Toledo Scale Co.

National Labor Relations Board - Board Decisions

Apr 6, 1949

82 N.L.R.B. 826 (N.L.R.B. 1949)

In the Matter of TOLEDO SCALE COMPANY, EMPLOYER and SCALE SALES-
MEN ASSOCIATION, PETITIONER
Case No. 2-RC-01 and 3RC-795.Decided April 6,1949
DECISION
AND
DIRECTION OF ELECTION
Upon petitions duly filed, a consolidated hearing was held before
a hearing officer of the National Labor Relations Board. At the
hearing, the Employer moved to dismiss the petition upon the ground
that the employees involved are independent contractors. The mo-
tion is hereby denied for the reasons given in paragraph 4, below.
The hearing officer's rulings made at the hearing are free from pre-
judicial 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 National Labor Relations Act.
2. The Petitioner is a labor organization claiming to represent em-
ployees of the Employer.
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 appropriate unit :
The Petitioner seeks to represent a unit composed of all industrial
and retail sales representatives working out of the New York City and
Newark, New Jersey, district offices of the Employer. The Employer
does not object to the proposed grouping of employees, but contends
that these sales representatives are independent contractors and there-
fore are not within the coverage of the Act, as amended.
The Employer manufactures, distributes, and services scales and
food machines for use in retail stores and industrial establishments.
It maintains a field selling organization, under the direction of a gen-
eral sales manager whose office is in Toledo, Ohio. For the purposes
of the field organization, the United States is divided into 12 zones,
each managed by a zone manager. The zones are further divided into
districts, under district managers; each district in turn is divided into
82 N. L. R. B., No. 96.
826
TOLEDO SCALE COMPANY 827
the several territories in which the sales representatives sell Toledo
products., As their titles indicate, retail sales representatives sell to
retail stores, and industrial sales representatives sell to industrial
establishments.
Whether the sales representatives are employees within the mean-
ing of the Act is to be resolved by application of the ordinary common-
law "right of control" test z An employee relationship exists when
the person for whom the services are performed reserves the right
(even if not exercised) to control the manner and means by which the
result is accomplished.8 The facts and circumstances from which pos-
session of such power to control may be determined vary from case
to case.
In this case, the record shows that the Employer exercises a high
degree of control over the activities of its salesmen. Salesmen are
selected from among individuals who have filed applications with the
Employer. After careful consideration of the application, and after
a personal interview, a salesman is accepted by the Employer, and a
work contract is signed.
After a salesman has been accepted, he undergoes a preliminary
period of office training which lasts from 1 to 4 weeks. For the first
week or two of selling in his assigned territory, he is accompanied by
the district manager who demonstrates selling techniques to aid the
salesman . Thereafter, at any time and without request from the sales-
man, the district manager may go with the salesman on his rounds.
The district manager reports on the salesman to the zone manager.
The duties of salesmen consist primarily in calling upon prospective
customers. Their working hours are therefore spent largely "on the
road." The office of the Employer is, however, their headquarters.
There they are supplied by the Employer with desk space, writing
paper, stamps, telephone service, and stenographic assistance. Sales-
men are expected to have all their business mail addressed to them at
the Employer's office, and all mail received is opened before it is put
into the salesman's own mail box.
Salesmen work under contracts which are terminable unilaterally
by either party, at any time, without notice. A contract may be
amended by mutual consent. In actual practice, the Employer pro-
poses changes which the salesman must accept; if he refuses, his con-
tract is deemed terminated. The contract describes the geographical
limits of the salesman's territory, and may exclude certain accounts
located within the territory. It also sets the rate of commission on the
1 Zone managers and district managers are admittedly employees of the Employer.
2 Matter of Steinberg & Company, 78 N. L. R. B . 211 ; Matter of San Marcos Telephone
Company, 81 N. L. R B. 314.
8 Singer Manufacturing Co. v. Rahn, 132 U. S. 518 ( 1889).
828 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
