George Transfer & Rigging Co., Inc.

National Labor Relations Board - Board Decisions

Jan 18, 1974

208 N.L.R.B. 494 (N.L.R.B. 1974)

494 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
George Transfer & Rigging Co ., Inc. and Local 377,
International Brotherhood of Chauffeurs, Team-
sters, Warehousemen and Helpers of America and
International Brotherhood of Teamsters , Chauf-
feurs, Warehousemen and Helpers of America,
Petitioners . Case 8-RC-8645
January 18, 1974
DECISION AND ORDER
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a
hearing 1 was held on various dates from July 18 to
October 30, 1972, before Hearing Officer Michael E.
Temsey. Following the hearing and pursuant to
Section 102.67 of the National Labor Relations
Board Rules and Regulations and Statements of
Procedure, Series 8, as amended, and by direction of
the Regional Director for Region 8, this case was
transferred to the National Labor Relations Board
for decision. Thereafter, the Employer and the
Petitioners filed briefs and requests for oral argu-
ment.
The Board has reviewed the Hearing Officer's
rulings made at the hearing and finds that no
prejudicial error was committed. The rulings are
hereby affirmed.
Upon the entire record in this case, the Board
finds: 2
1. The Employer is engaged in commerce within
the meaning of the Act, and it will effectuate the
policies of the Act to assert jurisdiction herein.
2. The labor organizations involved claim to
represent certain employees of the Employer.3
3. No question affecting commerce exists con-
cerning the representation of employees of the
Employer within the meaning of Sections 9(c)(1) and
2(6) and (7) of the Act.
The Petitioners seek a unit of all single owner-
operators and nonowner drivers of leased equipment,
and all direct employee drivers driving any equip-
ment throughout the entire system of the Employer.
The Intervenor is in agreement with the Petitioners'
unit description. The Employer, on the other hand,
contends that the unit sought is inappropriate on the
basis that the single owner-operators who lease
tractors and trailers to the Company are independent
contractors, that the nonowner drivers are employees
I Fraternal Association of Special Haulers , Local Union No 100, was
permitted to intervene on the basis of a proper showing of interest
2 The Petitioners ' and the Employer's requests for oral argument are
hereby denied , since the record , including the briefs, adequately presents the
issues and positions of the parties
3 We find no merit in the Employer 's contention that the Intervenor
should be disqualified from acting as a labor organization because of its
alleged conflict of interest with the Fraternal Association of Steel Haulers
(FASH ) See The Aetna Freight Lines, Incorporated, 194 NLRB 740
of the independent contractors, and that the Compa-
ny does not employ any drivers directly.
The Employer, a Maryland corporation, with its
principal office and place of business in Parkton,
Maryland, is engaged in the interstate transportation
of steel and building products as a common carrier
under license from the Interstate Commerce Com-
mission. It operates through 23 terminals, which are
maintained, for the most part, by terminal agents,
who are paid on a commission basis. The Employer
owns no tractors, but does own about 125 trailers.
There are about 300 single owner-operators who
lease a tractor, or a tractor and a trailer, to the
Employer, and approximately 26 multiple owner
operators who lease two to six pieces of equipment to
the Employer, and whom the labor organizations
involved would exclude.
The Employer is authorized to operate as an
interstate motor vehicle common carrier under a
Certificate of Public Convenience and Necessity
granted by the Interstate Commerce Commission. In
its operations, the Employer is subject to the
Interstate Commerce Act and to the regulations
promulgated by the ICC, and is further subject to
pertinent regulations of the Department of Transpor-
tation (DOT). Under the Interstate Commerce Act, a
carrier is permitted to augment its equipment by
means of leases, but the carrier is not thereby
relieved from certain duties and responsibilities
imposed by that Act.
