Portage Transfer Co., Inc.

National Labor Relations Board - Board Decisions

Jul 6, 1973

204 N.L.R.B. 787 (N.L.R.B. 1973)

PORTAGE TRANSFER COMPANY, INC. 787
Portage Transfer Company, Inc. and Local Union No.
505, affiliated with the International Brotherhood of
Teamsters , Chauffeurs, Warehousemen and Helpers
of America , Petitioner. Case 9-RC-9902
July 6, 1973
DECISION ON REVIEW AND ORDER
On February 14, 1973, the Regional Director issued
a Decision and Direction of Election in the above-
entitled proceeding in which he directed an election in
the Petitioner's requested unit of single owner-drivers
and nonowner-drivers operating equipment under
lease to the Employer, rejecting the Employer's con-
tention that they are independent contractors. There-
after, pursuant to Section 102.67(b) of the National
Labor Relations Board Rules and Regulations, the
Employer filed a timely request for review of the Re-
gional Director's Decision on the ground that in find-
ing the requested drivers to be its employees and not
independent contractors he departed from officially
reported precedent. The Employer filed a brief in sup-
port of its request for review.
On March 19, 1973, the National Labor Relations
Board granted the request for review and stayed the
election pending decision 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 Employer is an Ohio corporation engaged in
the business of hauling steel as a contract carrier. Its
home office is located at Hiram, Ohio. It carries on its
business through commissioned agents at Butler,
Pennsylvania, and at Middleton and Coal Grove,
Ohio. The Petitioner seeks a unit of drivers dispatched
to haul steel for the Employer at its Coal Grove loca-
tion. The requested drivers comprise 14 single owner-
drivers and 6 nonowner-drivers. The owners of the
equipment driven by the latter are stipulated to be
supervisors.
At Coal Grove, all the Employer's steel hauling is
done pursuant to a contract with Armco Steel Corpo-
ration, which has a plant at Ashland, Kentucky.
The record shows that the Employer operates pur-
suant to a Certificate of Public Convenience and Ne-
cessity granted by the Interstate Commerce
Commission, herein called the ICC. Its operations are
subject to ICC regulations and to the Department of
Transportation (herein called the DOT) Motor Car-
riers Safety Regulations. Under ICC regulations, a
carrier, when it leases equipment for use under its
certificate, must have "full direction and control of
such vehicles." Pursuant to ICC and DOT regula-
tions, equipment owners are required to submit their
equipment for safety checks; all owner-drivers and
nonowner-drivers are required to file an application
for employment with the certificated carrier; each
driver must undergo periodic physical examinations
and a driving test; the drivers are required to submit
trip logs to the carrier; and each vehicle is required to
exhibit the carrier's name and its ICC certificate num-
ber when operating for the Employer. This identifica-
tion may be by placards temporarily affixed to the
vehicle stating that the vehicle is leased to Portage.
The Employer enters into a lease agreement with
each equipment owner. The leases provide that the
Employer may cancel the lease "forthwith" if the les-
sor fails to operate his leased equipment to its satisfac-
tion. The lease, consistent with ICC regulations,
provides that the lessor shall surrender full control,
possession , and management of the leased equipment
to the Employer for the term of the lease.
The equipment lessors are obligated to furnish driv-
ers for the leased vehicles, to pay the compensation of
the drivers, and to pay all taxes, charges, benefits,
claims, and liabilities of every kind which may arise
by virtue of their employment. In addition, all vehicle
maintenance is paid for by the owners, as is the cost
of fuel, oil, and tires. Owners purchase their own
trucks, with no assistance of any kind from the Em-
ployer. The owners make their own arrangements for
parking and storing the vehicles when not in use. The
Employer maintains no garage or parking facilities for
the owners' use. Owners select the places where such
services and supplies are purchased. The Employer
has no interest in any repair facility or gas station. The
equipment owners, in return for the use of their equip-
ment and the driving services, receive payments from
the Employer at a set percentage of the gross revenue
derived from the use of the equipment. As set forth in
the leases, the lessors received 75 percent of the gross
revenue received on the loads hauled. The lessors are
paid weekly or, upon request of the contractor, settle-
ment is made upon the completion of a run. Drivers
may secure advances to cover -operational costs, but
only if their owner-contractors authorize the making
of such advances.
