing, and the entire
record, we arc satisfied that the single-truck
operators are not independent contractors. While the
evidence discloses several factors usually considered
to indicate an independent contractor status, the
presence of these factors does not alone establish
such status. Thus, we are not persuaded by and do
not regard as controlling the fact that the truck
operators provide their own trucks and the expenses
of their operation and upkeep, that they may on
occasion hire helpers if needed; that the Employer
does not make the usual payroll deductions for the
operators; that the operators extend some personal
credit to customers and give them gifts or samples
to increase goodwill; or that they may have sold
products, on occasion, at other than the "store
door" price and handle products other than those of
the Employer. We find, rather, that these factors are
outweighed by others which amply demonstrate the
effective control the Employer maintains over the
operations of the truck operators, from its initial
indoctrination of new operators in the use of the
Employer's merchandising techniques and business
forms through its continued supervision of the
operators' daily activities. In this regard we are
particularly cognizant of the following: (1) The
routes are controlled by the Employer in terms of
location, size, and sales practice. (2) The truck
operations in practice are limited principally to the
sale of the Employer's products." (3)The Employer
establishes the prices of its products, granting
reductions and discounts according to its own
policies. (4) At its own expense, the Employer
assists the operators in the solicitation of new
outlets, services their routes in emergencies, helps
them with such things as racking, and assists them
generally in resolving the problems which arise on
demands and requirements of the customers indeed, as noted elsewhere
herein, an operator may be terminated for not taking proper care of the
accounts serviced
their routes. (5) The Employer undertakes
completely all billing and collection of authorized
credit accounts which comprise almost half of the
operators' income and the Employer assumes the
credit risk of nonpayment of these accounts. (6)
Realistically, the operator retains no proprietary
rights in the route or territory which he can sell to a
third party.15 (7) The Employer reserves the right to
terminate the relationships upon notice without
cause and immediately for cause. Moreover, the
record indicates that the truck operators'
compensation is not controlled primarily by their
efficiency or industry in performing the work but is
in substantial part affected by decisions and actions
of the Employer.1' Regardless of whether this
control is exercised by means of suggestions,
requests, inducements, assistance, or systemized
methods of operating, we are satisfied that the
Employer has reserved the right to control, when
and as it sees fit, the manner and means, as well as
the result, of the operators' work. We therefore find
that the truck operators are employees of the
Employer."
As to the composition of the unit, a total of 15
single-truck operators work in Sales District No. 43.
From the record there appears to be no substantial
difference in the duties and working conditions of
the 10 truck operators working out of the Toledo
warehouse and the 5 truck operators who rent
warehouse space in nearby towns, except the
arrangement for and the location of their warehouse
space. In these circumstances, we find that the
appropriate unit should include all 15 single-truck
operators.1e
We therefore find that a unit of the following
employees is appropriate for the purposes of
"The Employer has a clear cut policy of terminating operators for not
exercising their primary responsibility , one of which is to take proper care
of customer accounts , and the evidence shows that an operator must
maintain a fairly fast pace in order to service his route in a manner
satisfactory to the Employer Thus, it does not appear that the Employer
tolerates the operators' sale of other products where such activities detract
from their ability to sell and promptly deliver the Employer's products.
Moreover, we do not find persuasive the evidence that a former operator
employed others to take care of his route while he devoted his full time to
an outside business Not only is such practice an exception to the normal
manner in which the operators handle their routes but it is also
inconsistent with the Employer's fixed policy of approving personally each
individual serving one of its routes.
"As the Employer has an established formula for compensating
operators upon termination of their services, it appears that the only
proprietary right the operator has is in his truck Indeed, the amount of
compensation to which an operator is entitled upon termination appears
substantially less than what he could obtain for sale of the route in an oven
market
"Thus, the Employer decides when a territory has become too large for
an operator to handle and itself decides to add a new operator rather than
leaving the decision to the operator to buy another truck and hire an
employee The Employer determines the extent and terms of credit to be
allowed a substantial portion of the operators ' customers , the discounts to
be allowed to quantity purchase customers and when a customer may so
qualify, and the percentage allowance to be given the operators for their
customers ' return of stale products
"Frito-Lay, Inc . 167 NLRB No 11
"As the parties have agreed to exclude one multi-truck operator, we
shall not include that operator in the unit.
FRITO-LAY, INC. 615
collective bargaining within the meaning of Section
9(b) of the Act:
All single-truck operators' of the Employer in
Toledo, Ohio, Sales District No. 43, excluding all
multi-truck operators, office clerical employees,
professional employees, guards, and supervisors as
defined in the Act.
[Direction of Election" omitted from publication.]
be informed of the issues in the exercise of their statutory right to vote, all
parties to the election should have access to a list of voters and their
addresses which may be used to t.ommunicate with them . Excelsior
Underwear Inc. 156 NLRB 1236, N L R B v. Wyman-Gordon Company.
394 U S 759 Accordingly , it is hereby directed that an election eligibility
list, containing the names and addresses of all the eligible voters, must be
filed by the Employer with the Regional Director for Region 8 within 7
days of the date of this Decision and Direction of Election The Regional
Director shall make the list available to all parties to the election No
extension of time to file this list shall be granted by the Regional Director
except in extraordinary circumstances Failure to comply with this
requirement shall be grounds for setting aside the election whenever proper
" in order to assure that all eligible voters may have the opportunity to objections are tiled.