Twin City Freight, Inc.

National Labor Relations Board - Board Decisions

Dec 22, 1975

221 N.L.R.B. 1219 (N.L.R.B. 1975)

TWIN CITY FREIGHT, INC. 1219
Twin City Freight , Inc., S & B Nelson , Inc. and
General Drivers Union No. 346, affiliated with
International Brotherhood of Teamsters , Chauf-
feurs, Warehousemen and Helpers of America,
Petitioner. Case 18-RC-10231
December 22, 1975
DECISION, ON REVIEW AND ORDER
On November 15, 1974, the Regional Director for
Region 18 of the National Labor Relations Board
issued a Decision and Direction of Election in the
above-entitled proceeding in which he found appro-
priate the Petitioner's requested unit of all drayage
drivers working out of the Employer's Detroit Lakes,
Minnesota, terminal, rejecting the Employer's con-
tentions that two of the three drayage drivers
involved are independent contractors and the third is
an employee of one of the independent contractors.
Thereafter, in accordance with the National Labor
Relations Board Rules and Regulations, Series 8, as
amended, the Employer filed a request for review of
the Regional Director's decision on the grounds that,
in rejecting its contentions that the drayage drivers
are not its employees, he departed from precedent
and made findings of fact which are clearly errone-
ous. The Employer also filed a motion to reopen the
record.'
On December 16, 1974, the Board by telegraphic
order granted the request for review and stayed the
election pending decision on review.
The Board has considered the entire record in this
case with respect to the issues under review and finds
that no question affecting commerce exists concern-
ing the representation of certain employees of the
Employer within the meaning of Sections 9(c)(1) and
2(6) and (7) of the Act, for the following reasons:
The Employer asserts, inter alia, that, contrary to
the Regional Director's conclusion, the record
supports a finding that Brian Nelson and Ordean
Christenson, two of the three drivers involved, act as
its dray agents for the delivery of commodities from
its Detroit Lakes terminal, to its customers and as
such are independent contractors.
The Employer, an interstate motor carrier holding
Interstate Commerce Commission (ICC) and Minne-
sota Public Service Commission certificates, hauls
commodities in northwest Minnesota Wand northern
North Dakota., Utilizing its own tractors and trailers,
it employs line haul drivers to transport these
commodities to its 15 terminals. At its two major
terminals , Twin, Cities and Fargo, the Employer
provides pickup and delivery service of freight in
lighter "city" equipment, which is driven by its own
employees.2 However, in the smaller communities
where the Employer has terminals, such as Detroit
Lakes, the local pickup and delivery service is
performed by dray agents.
Brian Nelson, who had been employed by the
Employer as a city driver, was established by the
Employer as a dray agent at its Detroit Lakes
terminal in 1972. The letter from the , Employer
containing the basic terms of the dray agency
agreement provides, inter alia:
2. The agent agrees to furnish adequate truck
and sufficient labor to handle the company
freight, shipments, and to provide all necessary
services required to aid the various departments
of the company find ' as necessary to maintain
adequate and proper relations with the shippers
and/or consignees in the area.
3. The agent agrees to provide and maintain
the necessary insurance coverage and such other
facilities as may be required in order to be an
independent business, and further agrees to be
liable as such to the general public.
Nelson is required to remit the moneys paid by
consignees to the Employer. The agreement also sets
forth the rates of compensation for Nelson, accord-
ing to the weight of, the freight delivered, or,
alternatively, by mileage. Nelson and his wife
subsequently incorporated the dray,agency as S & B
Nelson, Inc.
The terminal at Detroit Lakes is leased by the
Employer, which pays the rent and all utility bills.
Major repairs are paid for by the Employer or by the
landlord, while Nelson takes care of minor repairs.
The Employer supplies', Nelson with four trailers
bearing Twin City Freight, Inc., identification. They
are completely insured ley, the Employer. Nelson is
responsible for obtaining his own tractor, and is
financing it through a bank. Nelson',pays for his own
oil, gas, tires, and maintenance for the tractor. He
carries his own liability and collision insurance,
although the Employer carries concurrent insurance.
The Employer stated, that while it would prefer that
Nelson deliver goods exclusively, 'for Twin City
Freight, it exercises no control over the activities of
