Southwestern Associated Telephone Co.

National Labor Relations Board - Board Decisions

Apr 2, 1948

76 N.L.R.B. 1105 (N.L.R.B. 1948)

In the Matter of SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY AND
PRESCOTT ARKANSAS TELEPHONE CORPORATION, EMPLOYER and
SOUTHWESTERN TELEPHONE W ORKERS UNION, PETITIONER
Case No. 16E-R-5.-Decided April 2, 1948
Messrs . Jack M. Randal , R. B. Fairly , Roy Autry , and J . C. Rey-
nolds , of Lubbock , Tex., for the Employer.
Miss Lenna K. Thicker , of Houston , Tex., for the Petitioner.
Mr. J. V. Null, of San Antonio, Tex ., for the Intervenor.
DECISION
AND
DIRECTION OF ELECTION
Upon an amended petition duly filed, hearing in this case was held
at Lubbock, Texas, on May 15, 1947, before George Yager, hearing
officer. The hearing officer's rulings made at the hearing are free from
prejudicial error and are hereby affirmed.
After the hearing was terminated, the Petitioner addressed a motion
to the Board requesting that the record and the stenographic report of
the hearing in this proceeding be supplemented to include a statement
clarifying the position of the Petitioner with respect to the proposed
unit. The Employer opposes the granting of the motion. Because
the matter which the Petitioner would add is largely argumentative,
the motion is denied. We shall, however, treat the Petitioner's motion
as supplemental to its brief filed herein, and shall regard the Em-
ployer's answer to the motion as an answering brief.,
Two motions by the Intervenor, requesting that the petition herein
be dismissed because certain employees had signed authorization cards
allegedly as the result of misrepresentations made to them by the Peti-
tioner, were also addressed to the Board after the hearing was closed.
In support of its motions the Intervenor submitted statements signed
by a number of employees repudiating their previous signed authoriza-
tions of the Petitioner. The Intervenor's motions are denied. A
I The positions of the parties with respect to the proposed unit are indicated in Section
IV, infra.
76 N. L. It. B., No. 157.
1105
1106 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
prima facie showing of representation has been made by the Petitioner,
and the representation question presented in this proceeding can best
be resolved by an election by secret ballot.2
Upon the entire record in the case, the National Labor Relations
Board makes the following :
FINDINGS OF FACT
I. THE BUSINESS OF THE EMPLOYER 3
Southwestern Associated Telephone Company, herein called the
Southwestern Company, is a Delaware corporation and a subsidiary
of the General Telephone Corporation, with its principal offices at
Lubbock, Texas. It is engaged, in collaboration with the Bell Tele-
phone System, in the business of receiving and transmitting telephone
messages and communications wholly within the State of Texas; and to
and from States and Territories of the United States and foreign
countries. It principally receives, handles, and transmits communica-
tions and messages originating in the States of Texas, New Mexico,
Oklahoma, Louisiana, and Kansas. In addition, in the course of its
business, it operates and maintains transmission lines between points
in the State of Texas, and points in the States of Oklahoma and
Kansas. During the year 1940, its gross income was more than
$1,000,000; and since 1940, 12 additional telephone exchanges have
been added to its systems.
Prescott Arkansas Telephone Corporation, herein called the Prescott
Corporation, is also a Delaware corporation and a subsidiary of the
General Telephone Corporation, with its principal offices at Lubbock,
Texas. It is engaged, in collaboration with the Bell Telephone System,
in the business of receiving and transmitting telephone messages and
communications wholly within the State of Arkansas, and to and
from States and Territories of the United States and foreign countries.
It principally receives, handles, and transmits communications and
messages originating in the State of Arkansas. In addition, in the
course of its business, it maintains transmission lines within the State
of Arkansas. During the 6-month period ending December 31, 1946,
its gross income was more than $46,000.
The Southwestern Company and the Prescott Corporation each
admits, and we find, that each is engaged in commerce within the mean-
ing of the National Labor Relations Act.
