Melcher & Landau, Inc.

National Labor Relations Board - Board Decisions

Mar 18, 1977

228 N.L.R.B. 904 (N.L.R.B. 1977)

904 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Melcher & Landau, Inc. and District 65, Distributive
Workers of America , Petitioner. Case 13-RC-
14045
March 18, 1977
DECISION AND ORDER
BY MEMBERS FANNING, PENELLO, AND
WALTHER
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a hearing
was held before Hearing Officer John R. Albrecht.
After the hearing and pursuant to Section 102.67 of
the National Labor Relations Board Rules and
Regulations, this proceeding was transferred to the
Board for decision. Both the Employer and Petitioner
have filed briefs.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has reviewed the rulings of the Hearing
Officer made at the hearing and fords that they are
free of prejudicial error. They are hereby affirmed.
Upon the entire record in this proceeding, the
Board finds:1
1. Melcher & Landau is an Illinois corporation
which wholesales infants' and children's apparel.
During the last calendar year it purchased and
received, at its Illinois facility, goods valued in excess
of $50,000 from firms outside that State and shipped
goods valued in excess of $50,000 from that facility to
firms outside the State. We find that Melcher &
Landau is an employer engaged in commerce, or in
an industry affecting commerce, within the meaning
of the Act and that it will effectuate the purposes of
the Act to assert jurisdiction in this proceeding.
2. The labor organization involved claims to repre-
sent employees of the Employer.
3. No question affecting commerce exists concern-
ing the representation of employees of the Employer
within the meaning of Sections 9(c)(1) and (2)(6) and
(7) of the Act.
4. The Petitioner, District 65, Distributive Workers
of America, seeks to represent the Employer's territo-
rial, traveling, commissioned salesmen . The Employ-
er argues that those salesmen are independent con-
tractors: that it controls the result to be achieved but
not the manner or means of attaining that end, which
I We deny the Employer's motion for oral argument . In ourjudgment the
record, including exhibits and briefs, adequately presents the issues and the
positions of the parties.
are determined by the salesmen . We find that the
salesmen are independent contractors, thus outside
the jurisdiction of the Act, and do not reach the
Employer's further arguments, primarily that the
Petitioner should be disqualified.2
The Employer wholesales domestic and imported
infants' and children's apparel and accessories. Sales
are made at the Employer's Merchandise Mart
showroom in Chicago; through a buying service,
which purchases in bulk from the Employer at a
reduced price; 3 by salesmen calling on customers; by
displaying samples in hotel or motel rooms, at trade
shows, or at the Employer's showroom in Chicago; or
by means of direct contact between a customer and
one of the Employer's officials.
Most of the salesmen sought by the Petitioner have
contracts with the Employer according them exclu-
sive sales' rights within a geographic territory. Two
salesmen , at opposite ends of the country in Alaska
and New York , maintain showrooms at their own
expense and are agreed to be independent contrac-
tors . Two other salesmen, of seven in question, have
no contract or exclusive territory, but do sell to their
"own" accounts, which are in the Chicago area. All
seven salesmen in the requested unit live in or around
Chicago and all are paid a commission on sales
varying from 6 to 7-1/2 percent. The Employer, in
practice and as provided in the National Association
of Women's & Children's Apparel Salesmen (NAW-
CAS) contract, treats the salesmen as employees for
the purposes of the Federal Insurance Contributions
Act and pays for unemployment insurance. It also
pays for group health and life insurance policies and
withholds income taxes . The Employer does not pay
for vacations, pensions, or holidays.
The contracts are based on a standard form
approved by the NAWCAS. The contract, inter alia,
provides the amount of the commission , which is
individually negotiated in each case, and the extent of
the salesman's territory. The salesman receives a
commission on all goods shipped into his "territory,"
as defined in the contract, whether or not he has
made the sale himself. The exclusive "rights" to the
territory are granted to the salesman , who agrees to
diligently work the territory to secure business for the
Employer. The salesman, not the Employer, controls
the merchandising of the Employer's goods within his
territory.
The salesmen, whether under contract or not,
decide how to sell the Employer's goods, select the
customers or potential customers within their territo-
2 We also deny the Employer' s motions to dismiss the petition as
superfluous in view of our disposition of this proceeding.
3 The salesmen have agreed to reduced commissions on goods shipped
into their territories which are sold through the buying service.
228 NLRB No. 99
MELCHER & LANDAU, INC. 905
ry, and determine the trade shows in which they
participate. One of the salesmen decided to open a
showroom in his territory, did so without consulting
the Employer, and is individually responsible for the
rent. The Employer does not participate in these
decisions or the sales unless requested to do so,
although it will tell the salesmen of developments or
leads. If a sale is made by a management official or
by another salesman in the Employer's showroom
and goods are shipped to a customer in the sales-
man's contractual territory, the salesman receives a
commission even though he was not directly responsi-
ble for the sale. Salesmen may sell and have sold
other products than those carried by the Employer
and a number of the salesmen formed their own
corporation, J-Belt, for investment and merchandis-
ing purposes.
The Employer has sales meetings, of greater or
lesser formality depending upon the witness, at which
the Employer's line and other matters relating to
merchandising are discussed. The salesmen are not
instructed or directed in their selling efforts, nor are
their results formally reviewed, but they may be
asked to push, or at least show, items which are not
