Sweet-Orr and Co., Inc.

National Labor Relations Board - Board Decisions

Mar 26, 1957

117 N.L.R.B. 796 (N.L.R.B. 1957)

796 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
we agree with the Regional Director that it would not be proper to dis-
franchise Schrumpf because of Jepson's inability to vote. Under the
circumstances, therefore, we find that the exceptions raise no substan-
tial or material issues with respect to the election. Accordingly, the
Employer's objections are hereby overruled.
Having found that Schrumpf was eligible to vote in the election, we
hereby overrule the challenge to her ballot, and shall direct that the bal-
lot be opened and counted.
[The Board directed that the Regional Director for the Twentieth
Region shall, within ten (10) days from the date of this Direction, open
and count the ballot of Frankie Lee Schrumpf, and serve upon the
parties a supplemental tally of ballots.]
Sweet-Orr and Co., Inc. and Confectionery and Tobacco Drivers
& Warehousemen 's Union , Local 805 International Brotherhood
of Teamsters AFL-CIO, Petitioner. Case No. 2-RC-8541. March
26,1957
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, a hearing was held before Arthur A. Greenstein, hear-
ing officer. The hearing officer's rulings made at the hearing are free
from prejudicial error and are hereby affirmed.
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 Employer refused to stipulate that the Petitioner is a labor
organization within the meaning of the Act. The record shows that
it is an organization which represents employees for collective bar-
gaining purposes, and we find that it is a labor organization within the
meaning of Section 2 (5) of the Act.
3. A question affecting commerce exists concerning the representa-
tion of employees of the Employer within the meaning of Section 9
(c) (1) and Section 2 (6) and (7) of the Act.
4. The Employer is engaged in the manufacture and sale of work
clothes with its principal office in New York City, and plants in New
York, New Jersey, Pennsylvania, and Virginia. The Petitioner seeks
a unit of outside salesmen excluding all other employees. The Em-
ployer contends that its outside salesmen whom it refers to as "sales
representatives" are independent contractors. As an alternate posi-
tion if the Board does not find them to be independent contractors, the
Employer urges that the unit should include, in addition to the sales
representatives, the industrial representative and the manufacturer's
representatives located at Seattle, Washington, and Puerto Rico. At
117 NLRB No. 112.
SWEET-ORR AND CO., INC. 797
the hearing the Petitioner agreed to the inclusion of the industrial
representative.
There are 21 sales representatives assigned to territories throughout
the United States. The industrial representative, whose position is
otherwise the same as that of a sales representative, has no designated
geographic territory, but sells to commercial establishments which
have 100 or more employees. The manufacturer's representatives are
located in Seattle, Washington, Puerto Rico, the Belgian Congo, and
Denmark. The representatives in the Belgian Congo and Denmark
are companies; the representative in Puerto Rico is an association of
three men. The manufacturer's representative in Seattle, who covers
in general the States of Washington, Oregon, Montana, and Idaho
and the Territory of Alaska, is an individual.
The full relationship between the Employer and the various repre-
sentatives is not set forth in a written contract. The Employer in-
troduced into evidence copies of letters it had written to certain sales
representatives and certain manufacturer's representatives bearing
upon the terms of their relationship. The letter to the sales repre-
sentative states that confirming a verbal agreement the sales repre-
sentative is "employed by Sweet-Orr as a regular salesman." It sets
forth the territory "assigned" the sales representative, the commission
rate, the terms of account, and refers to an agreement covering sell-
ing materials which the sales representative is to sign. The letter to
the manufacturer's representative states that it confirms a verbal
agreement "appointing you a Manufacturer's Representative." It
sets forth the territory in which the representative is to represent
the Employer, the commission rate, the terms of account, and also
refers to an agreement regarding selling materials to be signed by the
representative.
The Employer's sales manager testified that in the last 17 years
(the period he has been with the Company) all representatives have
signed agreements with respect to selling materials. These agree-
ments provide that the Employer will furnish sample garments,
swatches, forms and stationery, credit information, sample cases,
advertising material, and all other supplies necessary to represent the
Employer's line adequately. The supplies remain the property of
the Employer and in case of theft, the Employer agrees to share the
loss equally with the representative. He further stated that the prin-
cipal advertising plan of the Employer was to match the retailer's
dollar-a 50-50 cooperative newspaper advertising plan. All repre-
sentatives submit orders on the Employer's forms and all billing is
made by and payable to the Employer. Customer's credit is deter-
mined by the Employer's credit department. However, at times a
representative's request for an extension of credit to a customer may
be granted.
798 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The sales representatives carry only the Employer's line of mer-
chandise. The manufacturer's representatives maintain their own
offices and clerical staffs and represent other manufacturers in addition
to the Employer. However, they may not carry a competing line and
it was brought out at the hearing that the Employer had "fired" a
manufacturer's representative for doing so.
All types of representatives are paid by straight commissions : 5
percent in the New York metropolitan area, 6 percent in New Eng-
land, Pennsylvania, Virginia, and Maryland, and 7 percent in the
remaining United States. Sales representatives are permitted a draw
against commissions on orders shipped. No such arrangement exists
for manufacturer's representatives. Monthly settlements are made
with the sales representatives, but a certain amount is held back and
at the end of the year a final settlement is made. Their net incomes
range from $6,000 to $20,000 per year. The Employer deducts from
the commissions of the sales and industrial representatives income tax,
social-security tax, and New York State disability insurance. The
Employer makes no tax deductions from the commissions of the
manufacturer's representatives. The financial relationship with the
manufacturer's representatives in the Belgian Congo and in Denmark
differs from that of the representatives in the United States due to
the nature of foreign business practices. The foreign representatives