Z See Matter of Hortes, Manufacturing Company , 75 N L. R. B., 1232 , Matter of
Jefferson Island Salt Mining Company , 67 N L It. B 1282
a For reasons hereinafter stated , we find that the two corporations herein named con-
stitute a single Employer within the meaning of the National Labor Relations Act.
SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY 1107
II. THE ORGANIZATIONS INVOLVED
The Petitioner is a labor organization claiming to represent em-
ployees of the Employer.
International Brotherhood of Electrical Workers, herein called the
Intervenor, is a labor organization affiliated with the American Fed-
eration of Labor. Locals 13-901 and B-66, chartered by the Inter-
venor, claim to represent employees of the Employer.
III. THE QUESTION CONCERNING REPRESENTATION
The Employer refuses to recognize the Petitioner as the exclusive
bargaining representative of employees in the proposed unit.
Both the Petitioner and the Intervenor have in the past contracted
with the Southwestern Company on behalf of employees falling within
the scope of the unit herein requested. Their most recent contracts
became effective on February 1, 1946. The Intervenor's contract
was operative for 1 year, and from year to year thereafter unless notice
of termination or desire to modify its provisions was given by either
party at le,,st 30 days prior to its terminal date. Timely notice, caus-
ing its contract to terminate, was effected by the Intervenor.4 The
Petitioner's contract was likewise made effective for 1 year, "and there-
after unless terminated by ninety (90) days notice in writing from
either party to the other." Notice terminating the contract has not
been effected. No claim is made by any party that the Petitioner's
contract constitutes a bar to this proceeding; nor, as we find, could
that contract constitute such a bar because, without considering the
scope of the contract and its application to employees in the proposed
lu,it, it is now a contract of indefinite duration and is, therefore, with-
out operative effect in this proceeding.
We find that a question affecting commerce exists concerning the
representation of employees of the Employer, within the meaning of
Section 9 (c) (1) and Section 2 (6) and (7) of the Act.
IV. TIIE APPROPRIATE UNIT
A. The operations of the Employer
The Southwestern Company divides its operations into 11 geo-
graphical areas, known as districts. A network of transmission lines
connects the districts, and the cities and towns within the districts, in
4In its motion to intervene filed on December 80, 1946, the Inteivenor contended that
its contract barred the present proceeding . The contention was not pressed at the healing
and has no merit
"Hatter of The Flintkote Company , 63 N L R. B 914
781902-48-vol 76-71
1 108 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
which are located the telephone exchanges. Six of the 11 districts
cover areas wholly within Texas; 3 are almost entirely within Texas,
each of them covering a relatively small area within one of the adjacent.
States of New Mexico, Colorado, and Kansas; I district covers all
area about half of which is within Texas, and the other half within
New Mexico; and the remaining district is divided about equally be-
tween Texas and the States of Louisiana and Arkansas. The geo-
graphical extent of the operational area thus covered is great; for
example, the exchanges of Goose Creek and Hobbs are situated in
different districts within Texas, but are approximately 700 miles apart.
One of the districts in which the Southwestern Company owns lines
and equipment is located in the southeastern portion of Texas and is
known as the Prescott District. The Prescott District includes 12 ex-
changes purchased in November 1946, and now incorporated into the
Southwestern Company systems The actual administration of the
Prescott District, however, emanates from the city of Prescott, in Ar-
kansas, which is not itself a part of the Prescott District. Such admin-
istration is performed, on behalf of the Southwestern Company. by a
district manager and employee of the Prescott Corporation, who also
administers the latter's operations in Arkansas. This arrangement is
deemed temporary, and it is contemplated that at some future date
exchanges now within the Prescott District will be transferred to other
districts of the Southwestern Company for administrative purposes.
There are approximately 170 exchanges in the system of the South-
western Company at which telephone operating and clerical em-
ployees, classified as traffic and commercial employees, are employed.
At approximately 50 of the exchanges, known as company-operated
exchanges, employees are hired and paid directly by the Southwestern
Company.' Approximately 121 of the exchanges are known as
agency exchanges, the method of operation of which is discussed
below. In addition, there are an undisclosed number of unattended
dial exchanges in the system, at which there are no clerical and operat-
ing employees.