selling . Because of the number of items involved,
most of the salesmen cannot-or do not-carry
samples of the entire line. The salesman, not the
Employer, decides which items the salesman will
carry samples of and show to prospective customers.
The samples-like the bags and cases, etc., in which
they are carried-are provided at the Employer's
expense, but the salesman is expected to return them.
Prices, credit, etc., are determined by the Employer,
and a salesman receives a commission only on items
actually shipped. A salesman may reduce a price on
his own initiative only by taking it out of his
commission. In some instances the salesman and the
Employer may agree to share the cost of reducing
prices in order to make a sale.
Salesmen are requested to indicate where they will
be while on the road, but are not required to do so.
Whether or not they leave an itinerary, they make
frequent phone calls to the office about the availabili-
ty of an item, pricing, etc.
The business expenses incurred by the salesmen are
reported by them as business expenses to the Internal
Revenue Service and are paid by them, not the
Employer. Transportation; trade show, hotel or motel
room costs; entertainment ; insurance, etc.; and the
direct expenses typically incurred by traveling sales-
men are all the responsibility of the salesmen . Certain
other expenses are shared by the Employer and the
salesmen . The costs of Christmas cards and gifts to a
salesman's accounts are shared as, for example, are
the costs of phone calls made by the salesmen to or
from the Employer's Chicago office. Salesmen are not
charged for use of the Employer's Chicago office nor
for office supplies, which are provided by the
Employer. The Employer also pays for the salesmen's
membership in the Chicago Merchandise Mart,
where it has its office and showroom, and for the
listings in the Mart's directory.
The salesmen normally come into the office at least
1 day a week and perhaps as many as 5 when not on
the road. In the office they check on the shipment of
orders to their customers, solicit orders over the
telephone, wait on customers who come into the
showroom-even though a sale may result in a
commission for another salesman-or perform inci-
dental tasks for the Employer. The salesmen are at
times asked to help with inventory, but participation
is sporadic at best and no action is taken against
salesmen who do not help.
In deciding whether individuals are independent
contractors or employees the Board determines the
right of control, employing common-law agency
principles. If Melcher & Landau controls only the
end to be achieved, not the manner or means of
attaining that end, the salesmen are independent
contractors. Conversely, if it controls not only the
result to be achieved, but also directs the salesmen in
the manner and means of attaining it, then the
salesmen are "employees" within the meaning of the
Act. Each case turns on its own facts. However, the
Board has frequently held that commissioned sales-
men, dependent on their own initiative and skills for
income and who bear the financial burden of any
lack in those areas, are independent contractors,
particularly where they participate in NAWCAS
trade shows, as here .4
The Board recently has considered this issue in
circumstances similar to those here, Joyce
Sportswear,5 finding the salesmen involved were
independent contractors. Contrary to Melcher &
Landau's practice, which is required by its NAWCAS
contracts, Joyce did not withhold income taxes or
social security. That, however helpful a detail in
resolving close cases, is not controlling where the
record nonetheless establishes the right to indepen-
dent decision and action which distinguishes the
independent contractor from the employee. The
salesmen operate at their own risk and expense, hire
and pay their own employees at their own discretion,
establish their own work schedules, decide which
items to show, which accounts to visit and which
shows to participate in, and the manner in which the
merchandise is presented to the prospective custom-
er. The salesmen are not bound exclusively to
4 Bambury Fashions, Inc., et a!, 179 NLRB 447 (1969). 5 Joyce Sportswear Company, 226 NLRB 1231 (1976).
906 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Melcher & Landau, but also sell noncompetitive
items on their own.
There is no showing that Melcher & Landau
exercises substantial day-to-day control over the
salesmen. The record indicates that the salesmen
control their own work schedules and the manner in
which Melcher & Landau's goods are sold under their
auspices . Melcher & Landau encourages the salesmen
to increase their efforts and familiarizes them with the
strong points of its line , but that does not alter their
status. The Company and salesmen share an interest
in maximizing sales . The issue is not whether Melcher
& Landau provides what help it can toward that goal,
but whether the salesmen may decide for themselves
what use, if any, to make of that help. The same is
true of the occasional help provided by management
to the salesman with respect to specific accounts,
6 Bambury held on the facts of the case that traveling salesmen, who, as
here, participated m NAWCAS trade shows, were independent contractors.
r Hunt & Mottet Company, 206 NLRB 285 (1973).
8 Member Fanning concurs in this result . Unlike Joyce Sportswear Co.,
which may include accompanying the salesman. It is
not a condition of employment imposed on the
salesman, but is done only at his request or with his
consent.
As the salesmen control the manner and means by
which sales are made, and in light of our previous
decisions in such cases as Bambury Fashions, supra,e
Hunt & Mottet,7 and Joyce Sportswear, supra, we find
that the salesmen in the unit sought by the Petitioner
are independent contractors. Accordingly, we shall
dismiss the petition.8
ORDER
It is hereby ordered that the petition in Case 13-
RC-14045 be, and it hereby is, dismissed.
sypra, a unit clarification can , where he dissented, the salesmen are members
of NAWCAS, participate in NAWCAS-sponsored trade shows , had not been
treated as employees in the past , and there is no history of bargaining on
their behalf.