Propane Transport, Inc.

National Labor Relations Board - Board Decisions

Feb 7, 1980

247 N.L.R.B. 966 (N.L.R.B. 1980)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Propane Transport, Inc., and Propane Chemical
Leasing Co., Inc. and Teamsters Local Union No.
144, affiliated with International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers
of America, Petitioner. Case 25-RC-7198
February 7, 1980
DECISION ON REVIEW
BY CHAIRMAN FANNING AND MEMBERS JENKINS
AND TRUESDALE
On July 20, 1979, the Regional Director for Region
25 issued a Decision and Direction of Election in the
above-entitled proceeding, in which he directed an
election in a unit of truckdrivers at the Employer's'
Oaktown, Indiana, facility. He excluded from the unit
of truckdrivers, as not employees of the Employer, the
owner-operators of leased equipment whom he found
to be independent contractors and the nonowner-
drivers of leased vehicles whom he found to be
employed by the independent contractors and not by
the Employer. Thereafter, in accordance with Section
102.67 of the National Labor Relations Board Rules
and Regulations, Series 8, as amended, the Employer
filed a timely request for review of the Regional
Director's decision contending the Regional Director
made erroneous findings of fact and departed from
precedent. On August 14, 1979, by telegraphic order,
the request for review was granted and the election
stayed pending decision on review. Thereafter, the
Employer filed a brief on review.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board had delegated its
authority in this proceeding to a three-member panel.
The Board has considered the entire record in this
case with respect to the issues under review, including
the brief on review, and makes the following findings:
The Employer contends that the Regional Director
erred in finding that the owner-operators of leased
equipment are independent contractors and that the
nonowner-drivers are employees of independent con-
tractors. We agree.
Propane Transport, Inc. (hereinafter called PT), a
California corporation, is a common carrier of LP gas
operating pursuant to a license from the Interstate
Commerce Commission (ICC) and subject to the
regulations promulgated by that agency, to the perti-
' The Regional Director found that Propane Transport, Inc., and Propane
Chemical Leasing Co.., Inc. (hereinafter jointly called the Employer),
constitute a single integrated business enterprise and are joint employers of the
employees in the unit. This finding is uncontested.
:The parties stipulated that the Oaktown terminal manager is a supervisor
and that the office clerical employee and two mechanics should be excluded
from the unit.
247 NLRB No. 131
nent regulations of the Department of Transportation
(DOT), and to the regulations of the various regulato-
ry agencies existing in the 13 States where PT is
licensed to operate. Propane Chemical Leasing Co.,
Inc. (hereinafter called PCLC), an Indiana corpora-
tion, leases equipment and supplies drivers to PT for
PT's Oaktown, Indiana, facility. California Liquid
Gas Corporation, a Delaware corporation, with prin-
cipal offices in Sacramento, California, markets LP
gas and related products, and owns all outstanding
shares of stock in both PT and PCLC. PT and PCLC
share common ownership, common officers, and a
common board of directors. PCLC does approximate-
ly 99 percent of its business with PT.
The Oaktown terminal is leased and operated by
PT, and the immediate supervisor (Oaktown terminal
manager or dispatcher) of the drivers operating out of
the Oaktown terminal is a PT employee. PT also
employs at the Oaktown terminal an office clerical
employee and two mechanics.' The Employer employs
seven drivers (company drivers) who are admittedly
its employees. These company drivers are assigned to
drive the two tractors owned by PT and the five
additional tractors leased by PCLC to PT. The
Employer's "company drivers" are supplemented by
owner-operators of equipment which is leased to PT
and by nonowner-drivers hired by owner-operators to
drive their equipment. There are approximately 17
owner-operators with lease agreements with the Em-
ployer.
Government regulations require the exercise of
considerable control by the Employer over owner-
operators, covering such things as safety of equipment
and drivers, physical health of drivers, identifying
markers on vehicles, and qualifications of drivers.