The property of the Prescott Corporation is all within the State
of Arkansas, four of its nine operating exchanges being located in
the southwestern portion, and five in the central-eastern portion of
the State. The record indicates that this property is actually owned
by the General Telephone Corporation. It is presently being
"operated" by the Southwestern Company, as agent for the General
6 A thirteenth exchange , the Linden exchange , is located within the adjacent New Boston
District, but is administered as part of the Prescott District
7 There are approximately 670 non-supervisory traffic and commercial department em-
ployees at the company -operated exchanges of the Southwestern Company.
SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY 1109
Telephone Corporation under a temporary arrangement. There are
nine exchanges in the system of the Prescott Corporation s
B. The contentions of the parties
The Petitioner, which currently represents traffic department em-
ployees at 18 company-operated exchanges of the Southwestern Com-
pany, seeks a single unit of all non-supervisory telephone operating
and clerical employees in the traffic and commercial departments at
all exchanges of both the Southwestern Company and the Prescott
Corporation, including employees in the general offices and employees
working under Agents at the agency exchanges. The parties are
agreed that operators, part-time operators, occasional operators,
cashiers, district clerks, and district stenographer-cashiers should be
included, and that chief operators, evening chief operators, and chief
open atoi•-i ashiers should be excluded from any unit found appropriate.
The Employer, however, would exclude employees working under
Agents, and further contends that employees at exchanges of the
Southwestern Company should be in a unit separate from any unit
involving employees at exchanges of the Prescott Corporation. The
Intervenor, which currently represents traffic and commercial depart-
ment employees at 14 ccinpany-operated exchanges of the So(ith-
western Company, has no interest in the organization and representa-
tion of employees whom it now does not represent, and, in opposition
to the Petitioner, urges the continuation of the status quo insofar as
the representation of those employees is concerned.
C. The scope of the unit
The divergent positions taken by the parties with respect to the
scope of the unit sought by the Petitioner makes pertinent a review
of the bargaining history affecting employees of the Southwestern
Company and the Prescott Corporation, and a consideration of the
relationship which exists between the two corporations.
The record is silent as to the bargaining history, if any, involving
employees of the Prescott Corporation.
The history of collective bargaining of the traffic and commercial
department employees a at company-operated exchanges 1° of the
8 Four of the exchanges of the Prescott Corporation are company -operated , 3 are agency
exchanges , and 2 are unattended dial exchanges There are approximately 16 traffic and
commercial depaitment employees at the company -operated exchanges These statistics,
supplied by the Regional Director, were not introduced into evidence, and consequently are
not relied upon by the Board in arriving at its findings and conclusions
°Since September 1941, all plant construction and maintenance ewpio)eea of South-
western Company have been represented for collective bargaining purposes by the Petitioner.
The Intervenor previously represented such employees in two of the operating districts
10 There is no bargaining history affecting employees at agency exchanges of [lie South-
western Company.
1110 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Southwestern Company, is, in effect, a history of the limitations im-
posed on the extent of the recognition originally accorded the in-
stant Petitioner. In early 1941, the Petitioner was recognized by
the Southwestern Company as the bargaining representative of all
traffic employees, excepting those at eight exchanges., Traffic em-
ployees at the excepted exchanges, including employees now considered
within the commercial department, were, in August 1941, found by
the Board to constitute a unit appropriate for bargaining purposes 12
The Intervenor, in November 1941, was certified as the bargaining
representative of these employees.13 In a subsequent consent election
conducted by the Board in April 1943,14 the Intervenor was also desig-
nated as the representative of such employees at six additional ex-
changes of the Southwestern Companyl2 Subsequently, pursuant to a
showing of majority designation, the Intervenor was accorded recogni-
t ion by the Southwestern Company as representative of employees at
another exchange." Collective bargaining between the Southwestern
Company and the Intervenor, on behalf of the employees it thus re-
presents, has been reflected in a series of bargaining agreements.
After the 1943 consent election, the bargaining relationship be-
tween the Southwestern Company and the Petitioner was redefined.
