National Freight, Inc.

National Labor Relations Board - Board Decisions

Jul 21, 1965

153 N.L.R.B. 1536 (N.L.R.B. 1965)

1536 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
National Freight, Inc., Federal Freight, Inc., and Sun Transporta-
tion, Inc.' and Truckdrivers & Helpers, Local 676, affiliated with
the International Brotherhood of Teamsters, Chauffeurs, Ware-
housemen & Helpers of America , Petitioner. Case No. 4-RC-
5769. July 21,1965
DECISION AND DIRECTION OF ELECTIONS
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, as amended, a hearing was held before Hearing Officer
Robert H. Levan. The Hearing Officer's rulings made at the hearing
are free from prejudicial error and are hereby affirmed. Subsequent
to the hearing, the Petitioner and the Employer filed briefs with the
National Labor Relations Board.
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 [Chairman McCulloch and Members Fanning and Jenkins].
Upon the entire record in this case, the Board finds:
1. The Employer is engaged in commerce within the meaning of the
Act.
2. The labor organization involved claims to represent certain
employees of the Employer.
3. A question affecting commerce exists concerning the representa-
tion of the employees of the Employer within the meaning of Section
9(c)(1) and Section 2(6) and (7) of theAct2
4. The appropriate unit.
The Petitioner seeks a bargaining unit which includes all truck-
drivers at the Employer's three motor freight terminals located in
Lawnside, Vineland-Millville, and Salem, New Jersey .3 The petition
presents two basic issues relative to the composition of the bargaining
unit: (1) whether the equipment lessors who have leased their truck
tractors to the Employer are independent contractors or employees
within the meaning of the Act; and, (2) whether the three-terminal
unit sought by the Petitioner is appropriate.
As to issue (1): The Employer has executed motor vehicle equip-
ment leases with tractor owners who serve the three terminals involved.
Nearly all these owners or lessors also drive their leased equipment on
the Employer's business. At the time of the hearing, there were nine
' The name of the Employer appears as amended at the hearing.
' We find no merit In the Employer's contention that the petition herein should be dis-
missed because the Petitioner allegedly has committed acts of violence , coercion, and
other improprieties during its organizational effort. We note that the Regional Director
for Region 4 has previously considered and rejected these allegations of the Employer.
Further, the cases cited by the Employer in its brief are inapposite in the circumstances
herein. Accordingly, we reject the Employer' s contention.
3 The petition was amended during the hearing to include the Salem, New Jersey,
terminal of Sun Transportation, Inc.
153 NLRB No. 133.
NATIONAL FREIGHT, INC. 1537
owner-operators based at these terminals who had leased more than
one tractor to the Employer. They are known as multiple owner-
operators. Consequently, there are nonowner-drivers who drive trac-
tors leased to the Employer by the multiple owner-operators. In
summary, all of the freight handled by the Employer at the three
terminals is transported by tractors leased from the above-described
owners or lessors 4 Further, all of the trailers used in these freight
movements are leased from Landis Leasing, Inc., by the Employer.
As noted, Petitioner seeks to represent all of these owners and drivers
at the Employer's three terminals in southern New Jersey.
A prospective tractor-lessor generally applies to the nearest terminal
of the Employer. The' terminal manager preliminarily checks the
equipment and if it is tentatively approved, the applicant is referred
to the Employer's main office in Vineland. There, the owner reports to
the Employer's safety director who, in conjunction with a represent-
ative of Landis Leasing, Inc., inspects the tractor for its general
serviceability and compliance with U.S. Interstate Commerce Commis-
sion's rules and regulations.5 At this juncture, a driving test is admin-
istered to the owner-operator. If the vehicle inspection and driving
test prove to be satisfactory, and the owner has adequate liability insur-
ance, or will arrange for it, he is requested to complete an information
sheet which ICC regulations require the Employer to keep in its files.
In the case of a multiple-owner, his drivers are also required to execute
such information sheets for the Employer.6 However, the Employer
has the right to reject all drivers.
At this point, standard lease forms, which appear to incorporate
by reference ICC regulations governing the leasing of equipment for
use in interestate commerce, are executed between the Employer as the
lessee and the owners as lessors. These leases vary only as to their-
duration-running from 30 days to 1 year-with provision made for
automatic renewal for like terms, absent notice to the contrary. Some
of the significant covenants in these leases are : the lessor agrees to place
his motor vehicle(s) under the lessee's control as required by ICC'
regulations which stipulate that leases between carriers and owner-
operators shall provide for the exclusive control and use of the equip-
ment and for the complete assumption of responsibility in respect
4 This recapitulation of the structuring of the Employer 's motor equipment ownership-
use arrangements shows that these relationships parallel those found by the Board to
exist at the Employer's Orangeburg , New York, terminal in a previous case, Natsonat
Freight, Inc ., 146 NLRB 144.