send letters of credit from which they are permitted to deduct their
commission rate from the face of the invoice.
The sales representatives operate cars and the Employer shares in
the public liability and property damage insurance premiums. The
Employer pays no travel expense to representatives except when it
calls the sales representatives into the New York office for meetings.
All representatives have the option of participating in the Employer's
group life insurance and group hospitalization plans. No manufac-
turer's representative, however, has requested inclusion in such plans.
All representatives are required to notify the Employer in advance
of the time they intend to take vacations.
The industrial and sales representatives submit detailed weekly
reports which contain a listing of accounts sold, accounts not sold,
and the following week itinerary or advance list. Short absences are
reflected in this report which is scrutinized at the office to be sure all
potential customers have been contacted. Manufacturer's representa-
tives do not submit weekly reports. The sales manager testified that
the company had a "complete sales control division." Lists of poten-
tial customers are sent out from the office as are notifications of order
cancellations with the suggestion that these customers be contacted.
The Employer puts out a dollar quota for sales representatives, and,
all sales representatives in the general area of New York are required
to attend a school of instruction by an instructor designated by the
SWEET-ORR AND CO., INC. 799
Employer for purposes of merchandising and selling. Some of the.
other representatives are requested to attend at the Employer's
expense.
The sales manager testified that the Employer expected representa-
tives to work 5 full days a week and from 9 a. in. to 5 p. in., but that
one could not hold salesmen to rigid hours. He also stated that he
occasionally went out into the field and accompanied a sales repre-
sentative on his route and that sales representatives were expected
to service their territories personally as they were hired because of
their personality and ability. He recalled one instance when a sales
representative became ill and the Employer selected a man to cover
his territory for him. Sales representatives go into the New York
office occasionally for sales meetings which are held semiannually
or to check on shipments to customers.
As the Board has held in numerous cases, the determination of
whether an individual is an independent contractor or an employee
under the Act requires the application of the common-law "right of
control" test.' Under this test, an employer-employee relationship
exists where the person for whom the services are performed reserves
the right to control not only the end to be achieved, but also the manner
and means to be used in reaching such end. The resolution of this
question depends on the facts of each case, and no one factor is
determinative.
In this case, the sales and industrial representatives are permitted
considerable latitude with respect to the manner and means of servicing
their territories. Thus, they arrange their call list, decide the hours
they work, and solicit new accounts as well as service old customers.
However, the Employer suggests methods, potential customers, re-
quires many of these representatives to attend a training school, estab-
lishes a quota, and keeps a check on the activities of the sales and indus-
trial representatives by requiring detailed weekly reports. It also
retains ownership of all samples, sample cases, and other supplies. The
Employer deducts from the commission checks of the sales and in-
dustrial representatives withholding taxes and social-security taxes,
and at the end of the year gives them Internal Revenue Form W-2.
The sales and industrial representatives sell only the Employer's mer,
chandise and are hired because of the personal service they can render
the Employer. We believe that these circumstances, particularly the
close supervision exercised over the sales and industrial representatives
by means of the weekly reports, show that the Employer has reserved
to itself the right to control the manner and means by which they per-
form their services as well as the end to be achieved. Accordingly, we
find that the sales and industrial representatives are not independent
I See, for example , Bob, Inc., 116 NLRB 1931.
800 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
contractors but are employees within the meaning of Section 2 (3) of
the Act.2
The Employer has requested that if the Board establishes a unit of
sales representatives it should include the manufacturer's representa-
tives in Seattle and in Puerto Rico in the unit. It does not contend that
the manufacturer's representatives in Denmark or the Belgian Congo
should be included. The facts recited above indicate that the manufac-
turer's representatives occupy a position which varies considerably
from that of the sales and industrial representatives. Only one of them
is an individual, the others being business companies or associations.
They carry other lines of merchandise in addition to that of the Em-
ployer. They maintain their own offices. They do not report on their
activities to the Employer in the frequent, detailed manner that the
sales and industrial representatives do. The Employer does not make
tax deductions from their commission. We conclude that the relation-
ship between the Employer and the manufacturer's representatives is
more like that of an independent contractor than is the relationship be-
tween the Employer and the sales and industrial representatives.
Without deciding whether the manufacturer's representatives are in-
dependent contractors or employees, however, we find that their rela-
tionship with the Employer, the conditions under which they operate,
and their interests differ to such an extent from those of the sales and
industrial representatives that they should not be included in a unit
with these employees. Accordingly, we shall exclude them from the
appropriate unit.
We find that the following employees of the Employer constitute a
unit appropriate for the purposes of collective bargaining within the
meaning of Section 9 (b) of the Act:
All sales representatives (outside salesmen) and the industrial repre-
sentative of Sweet-Orr and Co., Inc., wherever located, excluding all
other employees, manufacturer's representatives, guards, and super-
visors as defined in the Act.
[Text of Direction of Election omitted from publication.]
' See N. L R B v Phoenix Mutual Life Insurance Company, 167 F. 2d 983 (C A 7),
cert denied 335 U S 845, Golden State Agency, Inc, 101 NLRB 1775.
Temco Aircraft Corporation and International Union , United
Automobile , Aircraft and Agricultural Implement Workers of
America (UAW-AFL-CIO), Petitioner. Case No. 16-RC-1932.
March 26,1957
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, a hearing was held before John F. Funke, hearing
117 NLRB No. 119.