The relationship between the Employer and the
single owner- (and multiple owner-) operators is
based on the terms of a lease entitled "Motor Vehicle
Lease Agreement."`' The term of the lease is for a
minimum of 30 days, and may be terminated by
either party upon 24 hours' notice, or automatically
by either party's breach of its major provisions. The
lease provides, inter alga, that the owner guarantees
title to the equipment and warrants that such
equipment "is in good, safe and efficient operating
condition"; the owner is to submit the equipment to
the Employer for the latter's inspection at the time
the Employer takes possession of the equipment, and
periodically thereafter, as required by the ICC and
DOT; the Employer is to pay the owner 62-1/2
percent of the total revenue as payment for the use of
the equipment; 5 the Employer retains only that
control that it is required to retain under the
4 This lease is a tractor lease . There is also a trailer lease . A single owner-
operator who leases both a tractor and a trailer must execute both leases.
5 The trailer lease provides for 12- 1/2 percent of the gross revenue as
payment for the use of the trailer When equipment is detained at the point
of loading or unloading, the Employer bills the shipper for "detention time,"
which , when paid , is transmitted to the owner of the rig in full (not to any
employee-driver of the owner , as the dissent herein implies) The leases also
provide for an alternative to the percentage computation-"a fixed sum
agreed upon by the parties " This agreed sum is the means of payment when
208 NLRB No. 25
GEORGE TRANSFER & RIGGING CO., INC.
applicable laws and regulations and does not control
the manner or method by which the owner or the
owner's employees perform the work: the owner is to
operate the leased equipment himself, and any
person hired by the owner is considered to be an
employee of the owner, and is under the direction
and control of the owner and paid by the owner; and
the owner is to provide workmen's compensation
insurance for his drivers.
The lease further provides that the owner agrees to
deliver cargo consigned to his vehicle "with reasona-
ble diligence, speed and care," and the owner is
responsible for any customer claims resulting from
cargo shortage, cargo damage, or delay. Under the
lease , the owner must pay all equipment operating
costs, including- (a) fuel, oil, tires, and all other
necessary accessories; (h) maintenance costs and
repairs; (c) all taxes and assessments , etc., arising out
of obligations to the owner's employees; (d) all
licenses and taxes required for the equipment; ( e) all,
fines and penalties arising out of use of the
equipment; (f) bobtail and deadhead insurance; (g)
comprehensive insurance (fire, theft, and collision);
and (h) all other expenses necessary for the operation
of the equipment. It is further stated that the
Employer may sublease the equipment to authorized
motor carriers pursuant to the ICC regulations, but
that the owner is to receive his portion of any
payments received by the Employer; 6 and that
whenever the applicable law and regulations impose
joint liability upon the Employer and the owner, the
owner agrees to indemnify the Employer for any
such liability, and the Employer agrees to provide
public liability, property damage, and cargo insur-
ance where the law imposes liability on it.
All new drivers, whether they be owner-operators
or persons hired to drive their equipment, are
required to complete a company application, after
which they must attend an orientation program for a
period of up to a maximum of 5 days at the
Employer's terminal at Bedford, Pennsylvania.7
Their equipment is inspected,8 and the Employer
checks the driver's employment record, his character,
and his credit. All expenses of the orientation
program, except food, are paid by the drivers
themselves.
The record reflects that the pay and conditions of
employment of the nonowner drivers are a matter of
agreement between them and the owner-operators .9
the owner-lessor requires a sum larger than the specified percentage to be
persuaded to take a low-revenue load or a load destined for a point deemed
inconvenient or onerous by the owner-lessor.
G The record shows that the Employer subleases equipment under this
provision only on an occasional basis.
7 Both the application and the orientation program are required by either
iCC or DOT regulations. Drivers are also required to pass a physical
examination and thereafter submit to such an exam on an annual basis
495
The Employer does not withhold any Federal or
state income taxes or social security taxes, nor does it
cover their unemployment compensation or work-
men's compensation. Owners and their drivers
receive no vacation or holiday pay from the
Employer, and do not participate in welfare plans or
other Employer benefits enjoyed by the Employer's
salaried employees. However, owner-operators them-
selves can participate in a self-employment insurance
and retirement program, and the Employer will,
upon authorization, make the necessary deductions
from their revenue and forward the deductions to the
appropriate insurance company. The record further
shows that the Employer does not purchase equip-
ment for lessors, or assist the lessors in the acquisi-
tion of any equipment, and does not guarantee any
of the financing. The Employer does not make
personal loans to the lessors, but lessors may secure
an advance of up to 50 percent of the gross revenue
of any load. However, that advance is deducted from
the settlement check following the trip.