Accordingly, the Petitioner was recognized as the bargaining repre-
sentative of traffic employees at only 17 exchanges " Subsequently,
upon proof of majority designation, the Petitioner was recognized as
representative of such employees at 2 additional exchanges." A
series of bargaining agreements likewise has resulted from the nego-
tiations of the Petitioner and the Southwestern Company.
As a consequence of the events described above, collective bargain-
ing for traffic and commercial department employees at company-
operated exchanges of the Southwestern Company is currently carried
on by both the Petitioner and the Intervenor. The establishment of
the bargaining units described above, moreover, has been accomplished
without regard to district lines. Thus, the Board-established unit
of 1941, and the unit in the Board-conducted election of 1943 involved,
respectively, exchanges in two and three districts. District-wide or-
ganization of any magnitude, moreover, has not hitherto been com-
pletely accomplished, and at the present time in only one district are
11 Lemesa , Brownfield , Haskell , Tahoka , Post, Seagraves , Denver City, and Allred The
Allred exchange has been discontinued
12 Matter of Southwestern Associated Telephone Company, 35 N. L R B. 84
11Matter of Southwestern Associated Telephone Company , 36 N L R. B 794
11 Case No 16-R-575.
Goose Creek , Dickinson , Alta Loma , Palaeios , Carlsbad , and Hobbs.
The Daingerfield exchange.
17 Guymen, Shattuck , Waynoka , Clarendon , Dalhart . Gonzales , Littlefield, Memphis, (l ine,,
Paducah , Perryton , Raymondville , Robstown , Seymour, Taft , Wellington , and Wesla(o
18 Levelland and Vivian.
SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY 1111
all the company-operated exchanges involved in collective bargaining.
As a result, therefore, the exchanges at which employees are repre-
sented are widely scattered throughout the system of the South-
western Company.
In Matter of Southern Bell Telephone and Telegraph Cotnpan g,1°
the Board indicated its persuasion that "attempts at bargaining in the
telephone communications industry which fail ultimately to contem-
plate organization in company-wide units, are not practical," and,
pointing to the highly integrated and interdependent character of the
operations of the industry, the Board found that a system-wide unit
was appropriate. We are here, under circumstances like those which
existed in that case, similarly convinced that a system-wide unit of
traffic and commercial department employees is appropriate for col-
lective bargaining.20 In reaching that conclusion, we reject as un-
tenable the unit claim of the Intervenor, here seeking the continuation
of a narrower bargaining unit, which is founded largely on the limited
extent of its own organization of employees, and which appears as the
outgrowth of the organizing activities of two competing labor unions
operating within different geographical and administrative segments
of the Southwestern Company. The Act expressly precludes us
from considering as controlling the extent of the Intervenor's or-
ganization of employees,21 and we, moreover, have frequently stated
in the past where organization has successfully proceeded on the basis
of a large unit, which is otherwise appropriate, extent of organization
may not be invoked to justify the finding of a smaller unit 22 Our
conclusion that a system-wide unit is appropriate will conform the
scope of the unit for traffic and commercial department employees of
the Southwestern Company to the scope of the unit which has existed
since 1941 for plant construction and maintenance employees.
As stated above, the Southwestern Company and the Prescott Cor-
poration urge that separate bargaining units should be established for
their respective employees, contending that they are separate cor-
porate entities, and that whatever interrelationship exists between
them is only of a temporary nature and subject to severance at any
time. We do not agree that separate units are appropriate. Both the
19 55 N. L R . B. 1058, 1064
20 Company -wide units have also been established in the telephone industry in the recent
cases of Matter of West Coast Telephone Company , 64 N L . R B 70 and 66 N. L. R. B
1073; Matter of Illinois Consolidated Telephone Company, 61 N L. R B 447 ; Matter of
Ohio Telephone Service Company, 72 N. L It. B. 488.
21 Section 9 (e) (5) of the Act states in pertinent part "In determining whether a unit
is appropriate . . the extent to which the employees have organized shall not be
controlling."
22 Mattes of Ohio Telephone Seri,ice Coiiipany, 72 N L R. B. 488, ,flatter of West Coast
Telephone Company, 64 N. L. It. B 70 ; Mattel of Southern Bell Telephone and Telegraph
Company, 55 N. L. R B. 1058.