In practice, an owner desiring to lease his equip-
ment to the Employer files a written application with
the Employer's commissioned agent at Coal Grove.
Neither the Employer nor its commissioned agent
suggests potential drivers to the owners, and applica-
tions are taken only when the owner has sponsored,
or selected, the applicant. The driver normally makes
written application with the agent but owners may
freely substitute drivers who meet DOT standards.
The applications are forwarded by the agent to the
Employer's main office at Hiram, Ohio.
204 NLRB No. 117
788 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Solely for the purpose of determining compliance
with the aforementioned Federal regulations, the
drivers take physical examinations and are given a
road test administered by the Employer; the Employ-
er, under a contract with a local truck service shop,
provides the required 30-day periodic safety inspec-
tions for all leased equipment; and drivers submit the
DOT required log sheets to the Employer's commis-
sioned agent.
The record also shows that the Employer pays for
all cargo and liability insurance, with the exception of
"bobtail" insurance which is paid for by the individu-
al owner. The owners are responsible for obtaining
collision insurance if they want it. Additionally, after
a driver has hauled for the Employer for a period of
30 days and if he generates a certain amount of reve-
nue per month, the Employer will provide him with
Blue Cross and Blue Shield hospitalization coverage
and a $5,000 life insurance policy, all without cost to
the driver. The owner-nondrivers are not given these
benefits. The Employer asserted that these benefits
are viewed by it as part of the driver's compensation.
Finally, the Employer pays for workmen's compensa-
tion on the men.
With respect to day-to-day operations, the Employ-
er maintains no written rules or regulations of any
kind. If a driver wants a load for the next day, he
simply calls up and has his name placed "on the
board." Drivers are offered hauls on a "first in, first
out" basis. However, a driver is not required to call in
at specified intervals or even at all. If he doesn't want
to carry a load the next day, all he need do is not call
in. Even if his name is "on the board," he has the right
to refuse any freight tendered by the agent, without
explanation. Drivers can and have rejected loads for
personal economic reasons such as "easier runs" or
the desire to wait for a heavier load so that they can
earn more money. There is no reprisal or penalty for
turning down a load or failing to call in. Drivers are
allowed to select their own routes. The Employer spe-
cifies no delivery schedules, but Armco Steel requests
delivery within 24 hours after pickup.
Drivers are allowed to trip-lease if they so desire,
without clearance from the Employer. Trip-leasing is
not commonly done, however, not because of any
requirements of the Employer, but only for practical
economic factors-principally because there is little
demand for trucking services in the general vicinity of
Coal Grove, and available trip-leasing opportunities
at more distant locations do not offer attractive eco-
nomic possibilities for drivers who wish to haul regu-
larly under their contracts with the Employer.
The compensation and hours of work of nonowner-
drivers are established solely by the owner, not the
Employer. Days off, vacations, and discharge and dis-
cipline of nonowner-drivers are all matters within the
control of the owner. Compensation of drivers differs
as between owners-one owner, for example, pays his
drivers 25 percent of the revenue, whereas another
owner testified that he pays his driver 27 percent of
such revenues.
The test to distinguish an employee from an inde-
pendent contractor is the common law "right of con-
trol" test. There is an employer-employee relationship
where the employer reserves the right of control not
only as to the ends to be achieved but also as to the
means to achieve such ends. Resolution of the ques-
tion depends on the facts of each case and no one
factor is determinative. National Freight, Inc., 146
NLRB 144.
Application of the above test compels a finding that
the individuals in question here are independent con-
tractors.