The owner-operator is free to accept or reject any
shipment offered to him. In the event he rejects the
cargo, he is immediately offered another shipment,
which he may accept or reject, and he is not
disciplined for his refusal to accept. The Employer
does, however, prohibit "trip leasing," i.e., the
practice whereby drivers solicit freight on their own,
but this is done, according to the Employer, to avoid
possible conflict with ICC regulations which state
that leases "shall provide for the exclusive posses-
sion, control and use of equipment" by the lessor for
the duration of the lease. Moreover, the Employer
claims that there is no reason to allow trip leasing
because it has more freight than it can move. Thus,
there is always a load that a driver can pick up at a
nearby terminal of the Employer, if he desires, so
that there need be no occasion for a driver to return
with an empty trailer unless he chooses to do so.
Owner-operators decide how often and how many
hours they will work, and some may drive as few as
10 hours a week and others may drive the Federal
maximum of 60 hours per week. The owner-opera-
tors are free to select the routes they travel and to
determine where to park their tractors when not in
use. While the tractor carries the decal of the
Employer, as required by the lease agreement, the
tractors are not required to be painted a particular
color, nor do the drivers wear any special uniform.
s In order to comply with various DOT regulations requiring systematic
equipment inspections, the Employer requires its lessors to have their
equipment inspected every 30 days. free of charge. either at a company
facility or a subcontracted inspection station. Any repairs needed are taken
care of by the lessors at their expense at their choice of repair facilities.
9 The owner also decides whether to employ drivers, how many to
employ, and which driver shall drive on any given trip-all without the
necessity of any approval by the Employer
496 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
And if the driver is delayed at pickup or destination,
the Employer bills the customer for the expense,
which is described as "detention" time. Subsequent-
ly, the lessor is fully reimbursed by the Employer for
such time.
The Employer is required to adhere to certain
safety requirements of the Department of Transpor-
tation. To this end, it employs six field safety
inspectors, who engage in spot checks of vehicles on
the road to insure proper use and operation of the
equipment such as that all doors, tailgates, and
tarpaulins are secure. It is also required to keep an
"accident register" of recordable accidents which it
reviews annually. Furthermore, once a year, the
Employer sponsors a family style picnic, at which
time it awards safety bonuses to those drivers who
had no accidents during the preceding year. The
bonus amounts to one-half percent of the driver's
annual gross revenue. The Employer also pays a
productivity bonus to the owner of the equipment,
computed on the basis of 1-1/2 percent of the annual
gross revenue generated by their particular piece of
equipment. Occasional safety meetings are held
during the year, but attendance at these meetings is
strictly voluntary. The lease will be terminated by the
Employer because of a drinking or drug problem of
the driver, or if the driver has three major accidents
in a period of 2 years.
The lease, as noted heretofore, requires the lessor
to carry comprehensive insurance (fire, theft, and
collision), and "bobtail" (driving a tractor without
trailer) and "deadhead" (returning with an empty
trailer) insurance. The Employer, under ICC regula-
tions, has to carry cargo and equipment liability
insurance, but cargo is covered by the Employer's
insurance only while the lessor is transporting it, and
the equipment is covered by its liability insurance
only while it is en route to the shipper, during
delivery, and on return trips. The Employer is not
required to, and does not, carry collision insurance.