1112 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Southwestern Company and the Prescott Corporation are engaged in
the same business, and are owned and controlled by a single corpora-
tion. High managerial and executive positions in both corporations
are held by the same individuals. They occupy the same general of-
fices, and utilize the same general office personnel. Labor relations
matters affecting both corporations are handled by the same officials.
The close connection and interrelationship that exist between them are
significantly exemplified by the methods used for the administration of
the Prescott District and the exchanges of the Prescott Corporation,
pursuant to which both the Southwestern Company and the Prescott
Corporation perform functions normally within the administrative
sphere of the other. The record contains no factual substantiation for
the contention that such managerial and operational fusion is tempo-
rary. In view of their common interlocking interests, the reflection of
those integrated interests here noted, the control of labor relations by
the same officials, and on the basis of the entire record in, this proceed-
ing, we conclude and find that the Southwestern Company and the
Prescott Corporation constitute a single Employer within the meaning
of Section 2 (2) of the Act.23 We further find that traffic and com-
mercial department employees of both corporations constitute a single
appropriate bargaining unit.24
D. The agency exchanges
Approximately 125 of the exchanges of the-Southwestern Company
and the Prescott Corporation are known as agency exchanges. The
agency exchanges are located in rural and thinly populated communi-
ties. Each agency exchange serves a small number of telephones; ap-
proximately 10 of the exchanges serve less than 25 telephones, and the
largest agency exchange serves approximately 300 telephones.
The Southwestern Company enters into formal contracts with in-
dividuals for the operation of its agency exchanges. The contracts
are called agency agreements, and the individual contractors are desig-
nated as Operating Agents, or Agents. The contracts recite that the
contractor is "acting as an independent contractor." A typical agency
agreement provides that, in return for the payment to the Agent of a
monthly compensation, which is determined according to a schedule
based upon the amount of revenue collected by the Agent and the num-
ber of telephones and stations serviced by his exchange, the Agent
undertakes and agrees: (1) to operate the exchange on a 24-hour per
23 See Matter of Joseph It . Osherenko, 71 N L. R B. 418; Matter of Trans -Bridge Lines,
Inc., 63 N. L. R. B . 807; Matter of Penokee Veneer Company, 51 N. L. R . B. 997.
24 The propriety of interdepartmental units of employees in the telephone industry has
been considered and established in earlier cases See Matter of The People's Telephone
Coy poration, 69 N L. R. B 540, 543, and cases cited therein.
SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY 1113
day basis , in accordance with the operating rules and regulations of
the Southwestern Company; ( 2) to provide at his own expense all
operators necessary for the operation of the exchange , and to report
monthly, on forms furnished by the Southwestern Company, the num-
ber of hours worked and the amount paid each operator so hired; (3)
at his own expense , to do, or cause to be done, all work involved in the
making and accepting of contract orders, and to collect all revenue
due the Southwestern Company for services rendered through said
exchange ; and (4 ) to make all necessary tests directed by the South-
western Company on telephone lines and the agency switchboard, and
to snake such reports concerning the lines and equipment as the latter
may require . Pursuant to such agreement , an exchange switchboard
and other agency equipment are placed by the Southwestern Company
in a building it owns or leases, and the Southwestern Company under-
takes to maintain and repair the switchboard and its equipment. Liv-
ing quarters in the same building are furnished to the Agent without
charge of rent by the Southwestern Company, which is specifically
accorded access at all times to the agency premises and the Agent's
quarters. The Agent, however, pays all charges connected with the
heating, lighting, and servicing of the exchange premises and his
quarters.
Agency agreements are "in force" for 1 year from their effective date
and "thereafter to be terminated by thirty ( 30) days' notice in writing
given by either party. " The Southwestern Company, however, under
the terms of the agreement , specifically "reserves the right to cancel
the terms of the agreement with, or without cause, upon giving one (1)
day's previous notice to the Agent."
The agency agreements extend privileges to the Agents which are
accorded to employees of the Southwestern Company under a group
insurance plan of the General Telephone Corporation . The Agents,
however, are denied any privileges and benefits under the vacation,
sick leave, and other welfare plans of the Southwestern Company.