5 The owner is charged a fee for the vehicle inspection.
6 These information sheets in both instances are required by ICC safety regulations,
sections 190.11 , 191.12, 191 .13 and, in general , relate to the driving history and physical'
and health characteristics of the signatories . New drivers are also given physical
examinations.
7 96 -0 2 7-6 6-v o f 15 3-9 8
1538 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
thereto by the lessee for the duration of the lease; 7 the lessee retains
the right to interchange and interline the leased equipment with other
common carriers for transportation on their routes pursuant to ICC
regulations; 8 the lessor warrants that the leased vehicles are not sub-
ject to any other existing lease; the lessee may cancel the lease forth-
-with in the event the lessor is involved in an accident causing loss to
-the lessee or if the lessor's actions in any manner cause the lessee a loss
of business; and the lessor agrees to be compensated according to the
trip-rate compensation schedule issued by the lessee and amended from
time to time.9 We also note that the lease does not obligate the Em-
ployer to provide any specific amount of work to the lessor, although
the lessor has exclusively leased his equipment to the Employer.
We are cognizant of the fact that the equipment leases herein
expressly refer to the relationship created between the contracting
parties as that of independent contractors. Further, these leases also
provide, inter alia, that lessors shall be responsible for making payroll
-deductions for social security and income taxes, unemployment and
workmen's compensation, both for themselves and in behalf of any
employees whom they may furnish; that lessors will maintain adequate
fire, theft, and collision insurance; that lessors will provide their own
gasoline, oil, tires, repairs, and license fees necessary to the operation
of their vehicles, and that they agree to indemnify the Employer from
-all manner of claims by third parties arising from the use of their
equipment in the Employer's freight business.
It is manifest from thus juxtaposing these significant terms of the
leases, which on the one hand support a finding that the owners are
,employees, and on the other hand may tend to show that they are inde-
pendent contractors, that the Employer retains, largely as a matter of
ICC compliance, a substantial measure of control over these owners
and their equipment. Our determination of the issue concerning the
status of the lessors herein calls for the application of the common law
"right of control test"; i.e., does the recipient of the services in ques-
7 See Western Nebraska Transport Service Division, etc., 144 NLRB 301, for discussion
-of similar ICC leasing requirements and Board 's holding that lease drivers were employees
of the public carrier . The record herein contains inconclusive evidence concerning cargo
"moonlighting" by certain lessors who haul agricultural produce, exempted from various
ICC requirements , on return trips in the Employer 's trailers for their own account. We
-do not consider these occurrences of sufficient materiality to affect our decision nor do we
hazard any opinion as to the legality of these practices under ICC rules and regulations.
8 Cargoes are interlined by the Employer with other common carriers pursuant to ICC
regulations . The lessors are not parties to these arrangements and have no standing to
affect the division of the freight charge or other aspects of the interlining transaction
between the common carriers involved.
9 New lessors uniformly have their compensation withheld over the first 2 weeks of
their leases because of the Employer ' s accounting practices . Although the Employer in
-establishing trip compensation schedules has made adjustments in these rates because of
miscalculations or as a result of complaints made by lessors from time to time, we find
that, in effect , the Employer unilaterally determines the trip-rate compensation disbursed
pursuant to the leases.
NATIONAL FREIGHT, INC. 1539
tion possess the right to control not only the end to be achieved but
also the means to be utilized in attaining such results? If both quanta
of control are present, an employer-employee relationship obtains as a
matter of law. However, the application of this test is not a perfunc-
tory exercise, but demands a careful balancing of all the evidence rele-
vant to the relationship.lo
In this connection, we deem it pertinent to observe that in order to
protect the efficient flow of freight, the Employer makes substantial
and regular reimbursable cash advances to lessors for the purpose of
defraying the costs of gas, oil, tolls, and other expenses incidental to
the operation of the leased vehicles." Although the Employer no
longer compels lessors to contribute automatically to an escrow main-
tenance account, the Employer has a procedure in common use whereby
lessors can receive from $50 to $200, and in some instances more, to
defray the costs of overhaul and repairs when in-transit equipment
breakdowns occur. This money is supplied via purchase orders 12
executed by the Employer making it liable for these expenses. These
.sums are later repaid to the Employer by installment deductions from
future compensation due to the lessor .13 An additional element of mon-
etary support furnished by the Employer to the lessors arises in con-
nection with the financing or refinancing of the purchase prices of the
lessors' vehicles. From time to time the Employer has loaned money
to lessors to enable them to meet payments on their equipment and for
other purposes.14
We consider it singularly important that the Employer in the lease
has retained the right to cancel it forthwith in the event that the les-
sor's actions in any manner cause the Employer a loss of business.