Under the terms of the uniform lease agreement
utilized by the Employer, PT has the exclusive
possession, control, and use of owner-operators' equip-
ment and retains the exclusive right to sublease leased
equipment. Under the lease, owner-operators have the
responsibility to provide all fuel, oil, grease, tires,
parts, and other operating necessities, including all
safety equipment and devices required by law. Owner-
operators also have the responsibility to maintain their
leased equipment in good repair and in a safe and
proper mechanical and operating condition. The lease
further requires owner-operators to comply with all
applicable laws and regulations, and this includes the
responsibility to supply and pay the fees for all
required state licenses, permits, plates, cards, stickers,
'There is some uncertainty in the record about the exact number of owner-
operators. Propane Transport's vice president. Thomas Kenobbie, testified
there were 13 owner-operators. However, he had previously testified that
there were 17 owner-operators. In any event, the record establishes that the
number of owner-operators fluctuates depending on the amount of work
available. There are approximately four nonowner-drivers driving trucks
leased to PT.
966
PROPANE TRANSPORT, INC.
and decals, and to pay all other taxes and fees
connected with the operation of leased equipment.
Responsibility for paying all fines or penalties assessed
for a violation of any law or regulation pertaining to
the leased equipment is also the owner-operators'.
Furthermore, they must display the Employer's insig-
nia and ICC certification number on leased equip-
ment, as required by ICC rules. PT must have all
leased vehicles inspected in accordance with ICC
regulations and furnish a copy of the inspection report
to the owner-operators.
PT is required to supply public liability and cargo
insurance to protect against claims for personal injury,
property damage, and cargo loss, or damage arising
out of the operation of the leased equipment when it is
engaged in PT's business. Owner-operators have the
responsibility to provide "Bobtail" insurance, and any
fire, theft, collision, or other insurance they may
desire.'
Under the lease, owner-operators are obligated to
furnish, at their own expense, competent, experienced,
and qualified drivers for the operation of leased
equipment. Owner-operators must also supply PT
with medical certificates and all other records PT is
required to maintain for drivers of leased equipment.
Furthermore, owner-operators have the responsibility
to satisfy workmen's compensation law requirements
for nonowner-drivers and are required to supply PT
with a certificate of insurance evidencing that these
requirements have been satisfied. The lease provides
that drivers of leased equipment shall not be consid-
ered the employees of PT at any time or for any
purpose.' Under the lease, owner-operators are paid a
set percentage of the revenues earned by the leased
equipment while it is under lease. Finally, the leases
are terminable on 30 days' notice by either party.
Prior to entering into a lease with an owner-
operator, PT requires that an application to drive on
behalf of PT be filed. Nonowner-drivers must submit
the same application, as must company drivers. All
drivers, including company drivers, owner-operators,
and nonowner-drivers, must undergo a physical exam-
ination before they are allowed to drive for PT.
The Employer has the ultimate responsibility to see
that all of its drivers are in compliance with the
requisite governmental regulations and company
rules. The responsibility of all drivers, whether they be
company drivers, owner-operators, or nonowner-driv-
ers, to follow all applicable regulations and company
rules is the same. All drivers are subject to discipline
for violating governmental regulations and company
Bobtailing involves operation of a tractor without a trailer.
The fact that the lease contains a provision stating that the drivers of
leased equipment are not to be considered employees is not, of course,
determinative of the status that these drivers actually occupy. Our concern is
to determine whether the parties to the relationship have in fact established
rules. In some instances company drivers have been
suspended or discharged for such violations, while
owner-operators have had their leases canceled. Before
entering into a lease with an owner-operator, the
Employer discusses with the prospective lessee the
requirement of handling hazardous substances and
provides instructions on the safe handling of such
materials. It is the terminal manager's responsibility to
inspect and road test all equipment utilized by PT.