Although the topics are not the subject of treatment in the agency
agreements , as a matter of practice the Southwestern Company pays
the premiums on Workmen 's Compensation . insurance covering the
Agents, and also effects tax deductions from amounts due the Agents,
and pays excise taxes with respect to them , under the provisions of the
Social Security Act.
The agency agreements do not grant to the Southwestern Company
any specified rights or powers with respect to the procurement, hire,
discharge , hours, wages , or other terms and conditions of employment,
of operators under the Agents at the agency exchanges . Under the
practice of the parties, all such affairs are handled by the Agents at
1114 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
their own discretion, and without any interference on the part of the
Southwestern Company. The Agents are generally women; operating
help, in many instances, is procured from within their immediate
families. As is the case with respect to the Agents, the Southwestern
Company pays the cost of Workmen's Compensation coverage for
operators under the Agents, and, on the basis of required reports
furnished by the Agents, makes the appropriate tax payments for such
personnel pursuant to the Social Security Act. The agency agreements
provide for prompt reports to the Southwestern Company in case of
accidents to operators hired by the Agents, in which case the South-
western Company agrees to handle the matters and to free the Agents
from any financial responsibility arising out of the accidents.
The Prescott Corporation conducts operations at agency exchanges
in a manner similar to that of the Southwestern Company. Relations
with its Agents are also set forth in agency agreements containing pro-
visions like those stated above, and the practice thereunder is generally
the same as is the case with the Southwestern Company. The Agents
of the Prescott Corporation, however, are paid on a "flat rate basis,"
and operators hired by the Agents are paid directly by the Prescott
Corporation at wage rates which are set by the latter. Aside from
such differences, relations among the Prescott Corporation, the Agents,
and the agency operators, are the same as exist within the organization
of the Southwestern Company.
The Petitioner, asserting that an employment relationship exists
between Agents and the corporation concerned, would include in the
unit operators working under the Agents, and would exclude the
Agents on the ground that they are supervisors. The Southwestern
Company and the Prescott Corporation, asserting that the Agents are
independent contractors, would exclude from the unit both the Agents
and the personnel working under their direction.
While the matter is not entirely free from doubt we are of the opin-
ion and find that the Agents are independent contractors, and, there-
fore, without regard to their status as supervisors, are not employees
within the meaning of the Act 25 A number of factors and considera-
tions have led us to that conclusion. The arrangements between the
parties leave the Agents with complete responsibility for the conduct
of the agency exchanges, and that responsibility is discharged by them
with little, or no, interference by the corporations. The agency agree-
ments provide in essential part for the operation of the agencies on a
24-hour basis, the making of contract orders, and the collection of
revenue resulting therefrom; the details of the telephone operations,
25 Section 2 (3) of the Act provides in pertinent part: "The term 'employee' .. . shall
not include . . . any individual having the status of an independent contractor .
SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY 1115
of the snaking of the contract orders, and of the manner of collecting
the revenue are left to the Agents. In short, the Employer is con-
cerned with achieving the efficient operation of the exchanges and the
rendition of satisfactory telephone service; the method and means by
which those results are accomplished are left to the Agents. Signifi-
cant in this respect is the fact that the Agents are not required to
devote their time exclusively to the affairs and operation of the agency
exchanges . In fact, the agency agreements do not even specify the
amount of time which the Agents must devote to agency work.
_ The fact that the corporations have no right of control over the
hiring, disciplining , and discharging of the operators under the Agents
is, in our opinion , most persuasive . As was stated under similar cir-
cumstances by the Circuit Court of Appeals for the Seventh Circuit in
Williams v. United States: 26
It is difficult to conceive of an employer-employee relationship
without such a right [the non-existent right of the alleged em-
ployer to dire and discharge orchestra members controlled by the
alleged employee -orchestra leader] on the part of the employer.
It is equally, inconceivable that such a right rests solely in the
hands of the employee. Without this right there could be no
effective control of an employee.