Leases have been terminated on the basis of customer complaints. The
Employer's director of operations, Kaplan, testified in this regard,
"I wouldn't lose an account like Owens-Corning Fiberglas for Mr.
DeVito or any fifty owner-operators." While the Employer contends
that the lessors as independent contractors possess the right to refrain
from being dispatched on trips, Kaplan also testified that if they do
not appear at the terminals for a period of time, their leases are sum-
marily terminated. Thus, the lessors' asserted right not to work when
freight is available for movement appears to be somewhat illusory.
10 National Freight, Inc., supra, and cases cited in footnote 1 therein.
"About 80 percent of the lessors receive at least some weekly advances and approxi-
mately 50 percent of the owner -operators receive advance money for every trip. The
Employer endeavors to restrict these advances to a reasonable amount, such as 20 to 25
percent of the value of the trip.
12 When equipment operated by nonowner-drivers requires such repairs, the Employer's
practice calls for the lessors' approval before the purchase orders can be issued.
2 According to the Employer , the total number of purchase orders issued to lessors
ranges between 100 to 150 per year.
14 To help the lessors avoid repossession of their tractors by the vendors , the Employer
has also consented to make deductions from compensation it owes the lessors so that
payments on the purchase price of their tractors will be assured . At the time of the
hearing, 75 lessors had sanctioned such deductions and payments.
1540 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Upon our consideration of the record in its entirety, we are con-
vinced that the degree of control exercised by the Employer is sufficient
to support a finding that the equipment lessors herein are employees
of National both as a matter of law and as a matter of "economic
reality.""' In reaching this finding we note particularly the following
circumstances : the Employer's right to terminate the leases practically
at will; the overall impingement of ICC regulations upon the various
aspects of the Employer's interstate business as a common carrier and
the Employer's duty to comply therewith; the fact that the subject
leases do not guarantee to the lessors that any specific amount of work
or number of trips will be available to the lessor although the lessee
obtains exclusive dominion over the leased equipment; the subjecting
of the lessors' equipment to interchanging and interlining at the behest
of the Employer with no participation by the lessor; the unilateral
determination of the trip compensation by the Employer on the basis
of the established trip-rate compensation schedule which is generally
accepted by the lessor without question upon signing the lease; the
substantial financial assistance rendered by the Employer to the lessors
in the form of advances, purchase orders, and other loans which sub-
stantially dilutes the status of the lessors as entrepreneurs by increas-
ing their already great dependence upon the Employer for the duration
of the leases ; the retention by the Employer of the right to reject or
cause the discharge of any employee selected by the lessor; the con-
tinual need for the Employer to clear its lease rolls of lessor-operators
who fail to report to the terminals to be dispatched with freight con-
signments; the requirement of delivery to standards and schedules set
by the Employer, so as to avoid complaints by the Employer's custom-
ers which might cause termination of the lease; and the economic
realities of the Employer's relationship with its lessors which decree
that Employer must exert an effective degree of control over the lessors
consonant with the profitable conduct of its enterprise.
Accordingly, in view of the foregoing and on the basis of the entire'
record, we find that the equipment lessors and the nonowner-drivers
for such lessors are employees of the Employer within the meaning of
the Act. As for those lessors who utilize nonowner-drivers, although
we are convinced that they are not independent contractors, an issue is
presented as to whether they are supervisory employees within the
intendment of the Act. By the terms of the leases and the Employer's
practices thereunder, lessors possess and exercise the power to engage
drivers to operate the leased equipment, particularly where the lessor
has leased more than one piece of equipment. While this power is
exercised subject to Employer's approval, it appears that these lessors
WDeaton Truck Lines, Inc, 143 NLRB 1372 , 337 F 2d 697 (CA. -5), dismissing petition
for review ; National Freight, Inc., supra; Chemical Leaman Tank Lanes, Inc ., 146 NLRB
148, cf Robert Casebeer & Herman Foland, d/b/a Casebeer & Foland, a Partnership,
149 NLRB 742.
NATIONAL FREIGHT, INC. 1541
assign, transfer, and responsibly direct such nonowner-drivers. It is
apparent that this authority is exercised both for the purpose of pro-
tecting the lessor's equipment involved and as an integral part of the
Employer's operations. In these circumstances and particularly as the
multiple lessors have effective authority relating to the tenure of the
nonowner-drivers whom we have found to be employees of the
Employer, we find that the lessors whose equipment is operated by
nonowner-drivers are supervisors within the meaning of the Act.