products handled by the salesman. Territories, exclusions, and com-
missions may be, and frequently have been, changed by amendment.
Incorporated by reference in each contract is a book of Decisions which
set forth in detail procedures to be followed in such matters as how
commissions will be figured; what advances on commissions will be
made; how advertising may be done; how collections and remittances
are to be made by the salesmen; how orders must be taken from cus-
tomers, and what credit balance must be maintained by salesmen.
Customers are considered to be customers of the Employer, and pay-
ments are made to the Employer, which later sends the salesman his
commission. Regular detailed reports are required of the salesmen
on forms which are supplied by the Employer.
The contracts are silent as to the amount of time which a salesman
must devote to selling the Employer's products, the volume of business
which must be done, the right of salesmen to employ assistants, and the
right to sell competing or non-competing goods. The record shows,
however, that in practice, control by the Employer has been exerted in
all of those matters : salesmen must report to the office of the Employer
before 9: 30 each morning, either in person or by telephone ; quotas
are set; salesmen are forbidden to hire helpers; and salesmen are
forbidden to sell other products or to conduct another business. The
foregoing factors show the characteristics of an employer-employee
relation.
It is true that there are other factors which tend to show that the
salesmen may be independent contractors. Thus, the contract under
which each salesman works specifically states that the salesman is not
an employee, but a dealer. However, attempts to label a relationship
created under a contract are not controlling.4 Nor is it decisive that
the Employer pays no Unemployment Insurance, Social Security or
Workmen's Compensation taxes for salesmen, nor withholds their
income taxes.5
Although the latter factors are some evidence of an independent
contractor status, they must be weighed against the evidence of an
employer-employee relationship. We believe that the preponderance
of the evidence clearly indicates that the relationship of the salesmen
to the Employer is that of employees rather than of independent
contractors. Accordingly we find, contrary to the Employer's con-
4 Rutherford Food Corporation v. McComb, 331 U . S. 722 ; Gulf Refining Co. v. Brown,
93 F. (2d ) 870 (C. A. 4).
Compare Matter of The Kansas City Star Company, 76 N. L . R. B. 384 , ( where the
employer did not pay such taxes and the newspaper carriers were held to be independent
contractors ), with Matter of Southwestern Assoctiated Telephone Company, 76 N L. R. B.
1105 (where the agents were also held to be independent contractors , although the
employer did pay such taxes), and with Matter of Steinberg & Company, 78 N. L. it. B. 211
( where the employer did not pay such taxes, and the trappers were held to be employees).
TOLEDO SCALE COMPANY 829
tention, that the salesmen are employees, within the meaning of the
Act.
We find that all retail and industrial sales representatives in the
Employer's district offices located at 1060 Broad Street, Newark,
New Jersey, and at 305 East 63rd Street, New York City, excluding
all production and maintenance employees, salaried employees, clerical
and professional employees, service mechanics, district sales super-
visors, district managers, zone managers and other supervisors as
defined in the Act, constitute a unit appropriate for the purposes of
collective bargaining within the meaning of Section 9 (b) of the Act.
DIRECTION OF ELECTION
As part of the investigation to ascertain representatives for the
purposes of collective bargaining with the Employer, an election by
secret ballot shall be conducted as early as possible, but not later than
30 days from the date of this Direction, under the direction and super-
vision of the Regional Director for the Region in which this case was
heard, and subject to Sections 203.61 and 203.62 of National Labor
Relations Board Rules and Regulations-Series 5, as amended, among
the employees in the unit found appropriate in paragraph numbered
4, above, who were employed during the pay-roll period immediately
preceding the date of this Direction of Election, including employees
who did not work during said pay-roll period because they were ill or
on vacation 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 exclud-
ing employees on strike who are not entitled to reinstatement, to
determine whether or not they desire to be represented, for purposes
of collective bargaining, by Scale Salesmen Association.
MEMBER GRAY took no part in the consideration of the above
Decision and Direction of Election.