Moreover, the broad discretionary powers given to its approximately
121 Agents by the Southwestern Company, with respect to the wages of
operators in the agency exchanges, serve to indicate that the Agents
are engaged in an independent business enterprise . Thus, while the
compensation received by the Agents is fixed by factors which are
almost completely beyond the control of the Agents , the amounts which
ultimately accrue to their beneficial use are largely determined by
whether the Agents decide to do the work themselves , or engage others
to do it.
In reaching the conclusion that the Agents are independent con-
tractors , we have not overlooked the fact that the corporations make
payments on Workmen's Compensation and Social Security coverages
for the Agents and the operators under the Agents. This factor is
not in itself decisive , since such payments by the corporations may
be regarded , for example , as a form of business insurance designed to
protect their business interests .27 Similarly , we do not regard as con-
trolling the power of the two corporations to cancel the agency agree-
ments "with, or without cause." The possibility admittedly exists
that such powers may be used as a club to force compliance . Never-
2" 126 F ( 2d) 129 , 133, cert denied , 317 U S. 655
21 See Matter of Red River Lumber Company , 5 N L R B 662, 672
1116 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
theless, the power to cancel does not give to the corporations rights
of control as to the methods and means of operating the agency ex-
changes which are not given directly by the agency agreements them-
selves. Nor, in our opinion, do the requirements that certain records
be kept by the Agents, and that reports be furnished in certain in-
stances, constitute control over the methods and means by which the
agency exchanges render telephone service.
From our finding that the Agents are independent contractors, it
follows that the operators under the Agents are not employees of the
Southwestern Company and the Prescott Corporation. Accordingly,
we shall exclude from the unit all Agents and the operators in the
agency exchanges 28
We find that all telephone operating and clerical employees in the
traffic and commercial departments at the various exchanges of South-
western Associated Telephone Company and Prescott Arkansas Cor-
poration, and in their general offices at Lubbock, Texas, including op-
erators, part-time operators, occasional operators, cashiers, assistant
cashiers, district clerks, and district stenographer-cashiers, but ex-
cluding Agents, operators and all employees at agency exchanges,
professional employees, guards, chief operators, evening chief op-
erators, operator-cashiers, and other supervisors, constitute a unit
appropriate for the purposes of collective bargaining within the
meaning of Section 9 (b) of the Act. -
DIRECTION OF ELECTION 29
As part of the investigation to ascertain representatives for the
purposes of collective bargaining with Southwestern Associated Tele-
phone Company and Prescott Arkansas Telephone Corporation, both
at Lubbock, Texas, an election by secret ballot shall be conducted as
early as possible, but not later than thirty (30) days from the date
of this Direction, under the direction and supervision of the Regional
Director for the Sixteenth Region, and subject to Sections 203.61 and
28 Our conclusions that the Agents are independent contractors and the operators are not
employees accord with previous Board determinations involving similar factual situations
See Matter of The Kansas City Star Company, 76 N. L. R. B. 384 (home delivery carriers
of newspapers held independent contractors) ; Matter of Southeastern Telephone Company,
70 N L It B. 4 (operators at agency telephone exchanges excluded fiom unit of employees
in traffic, plant, and commercial departments) ; Matter of Consolidation Coal Company,
63 N. L. R B. 169 (workers in company-owned hospital held not employees of coal coin-
pany) ; Matter of Mahoning Mining Company, 61 N L It. B 792 (operators of company-
owned fluorspar mines and machinery held independent contractors) ; Matter of Consoli-
dated Vultee Aircraft Corporation, 57 N L It. B 1680 (workers in canteen and cafeteria
concessions held not employees of company-lessor) ; Matter of Red River Lumber Company,
5 N. L. R. B. 663 (workers employed by logging and railroad contractors held not employees
of lumber null operator).
29 Any participant in the election herein may, upon its prompt request to, and approval
thereof by, the Regional Director, have its name removed from the ballot
SOUTHWESTERN ASSOCIATED TELEPHONE COMPANY 1117
203.62 of National Labor Relations Board Rules and Regulations-
Series 5, among the employees in the unit found appropriate in Section
IV, above, who were employed during the pay-roll period immediately
preceding the date of this Direction, including employees who did
not work during said pay-roll period because they were ill or on vaca-
tion or temporarily laid off, but excluding those employees who have
since quit or been discharged for cause and have not been rehired or
reinstated prior to the date of the election, and also excluding em-
ployees on strike who are not entitled to reinstatement, to determine
whether they desire to be represented by Southwestern Telephone
Workers Union, or by International Brotherhood of Electrical Work-
ers, Locals B-901 and B-66, A. F. of L., for the purposes of collective
bargaining, or by neither.