Therefore, we shall exclude them from the unit 1°
As to issue (2)-the three-terminal unit: Petitioner seeks a bargain-
ing unit consisting of drivers at the Employer's three terminals in
southern New Jersey located at Lawnside, Vineland-Millville, and
Salem. However, Petitioner makes an alternative request for a sepa-
rate bargaining unit at each of these three terminals should the Board
find its primary unit contention to be inappropriate. The Employer
contends that the petition should be dismissed in that only a unit coex-
tensive with its entire transportation system is appropriate.17
These terminals are 30 to 38 miles apart and Petitioner argues that
their location in such a relatively close geographic area justifies their
inclusion in one unit. However, the following countervailing factors
dictate our rejection of this contention: under the Employer's method
of trip-rate compensation based on combined tonnage and mileage,
separate schedules have been developed for each terminal in the
Employer's system; all lessors have a home or base terminal from which
they are initially dispatched to begin the week's work; the home ter-
minal manager is primarily responsible for enforcing ICC safety reg-
ulations covering leased equipment and drivers ; lessors most fre-
quently reside in the vicinity of their home terminal; lessors look to
their base terminal manager or dispatcher for cash advances, purchase
orders, or other loans to enable them to effectively transport the
Employer's freight shipments; trip compensation [and deductions
therefrom] is disbursed to the lessor at his home terminal; and, as
mentioned previously, the Board has found the Employer's Orange-
burg, New York, terminal to constitute an appropriate unit. In view
of these circumstances and the entire record, we find appropriate three
separate bargaining units in the Employer's terminals at Lawnside,
Vineland-Millville, and Salem, New Jersey.
Accordingly, we find that the following employees at the Employ-
er's Lawnside, Vineland-Millville, and Salem, New Jersey, terminals
constitute appropriate units for the purposes of collective bargaining
within the meaning of Section 9 (b) of the Act :
2s See Deaton Truck Linea, Inc., supra ; National Freight, Inc ., supra; and Chemical
Leaman Tank Lines , Inc., supra.
17 The Board has previously found appropriate a separate unit at Employer 's Orange-
burg, New York, terminal . National Freight, Inc., ,supra.
1542 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
All lessor-drivers, who do not utilize nonowner-drivers, nonowner-
drivers, and spotters,"' excluding multiple tractor lessors and all other
employees.
[Text of Direction of Election omitted from publication.]
IsSome lessor-drivers, denominated as spotters , perform transportation work for the
Employer by (1) utilizing their tractors in hauling trailers between the terminal and the
loading docks of certain of the employer 's customers ; ( 2) working on the grounds of the
customers ; or (3) making short-haul deliveries . Spotters are guaranteed 10 hours work
per day at an agreed-upon hourly rate. Accordingly , we find that spotters are appro-
priately included in the unit. However , the record shows that some spotters utilize
nonowner-drivers. Consequently , we exclude such spotters from the unit as supervisors
for the reasons set forth , supra, with respect to multiple tractor lessors.
Lewers & Cooke , Ltd. and Hawaii Teamsters and Allied Workers,
Local 996. Case No. 37-CA-335. July 22, 1965
DECISION AND ORDER
On May 25, 1965, Trial Examiner Eugene K. Kennedy, issued his
Decision in the above-entitled proceeding, finding that the Respondent
had engaged in certain unfair labor practices alleged in the complaint
and recommending that it cease and desist therefrom and take certain
affirmative action, as set forth in the attached Trial Examiner's Deci-
sion. The Respondent has filed exceptions i o the Trial Examiner's
Decision and a brief in support thereof.
Pursuant to the provisions of Section 3 (b) of the National Labor
Relations Act, as amended, the National Labor Relations Board has
delegated its powers in connection with this case to a three-member
panel [Members Fanning, Brown, and Jenkins].
The Board has reviewed the rulings of the Trial Examiner made at
the hearing and finds that no prejudicial error was committed. The
rulings are hereby affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions, the brief, and the entire record
in this case, and hereby adopts the Trial Examiner's findings, conclu-
sions, and recommendations.
ORDER
Pursuant to Section 10(c) of the National Labor Relations Act, as
amended, the National Labor Relations Board hereby adopts as its
Order the Recommended Order of the Trial Examiner and orders that
Respondent Lewers & Cooke, Ltd., Honolulu, Hawaii, its officers,
agents , successors , and assigns, shall take the action set forth in the
Trial Examiner's Recommended Order.
153 NLRB No. 138.