All drivers are dispatched in essentially the same
manner. Owner-operators drive the same runs and
handle the same materials as company drivers, and all
drivers are expected to wait in line when necessary to
pick up an assigned load. Owner-operators are expect-
ed to take all assigned runs, including those which are
less lucrative and those involving hazardous sub-
stances. According to Kenobbie, he has disciplined
owner-operators who have refused to accept assigned
loads by cancelling their leases. One exception to the
requirement that an owner-operator accept all as-
signed loads are instances involving an interstate run
to a State in which the owner-operator is not licensed
to drive. The Employer normally dispatches company
drivers before it utilizes owner-operators. Company
drivers are normally assigned specific routes for a run.
Because owner-operators are compensated according
to a set percentage of the gross revenues generated by
their trucks, the particular route they select does not
affect their compensation and, accordingly, the Em-
ployer does not assign them set routes. However,
owner-operators receive specific delivery times which
they are expected to meet.
Company drivers are paid by check twice a month
by PCLC. The compensation they receive is based on
the mileage they drive plus additional unloading and
waiting fees. They also receive certain fringe benefits,
including insurance, retirement benefits, and a profit-
sharing plan. The Employer deducts social security
and other taxes from company drivers' paychecks.
Owner-operators, consistent with the standardized
lease, receive a set percentage of the revenues generat-
ed by their trucks. Owner-operators leasing both
tractors and trailors to the Employer receive an
increased percentage. No deductions are made from
owner-operators' checks, and they do not receive any
of the fringe benefits paid to company drivers.
Nonowner-drivers are paid whatever amount is nego-
tiated between a particular nonowner-driver and a
particular owner-operator. All drivers are required to
keep logbooks and other records which they submit to
the Employer. Company drivers have company credit
the drivers as true independent contractors or have clothed them with
employee status. Moreover, we note that despite the presence of this provision
in the lease. one of the parties to the lease, the Employer, has vigorously
contended that the actual relationship between a driver of the leased
equipment and the Employer is that of employee/employer.
967
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
cards to cover their road expenses, while owner-
operators and nonowner-drivers pay their own operat-
ing costs. Repairs of PT and PCLC equipment are
handled by PT mechanics; owner-operators must
arrange for and finance any necessary repairs for their
equipment. PT provides parking for PT and PCLC
equipment; however, owner-operators must make
their own parking arrangements.
As previously discussed, the standard lease between
the Employer and owner-operators grants the Em-
ployer the exclusive right to control the operation of a
leased vehicle, including the sole right to sublease
during the term of the lease. While there was some
testimony of instances of owner-operators subleasing
their equipment while the equipment was under lease
to the Employer, Kenobbie testified that his duties
included enforcing the provision granting sole and
exclusive possession of leased equipment to the Em-
ployer and that he was unaware of any instances of
unauthorized subleasing of leased equipment by own-
er-operators.
In making our determination concerning the status
of these owner-operators, we are guided by the
common law right-of-control test, whether the carrier
exercises control over the means used to achieve the
ends desired or merely over the ends to be achieved. 6
In applying this test, we must consider the degree of
control exercised over the owner-operators regardless
of the reasons for the imposition of that control; that
is, whether required by governmental regulations or
inspired for other business reasons.'
Although we are aware of various factors which
indicate a degree of freedom by the owner-operators,
we find that these factors are outweighted by others
which establish extensive Employer control over
owner-operators and lead us to conclude that they are
employees of the Employer. In reaching our determi-
nation we rely particularly on the following facts: (1)
the Employer requires that leased vehicles display its
insignia and its ICC certification number; (2) the
Employer has the exclusive possession, control, and
use of the leased equipment;' (3) the Employer
unilaterally determines owner-operators' compensa-
" Deaton Truck Lines. Inc.. 143 NLRB 1372 (1963), enfd. 337 F.2d 697 (5th
Cir. 1964).
' Robbins Motor Transportation, Incorporated. 225 NLRB 761 (1975); and
Dixie Transport Company. 218 NLRB 1243 (1975).