In determining whether an individual is an employ-
ee or an independent contractor, the Board has
consistently applied the common law right-of-control
test. Under this test, an employer-employee relation-
ship exists when the employer reserves the right to
control not only the ends to be achieved, but also the
means to be used in achieving such ends. On the
other hand, where control is reserved only as to the
result sought, an independent contractor relationship
exists. The Board has made it clear that the
application of the test is not a "perfunctory exercise,"
but demands a balancing of all the evidence relevant
to the relationship. 10
After balancing the pertinent factors in this case,
we find that the owner-operators are independent
contractors rather than employees. Although such
factors as (1) the overall effect of the degree of
control over equipment and personnel required by
Federal regulation of motor carriers, including the
effect of certain lease provisions which appear to
preserve to the Employer a degree of control
consistent with the ICC and DOT rules and
regulations; (2) the fact that the Employer unilateral-
ly sets the rates of compensation for lessors; and (3)
the fact that the Employer does not permit the
owner-operators to trip lease their equipment to
other carriers appear to favor a finding that an
employer-employee relationship exists , they do not,
in our opinion, establish that the Employer controls
the means by which the owner-operators perform
their day-to-day transport duties under the lease
agreements.I" To the contrary, the following factors
convince us that the controls exercised by the
Employer relate solely to results to be achieved under
the leases, and that an employer-employee relation-
ship has not been established: (1) The owner-
operators exercise a very substantial degree of
freedom in scheduling the use of their equipment, as
reflected by the fact that they determine what days
and hours to work, what routes to use, where to have
repairs made and purchase fuel, and where to park
their tractors when not in use; (2) the owner-
operators are free to refuse loads without penalty,
and free to select their own routes; (3) the owner-
operators decide whether to hire or fire a driver, what
work rules to impose on their drivers, and what rates
of pay and fringe benefits the drivers will receive; (4)
the owner-operators pay virtually all the costs of
operation and maintenance of the equipment; (5) the
owner-operators are subject to only minimal day-to-
day supervision or control by the Employer; (6)
lessors and their drivers do not participate in
Employer benefits and the Employer makes no loans
to the lessors other than an advance up to 50 percent
of the gross revenue of current shipment, which is
deducted from the settlement check for that trip; and
(7) the entrepreneurial nature of the owner-operator's
modus operandi is reflected by the fact that he is an
individual with a substantial capital investment in
equipment, which he purchases without any assist-
ance from the Employer, and which he then utilizes
to produce income for himself.
In view of the foregoing, we conclude that the
single owner-operators are independent contractors,
10 National Freight, Inc, Federal Freight, Inc, and Sun Transportation, I1 Conley Motor Express, Inc, 197 NLRB 624
Inc, 153 NLRB 1536,1538-39.
GEORGE TRANSFER & RIGGING CO., INC.
and that the nonowner drivers are employees of the
independent contractors rather than of the Employ-
er.12 In view thereof, and the fact that there are no
employees driving directly for the Employer, we shall
dismiss the petition.
ORDER
It is hereby ordered that the petition herein be, and
it hereby is, dismissed.
MEMBERS FANNING AND JENKINS, dissenting:
The Employer is a multimillion dollar corporation
with its main office in Parkton, Maryland. It is
engaged in the business of hauling over-the-road
steel and other freight in an area of approximately
300,000 square miles, including nine Middle Atlantic
States, New England, and the Carolinas. To service
this interstate transportation system the Employer
maintains 23 terminals, manned by dispatchers, who
assign freight to be picked up and delivered to
consignees by some 500 drivers. These drivers are the
only persons who perform revenue-producing serv-
ices for the Employer. The Employer contends,
however, that they are not employees of George, but
merely independent contractors or employees of
independent contractors, who have leased equipment
to George. The Employer takes the position that its
only employees are executives and support person-
nel, such as administrators, inspectors, and clericals.
This would suggest that the Interstate Commerce
Commission and the Department of Transportation
have issued licenses to the Employer as a sort of
booking agent, an intermediary between persons
seeking to have goods transported in interstate
commerce and those persons, drivers, who actually
do the transporting.
In our opinion, the record does not support the
Employer's position. On the contrary, it seems clear
from the voluminous testimony and the extensive
exhibits in this case that George, and George alone,
not the individual driver or the owner of leased
equipment, is legally and operationally responsible
for the critical means and methods whereby freight
entrusted to George is moved from shipper to
consignee. This responsibility includes the essential
procedures to assure the safety of the drivers, their
vehicles, the cargo, and the public.