In the instant case we are unable to agree with the
Regional Director that the Employer has in fact creat-
ed an employer-employee relationship between itself
and the drivers of its leased equipment. Tending to
support the conclusion that the drivers are employees
of the Employer are the following factors: the overall
effect of the degree of control over equipment and
personnel required by ICC and DOT regulations, in-
cluding the effect of certain lease provisions which
appear to preserve to the Employer a degree of con-
trol consistent with such regulations, and the fact that
the Employer unilaterally determines the compensa-
tion for the drivers, including fully paid health and
hospitalization insurance and life insurance benefits
after 30 days of service.' The above factors alone, as
we stated in Conley Motor Express, Inc., 197 NLRB
624, do not establish that the Employer controls the
means by which drivers of leased equipment perform
their transport and delivery duties under the lease
agreements. We are persuaded by the following fac-
tors present in this case that the control exercised by
the Employer, whether by virtue of ICC or DOT regu-
lations or the terms of the lease agreements, relates
solely to results to be achieved under the leases, and
that an employer-employee relationship has not been
established: (1) the owners of the leased equipment
are free to make their equipment available or not each
day, as they choose; (2) there is no attempt to exercise
any supervision over the daily conduct of drivers by
any written or oral rules of conduct; except as to the
federally required safety inspections, there is no day-
to-day set of requirements imposed by the Employer;
(3) there is no evidence of discipline of or any at-
1 Contrary to the Regional Director, we do not believe that the requirement
that all loads be delivered within 24 hours, as imposed by Armco Steel, is
indicative of employer control over the means by which drivers make deliver-
ies
PORTAGE TRANSFER COMPANY, INC.
tempts to discipline , either owners or drivers by the
Employer; (4) except for the cost of periodic safety
inspections , the owners pay all the costs of operation
and maintenance of their equipment ; and (5 ) the own-
ers are free to trip-lease their equipment if they believe
it to be economical.
While Aetna Freight Lines 2 is urged upon us as
controlling precedent by the Petitioner , we note a sub-
stantial difference in facts between Aetna and this
case . There the record evidence substantial re-
strictions on trip-leasing , the use of lease terminations
as discipline by the employer, carefully prescribed
time limitations on deliveries , various specified and
regularly enforced procedural rules , the imposition of
penalties for refusing to accept loads , and specific
directions as to a substantial number of operating
details . The record here presents a much different
picture with respect to the freedom and genuine inde-
pendence of the owners and little or no significant
control over the day-to-day activity of any driver.
Upon the foregoing , balancing the factors present
in the record of this case, we find that the owners of
leased equipment involved herein are independent
contractors . Accordingly, as the requested unit is
comprised of independent contractors and drivers
employed by independent contractors , we shall dis-
miss the instant petition.
ORDER
It is hereby ordered that the petition filed herein be,
and it hereby is , dismissed.
MEMBER FANNING , dissenting:
My colleagues dismiss this petition for a unit of
drivers who haul steel for the Employer 's sole custom-
er, Armco , at Ashland , Kentucky. Owners of the
leased equipment utilized , and those who own and
drive , are found to be independent contractors; non-
owner drivers are found to be employees of the inde-
pendent contractors.
This is a hauling operation where Portage, licensed
by the ICC as a contract carrier , has no terminal and
no hauling equipment . It does have an office at Hi-
ram, Ohio , where there is an office manager , one cleri-
cal employee , and one coowner in attendance . Copies
of the equipment leases and personnel files on the
drivers are kept there. Dispatching is done only from
other locations , by commissioned agents . At Coal
Grove , Ohio, the location here involved , Rosemary
Bruce and Robert Drown act in this capacity, their
office being a trailer parked in the vicinity of Ashland
52 Plaza , a truckstop where the hauling equipment
utilized by Portage receives the required inspection
2 The Aetna Freight Lines, Incorporated, 194 NLRB 740
789
every 30 days . Portage supplies the trailer with tele-
phone service and the printed forms necessary for
shipping . Agent Bruce signs the equipment leases for
Portage and sends one copy to Hiram, keeps one in
her office , and gives the other to the owner -lessor. S:ie
also takes applications from owner-drivers, and from
nonowner-drivers who generally come in with an
owner . Each morning Bruce reports to Armco how
many trucks are available. She then assigns the loads.
When the drivers arrive at Armco they pick up their
shipping orders . Most deliveries average 4 hours of
driving time . After delivery, the shipping orders, the
delivery receipt , and the log are turned over to Bruce.
The majority relies on five factors to counteract the
obvious impact of an equipment lease made pursuant
to ICC regulations , the right of Portage to terminate
the lease at any time for improper handling of equip-
ment , and the unilaterial setting by Portage of lessor
compensation.