' While there is some testimony that owner-operators have subleased their
trucks without the Employer's knowledge, it is clear that under the terms of
the lease the Employer has the sole right to control and restrict the use of a
leased vehicle. See John Himmer Transfer, Inc.. 221 NLRB 284 (1975).
' The fact that the Employer unilaterally establishes what an owner-
operator's percentage of load revenues shall be for the use of leased equipment
and the driver's service is indicative of the lack of an arm's-length relationship
typical of a true independent contractor relationship. See Robbins Motor
Transportation. .supra.
"' Since it is unclear how many owner-operators have lease agreements
tion on the basis of a predetermined rate schedule, and
that compensation rate is generally accepted by
owner-operators without question;9 (4) the Employer
requires owner-operators to accept virtually all as-
signed loads, and disciplines owner-operators who
refuse assigned loads; (5) the Employer assigns loads
with instructions on delivery times and requires the
furnishings of logsheets and other records; (6) the
Employer requires drivers of leased equipment (like
the company drivers who are admitted employees) to
fill out employment applications, take physical exami-
nations and road tests; (7) the Employer maintains
cargo and liability insurance for owner-operators; (8)
the Employer instructs owner-operators regarding the
handling of hazardous commodities; (9) the Employer
inspects owner-operators' trucks and requires owner-
operators to make necessary repairs; (10) the Employ-
er establishes a uniform set of company rules that
apply uniformly to all drivers and the Employer
imposes discipline for infractions of these rules by
company drivers, owner-operators, and nonowner-
drivers; and (11) the overall effect of the degree of
control over equipment and personnel required by
state and Federal regulations of motor carriers.
For these reasons, we find that the owner-operators
and the nonowner-drivers hired by them to operate
their leased equipment are employees of the Employer.
In these circumstances, we conclude that the following
unit is appropriate herein for the purpose of collective
bargaining within the meaning of Section 9(b) of the
Act:
All truckdrivers employed by the Employer at its
Oaktown, Indiana, facility, including owner-oper-
ators,'° and nonowner-drivers of equipment
leased by the owners to the Employer; excluding
all mechanics, office clericals, guards and supervi-
sors as defined in the Act.
Accordingly, the case is hereby remanded to the
Regional Director for Region 25 for the purpose of
conducting an election pursuant to his Decision and
Direction of Election, as modified herein." The
eligibility payroll period for the election shall be that
covering more than one tractor, there is an inadequate factual basis for
determining whether or not they are supervisors as defined in the Act.
Accordingly, if there are such "multiple" owner-operators, they shall be
permitted to vote under challenge.
" At the hearing, Petitioner indicated an interest in proceeding to an
election in the broader unit asserted by the Employer to be appropriate. It is
unclear from the record whether Petitioner has made a sufficient showing of
interest for such an expanded unit. Accordingly, Petitioner is hereby accorded
a period of 10 days in which to submit the requisite showing of interest to
support an election herein. In the event Petitioner does not wish to proceed
with an election herein, it may withdraw its petition without prejudice by
notice to the Regional Director within 7 days from the date of this Decision
on Review.
968
PROPANE TRANSPORT, INC.
ending immediately before the date of issuance of this
Decision on Review.'2
'' In order to assure that all eligible voters may have the opportunity to 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 communicate with them. Excelsior Underwear Inc., 156
NLRB 1236 (1966); N.LR.B. v. Wyman-Gordon Co., 394 U.S. 759 (1969).
Accordingly, it is hereby directed that a revised 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 25 within 7 days of this
Decision on Review. The list may initially be used by the Regional Director to
assist in determining an adequate showing of interest. The Regional Director
shall make the list available to all parties to the election when he shall have
determined that an adequate showing of interest among the employees in the
unit found appropriate has been established. No extension of time to file this
list shall be granted by the Regional Director except in extraordinary
circumstances. Failure to comply with the requirement shall he grounds for
setting aside the election whenever proper objections are filed.
969