Stringent rules, rigorously enforced by the Employ-
er, determine who is to drive vehicles for George,
how those vehicles are to be driven and maintained,
12 Conley Motor Lxpress. Inc, supra, and Fleet Transport Company, Inc,
196 NLRB 436
We note that other governmental agencies, such as the IRS, the State of
Maryland, and the State of Kentucky, have all ruled that the relationship
between the Employer and the lessors is one of independent contractor, not
employer-employee We further note that the only driver who testified
described how he and others formed a partnership and, eventually, a
497
and specific procedures the driver must follow in the
performance of his driving function. Every applicant
for a driver's job on one of the Employer's leased
vehicles must file an application with the Employer,
answering questions with respect to his residence,
family status, character, accident and driving record,
and references. The answers are all subject to
investigation by George or its agents. A driver is not
permitted to drive for George until he has attended
an "orientation course" at the Employer's Bedford,
Pennsylvania. safety terminal . There he is given a
written examination in which he is required to
answer 30 questions from a list of 100 provided by
the Department of Transportation. The formal
orientation program lasts about 1-1/2 days. During
this period the applicant is indoctrinated into the
"George system." George's inspector takes him on a
road test with a tractor and loaded trailer to
determine if he can, in fact, handle the equipment to
the satisfaction of the Employer. He is instructed on
the method of installing tarp over his cargo, which is
required even if he is carrying junk steel. He is
instructed on loading procedures and distribution of
weight in conformance with George's rules and
government regulations. His vehicle must be inspect-
ed every 30 days by one of George's inspectors or at
an inspection station authorized and paid by George.
He himself must check his vehicle for safety
problems before every run and include this informa-
tion in his daily log, which he is required to keep.
Every day he submits the log for the previous day to
George's terminal manager where, after review, it is
transmitted to the main office where it is daily
reviewed again by George's safety department.
Drivers are required to have a medical examination
once every 24 months. The Employer will notify the
driver that his medical certificate is expiring and if,
after several notices, the driver fails to report for his
examination, as directed, the dispatcher at the
driver's terminal will be told not to load that
particular driver.
Drivers are on notice that they may be stopped at
any time on the highway, at a terminal, or parking lot
by one of George's inspectors, who are there to check
the condition of the rig and the driver's performance
of his job. Inspectors have the authority to and do
determine whether the driver or his vehicle consti-
tutes a safety problem and may take a driver off his
tractor or, if the problem is serious enough, cancel
his lease on the spot. Every vehicle leased to George
Delaware corporation to carry on their business relationship with the
Employer-acts which clearly have the flavor of an independent business
relationship, rather than of the traditional employer-employee relationship
The totality of the en tire record persuades us that , while the matter is by no
means wholly free from doubt, the preponderence of the evidence supports
our conclusion that the relationship here is one of independent contractor
rather than employer-employee
498 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
must show the insignia and decal of the George
Transfer & Rigging Co., Inc. George, and George
alone, has the right to sublease the equipment for a
return load. Drivers, whether or not owners of their
equipment, are absolutely prohibited from seeking a
return load. If a load is not available through
George, they must return with an empty trailer. The
general rule in the George system is that a driver who
has had three major accidents in 2 years will have his
lease terminated. Drivers are warned by teletype of
dangerous conditions on the road such as a danger-
ous hill, steep grades or slippery spots, and severe
accidents. By computerizing terminal and driver
identification numbers the Employer is informed at
all times where a particular driver and his load is or
should be.
The Employer has a dual incentive system to
encourage its drivers to drive safely and to maximize
their production. In addition to their regular percent-
age, they are granted one-half percent of the gross
revenue they have produced in 1 year if they have
had no chargeable accident or monetary losses. This
bonus is paid at the annual "George family picnic"
where they and their families are entertained. Drivers
are also granted a production bonus of 1-1/2 percent
of their gross yearly revenue. This bonus is paid at
the end of March. Drivers are not required to run the
risks of some normal business losses. For example, if
a driver is unreasonably detained with a load he will
be paid an hourly rate known as "detention time."