MEMBER MURDOCK took no part in the consideration of the above
Decision and Direction of Election.
CHAIRMAN HERZOG, dissenting in part:
I regret and I cannot join in so much of this decision as holds that
the Agents and therefore the operators in the agency exchanges are
not the employees of the Companies. I share my colleagues' view that
"the matter is not entirely free from doubt,," but I would resolve the
doubt the other way. The doctrine applied in the Kansas City Star
case, with which I agree, should be most cautiously extended to other
factual situations.
The elements of employer control here seem to me sufficiently strong,
especially among the Prescott Agents and operators, to warrant our
finding the operators to be employees.2 I recognize, of course, that if
the Agents are independent contractors, we may not, under the 194T
amendnients,2 hold then to be employees for the purposes of this Act.
But we still must decide, applying general principles of law to the
particular record, what relationship it is that the parties have created
in fact, rather than what they have chosen to call it on a piece of paper.
It is true that the Companies do not supervise, in detail, hiring prac-
tices or the daily work of the Agents and the operators. But this is
hardly to be expected in an enterprise that is, by its very nature, com-
prised of small units in distant and isolated communities. The equip-
ment used is the Companies' and not the Agents' ; the revenue received
is for the account of the Companies. The agency agreements them-
1 76 N. L. R. B. 384, decided February 27, 1948
2 The Agents themselves would appear to be supervisors in most instances, and therefore
not "emplovees" under Section 2 of the Act, as amended
3 Section 2 ( 3) of the amended Act.
1118 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
selves afford the Companies substantial control over the Agents' con-
duct. Both Companies pay for Social Security and Workmen's Conl-
pensatlon coverage of the operators. In the case of Prescott, the wage
paid the operators is fixed by the Company.
Most significant is the'fact that the agreements themselves provide
that they may be terminated by the Companies "with or without
cause," upon giving the Agent only "one clay's previous notice." This
provision for unilateral and peremptory rupture, standing by itself,
seems to me to raise a most serious question as to whether the second
party to the contract is really "independent" at all.4 Considered to-
gether with the other elements present in this record, particularly the
fact that the work of the Agents is part of the Companies' regular
business,5 it reminds sharply of a master and his servants.'
4 See henry IV Cr oss Co v Burns, 81 F (2d) 856, 861 (C C A 8. 1936) , Wabash R R
Co v. Finnegan , 67 F Supp 94, 100 (B D Mo , 1946)
s Ra therfoad Food Corp v bfcCoinb, 331 U S 722 (1947) , Southei n Rp Co v Black,
127 F (2c1) 280 (C. C A 4, 1942)
6 On closely similar facts, the Bureau of Internal Revenue ruled that Such Agents and
their helpers ate employees S S T 170 (I R B XVI-28-8814 (1937))
See the Restatement of the Law of Agency, prepared bi the American Law Institute, at
Section 220, for a recital of the factors to be considered in determining on which side
of the line a particular situation falls :
. . (2) In determining whether one acting for another is a servant or an inde-
pendent contractor, the following matters of fact, among others, are considered (a)
the extent of control which, by the agreement , the matitei may exercise over the details
of the work ; ( b) whether or not the one employed is engaged in a distinct occupation
or business , (c) the kind of occupation, with reference to whether, in the locality, the
work is usually clone under the direction of the employer or by it specialist without
supervision ; ( d) the skill required in the particular occupation , (e) whether the em-
ployer or the workman supplies the instrumentalities , tools, and the place of work for
the person doing the work ; (f) the length of time for which the person is employed ;
( g) the method of payment , whether by the time or by the job , (h) whether or not the
work is a part of the regular business of the employer , (i) whether of not the parties
believe they are cleating the ielationshnp of master and servant