(1) Owners of leased equipment testified that they are
free each day not to take loads. The record does indeed
contain testimony to this effect , but it must be evalu-
ated in the context of all testimony . Agent Bruce testi-
fied that "drivers generally take their loads ." She also
testified that drivers generally call in if they are not
going to take a load , in order to tell her that they are
ill, that the truck is broken down , that there is death
in the family, that the driver has some other business
to attend to, etc . According to Bruce it rarely happens
that a man refuses a load for several days because
"this is an operation and the men work together, and
they take their loads as they come in." An owner-
driver testified that he preferred heavier loads because
his equipment was light and permitted him to haul the
heavier loads , and another simply that he could make
more money by "choosing loads ." One nonowner-
driver testified that he did not like to go to Indiana
and "believed" he had refused a load there ; that he
didn't check with his equipment owner about it be-
cause the latter considered the truck more "mine than
his." Nothing in Bruce 's testimony suggests that loads
are refused for no reason at all. On the contrary it
establishes that like any dispatcher of truckdrivers,
Bruce is kept well advised of the availability of equip-
ment, as well as of the desires of the drivers with
respect to runs.
(2) No day-to-day supervision of control by the Em-
ployer, apart from periodic safety inspections. Again the
context must be considered . These runs average about
4 hours . The freight must be picked up at Armco at
the time set by Armco. As Agent Drown testified:
"Armco gets mad and won 't give us any freight if we
don't follow the times they set pretty closely." Be-
cause of this it is sometimes necessary for the agent
to get another driver to make the pickup so that Por-
790 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tage won't get into any problem with Armco. Armco
specifies delivery within 24 hours, but the available
time may actually be less because of the receiving
hours at the place of destination. This is shown on the
shipping order. One owner-operator explained the ap-
parent lack of direction or supervision by Portage and
its agents as follows: "it's a pretty cut job, and we
follow it."
Periodic safety inspection of the vehicles, as re-
quired by the ICC, is paid for by Portage. In addition,
drivers take a physical examination upon hire and
they are reminded by Bruce, after a reminder from
Hiram, to renew these physical checkups every 2
years. They are given a road test initially, and their
personnel files at Hiram have a record of driving vio-
lations. They are required to submit their trip logs. As
one owner-operator testified, he never turns his logs
in late. "You have to keep your logs every four hours
at the present time." 3 Thus, like many truckdrivers,
these drivers have no supervision on the road, but
their qualifications are carefully checked before hire,
they are required to maintain their physical checkups,
and they must supply the required logs of their trips.
(3) No evidence of discipline by the Employer of own-
ers or of drivers. This is to some extent a facet of (2)
above. The delivery runs are not long, or varied, and
it appears that the Employer is getting a degree of
driver cooperation that makes discipline unnecessary,
as that concept is normally understood. Employer has
made the lease-drive arrangement attractive finan-
cially. One of the part owners testified that 4 years ago
the Company elected to cover the drivers with
workmen's compensation "to make the business a lit-
tle more attractive." The witness considers this cover-
age "a form of compensation" but views the
employee-implication which arises from such cover-
age as inapplicable when a company voluntarily elects
to carry such coverage. Admittedly he did not know
what determines eligibility for workmen's compensa-
tion in the State of Ohio. He did know that the
amount paid by the Company to the State was based
upon total revenue of the Company. He also views as
a "form of compensation" the Blue Cross coverage
and $5,000 life insurance policy furnished without
cost to owner-drivers and nonowner-drivers by the
Company.4 It is not clear from the testimony whether
this health and life insurance coverage is paid by the
Company from time of hire, or only after a 30-day
trial period. The part owner's testimony indicates that
7 Unlike Conley Motor Express, 197 NLRB 624, there is here no evidence
of lack of attempt to verify the authenticity of logs Apparently there has been
no need to discipline for late submission of logs
In its brief Employer says that some Portage owners carry their own
group insurance and workmen 's compensation on their drivers. The support-
ing citations from driver testimony are not convincing on the record as a
whole.
"as long as they maintain a certain amount of revenue
per month" the men are covered (owners who do not
drive must pay for this themselves). The policy of
supplying this coverage can be equated with a "car-
rot" approach to discipline as contrasted with the "big
stick."
Agent Bruce, who had been with the Company for
about 13 months, testified concerning one driver who
refused to deliver his load for a week, contrary to the
24-hour rule. In her view this driver "terminated his
own employment." Whatever the euphemism, this
driver failed to live up to a condition of his employ-
ment and no longer drives for the Employer. Self-
effectuating discipline such as is here claimed has
much to recommend it from an employer point of
view.