The consignee or consignor is billed by George for
this amount, which is then passed to the driver with
no deduction by George.13 Drivers are paid an
advance of about 50 percent of their anticipated
earnings for a particular run. In the event of an
emergency, involving a breakdown or necessary
repairs on the road, the Employer may provide the
driver with a second advance to take care of the
emergency. The Employer may also negotiate a
premium out of its own percentage to move a
stranded load of freight by dispatching a second
driver to take a tractor out to the disable vehicle.
Thus, it is George, not the driver, who assumes final
responsibility for the movement of freight under its
name as, indeed, Federal regulations require. In the
event a shipper or consignee does not pay George,
the driver will still get paid for hauling that particular
load, presumably an amount equal to the percentage
he would have received had George been paid in the
normal course of business. It would seem clear,
however, that payment of such an amount is in the
nature of a reimbursement for services performed for
13 Obviously, the payment of detention time by George is made to those
drivers operating under a percentage agreement who would not otherwise
be reimbursed for time lost It should be equally apparent that drivers
operating on an hourly or salary basis would not lose pay as a result of
George rather than a percentage of the tariff paid by
the customer.
Impoliteness to customers or altercations with
other drivers are investigated by George and, if
George is not satisfied with the conduct of the driver,
his lease may be terminated or the owner of his
equipment notified that the driver's reference had
been removed from George's system so that he may
no longer drive a tractor leased to George.
The Employer has a fleet liability insurance policy
covering all vehicles in its service. This policy also
covers cargo insurance while the cargo is transported
under George's name . The Employer pays "third
structure taxes" imposed on George by various
States on the basis of miles traveled in the State or on
a tonnage or axle-load basis. To take advantage of
credits given by these States for taxes paid on
gasoline George asks its drivers to purchase gasoline
in such States and to submit the receipts to George.
From the foregoing evidence it is obvious that
George exercises detailed control and supervision
over the drivers who haul freight under its name.
Applying the common law right-of-control test to
this relationship, we must conclude that George has
reserved to itself not only the right to control the
ends to be achieved but the means whereby the
drivers perform their driving duties. It is irrelevant, in
our view, that some of the rules enforced by George
emanate from the Interstate Commerce Commission,
the Department of Transportation, or other govern-
ment agencies . For, surely, as this record shows, the
drivers controlled by George are not under the aegis
of those agencies, but under the complete and
operative authority of George, subject to losing their
employment at the will of George.
We find most unpersuasive the majority's list of
factors on which they rely in finding that these
drivers are independent contractors. The fact that a
driver may elect not to work on a particular day or a
particular run is hardly an indication of the Employ-
er's lack of control on the days and runs when he
does work. Nor does the fact that the owner of the
leased vehicle pays for its repair and decides where to
park it have any substantial impact upon the
Employer's right to control the vehicle and the driver
on or off the road. While the route to travel may be
the driver's choice , this prerogative loses its signifi-
cance since it is obvious that there are very few
interstate routes from which to choose and the
interests of the driver and the Employer in this
respect are precisely the same. Owners of equipment
may offer an applicant to the Employer as drivers of
being unreasonably detained However, in that case the owner of the rig
would normally be the one to lose but for the payment of detention time In
both instances George assumes responsibility for the actual cost of the labor
of driving in its transportation business
GEORGE TRANSFER & RIGGING CO., INC. 499
their tractors, but there can be no doubt on this
record that no driver is employed on a vehicle leased
to George unless and until he is approved by George
and no driver continues in that capacity if George
disapproves of his employment. With respect to the
method of reimbursing the driver for his services, this
is an immaterial factor in assessing the degree and
depth of the Employer's actual control over the
means of driver performance. Contrary to the
majority, the Employer does tell the drivers to
purchase gasoline in States offering a credit to the
Employer for mileage and axle-load taxes. We must
also disagree with the majority, on the basis of the
evidence set forth above, that the owner-operators
are subject to "only minimal day-to-day supervision
or control by the Employer."
For these reasons we find that all drivers of tractors
leased to George and under its control are employees
within the meaning of the Act and we dissent from
the majority's contrary conclusion.