(4) Owners pay all costs of operating and maintaining
their equipment, except the cost of periodic equipment
tests for safety. Here again it appears that the Compa-
ny has opted for driver cooperation spurred mainly by
adequate compensation, buttressed with specific con-
ditions for pickup time, delivery hours, and elapsed
time . Although many lessors of trucking equipment
opt for compensation without extra benefits and ap-
parently supply services instead, can it really be said
that the latter method is more indicative of employee
status than the former?
(5) The owners are free to trip-lease if they believe it
to be economical. In the context this is a meaningless
"freedom." My colleagues admit that trip-leasing is
not generally done by these drivers because there are
few opportunities in the general vicinity of Coal
Grove. One owner-operator testified that he had nev-
er entered into a trip-lease "only because we don't
travel the distance with Portage." Another had trip-
leased only once. "I found out it didn't pay as much
as coming back and hauling for my regular run." On
that one occasion he had notified the agent not to put
him "on the board" the next day because of this trip-
lease , but he had to deadhead to Gary to pick up the
load and that was not economical. This is the sole
instance given at the hearing of a trip-lease.
So much for the factors the majority views as con-
trolling. Truly the evidence as a whole shows the Em-
ployer providing a lease-drive agreement that is cut
and dried geographically and circumscribed by condi-
tions of delivery, though not of route. The drivers
cooperate and follow the set pattern. They are given
advances if they need them, and normally receive
regular weekly checks. Contrary to the majority, there
is only one incident of a driver substituting for anoth-
er, and that substitute was an owner-operator who
had already qualified. The Employer , on its part, took
pains to emphasize during the hearing its efforts for
letter-of-the-law compliance with its status as an ICC
PORTAGE TRANSFER COMPANY, INC. 791
certificated contract carrier, including the appearance
on the equipment of its name and certificate number.
This compliance includes periodic safety checks,
qualification of drivers for health and driving skill,
submission by drivers of trip logs, prohibition against
hauling passengers, and employer insurance coverage
of the cargo and of public liability responsibility. Un-
reasonably, to my mind, the Employer would draw a
distinction between the various control requirements
provided "by law" but "not" by Portage. As Portage
is certified under the law, it is itself required to exert
certain safety controls for the benefit of the public, the
equipment driver, and the shipper. It is hardly a ques-
tion of Portage "initiating" controls already required
by stature. Simply by being certificated as a carrier,
Portage undertakes to exercise such controls. Nor can
I agree with my colleagues that regulatory submission
by an employer is not, and should not be, of enormous
significance in reaching an employee conclusion in
these cases. The Department of Transportation by its
regulations implies this when it equates permission to
drive a motor vehicle (owned or leased) "in fur-
therance of the business of the motor carrier" as em-
ployment of a driver.'
5 DOT regulations (part 391.3(c)) state that "a motor carrier 'employs' a
person as a driver . . whenever it permits or requires that person to drive a
motor vehicle (whether or not the vehicle is owned by the motor carrier) in
My colleagues rely on Conley Motor Express, foot-
note 3 above, another steel hauling case. I did not
participate there, but here note that the apparent lack
of operational control occurred in a five-state opera-
tion with Pittsburgh as the dispatch point; that the
75-percent compensation for hauling unilaterally set
by the employer was not augmented by the carrot of
prepaid fringe benefits calculated to achieve driver
compliance with employer objectives; that there was
no time limit on delivery-a factor my colleagues
choose to evaluate as not indicative of employer con-
trol over means, though they here distinguished Aetna
Freight Lines, 194 NLRB No. 120, partly because of
"carefully prescribed time limitations on deliveries";6
and that the majority of drivers trip-leased after deliv-
ering their loads of steel.
I agree with the Regional Director that "extensive
Employer control" over the owner-operators and
their drivers is here established and that the 1972
Board Decisions in Conley and Fleet Transport Com-
pany, 196 NLRB 436, are distinguishable. Hence, like
the Regional Director, I would direct an election in
the unit sought, excluding Agents Bruce and Drown
as supervisors, as stipulated by the parties.
furtherance of the business of the motor carrier"
6 A time limitation on delivery imposed by a customer of the employer,
scrupulously adhered to by the employer in order to keep a customer (as is
the case here ), scarcely qualifies as a delivery requirement of the customer
alone