the 'dray agency once, the Employer's freight is
delivered. Moreover, the Employer stated that
Nelson was free to sell his tractor.
1 The Regional Director subsequently issued an order denying the Section 102.65 (e)(1) of the Board's Rules and Regulations
Employer's motion for the reason that the motion failed "to allege 2 Both the line haul dnvers and the city dnvers are currently represented
`extraordinary circumstances ' or otherwise satisfy the requirements of in separate units.
221 NLRB No. 205
1220 DECISIONS OF NATIONAL, LABOR RELATIONS BOARD
Nelson is responsible for hiring drivers to perform
the drayage operation.3 He determines their rate of
pay, pays them directly, and makes the necessary
payroll deductions. It is Nelson's responsibility to
direct them in their work, to discipline them, and if
necessary to discharge them. The Employer asserted
that it is up to Nelson to schedule his drivers. Thus,
the Employer does not require Nelson or his
employees to come in to work at a specific time, nor
does it check' on work breaks or the time that the
dray agent leaves work, unlike the way it carefully
regulates the hours and activities of the city and line
haul drivers conceded to be its employees. Further-
more, Nelson is free to deliver by any vehicle he
chooses, including automobile.
Nelson, upon submission of a drayage report to the
Employer, is paid on a weekly basis. Besides being
paid by the hundredweight of freight delivered, or
according to mileage, part of Nelson's compensation
is received as a result of some unloading work he
does for Christinson. Payroll taxes are not withheld
from his checks by the Employer. Unlike the drivers
who are conceded to be employees of the Employer,
who receive their pay regardless of whether or not
the Employer has freight to deliver, Nelson is not
given a guarantee by the Employer as to the number
of hours he will work or as to his total pay.
Although the, record indicates that a supervisor of
the Employer visits the Detroit Lakes Terminal twice
monthly to settle claims, solicit customers, and take
care of problems as they arise, the Employer points
out that because Nelson operates exclusively under
its certificates, such supervisory visits are designed to
insure compliance with Government regulations.4
There is no indication in the record that the
supervisor gives any directions to Nelson as to the
means by which he is to carry out his drayage
operation.5 According to the testimony of the
Employer's witness, Secretary-Treasurer Elsholtz,
3 Until September 1974, Nelson employed two brothers, the Grahams, to
perform the drayage operation at Detroit Lakes In September 1974, the
Employer took away a portion of Nelson's territory and established a
second dray agent, Ordean Chnstmson, for delivery of commodities from
the Detroit Lakes terminal The Graham brother who previously drove in
this territory was subsequently laid off by Nelson Previously, one of the
Graham brothers had left Nelson's employ sometime after Nelson took over
the dray agency but was rehired by him in January 1974 Thus, contrary to
the implication left by our dissenting colleague , Nelson 's conceded
"responsibility" to staff his own agency was borne out by his actual
conduct Further, the evidence indicating that the Employer removed part
of Nelson's territory and -set up a new dray agency to handle it in order to
provide better customer service is hardly conclusive evidence of employee
status Were Nelson an employee of the Employer with whose service the
Employer was dissatisfied, the Employer would most likely have discharged
or disciplined him, rather than merely contracting for service by another
agent to a portion of Nelson's dray territory
4 It cannot be disputed that an employer has an obligation under certain
governmental regulations to insure compliance therewith by persons making
deliveries under its certificates However, our dissenting colleague had
difficulty accepting the uncontradicted testimony of Secretary-Treasurer
Elsholtz that the purpose of the Employer's twice monthly supervisory visits
aside from the Employer's expectation that the
drayage operation-be carried out- efficiently, it is up
to Nelson- to determine the means of performing the
operation. Moreover; despite the fact that a chart in
the terminal indicates the dray agent's schedule of
deliveries, Secretary-Treasurer Elsholtz testified that
"In Detroit Lakes it is up to Brian to route the route
that he wants . . . to deliver the freight in what order
... and What time to go to them and so forth. That
is all Brian ' s decision ." Although our, dissenting
colleague correctly points out -that Nelson must
obtain clearance from the Employer if he wants to
delay shipment of freight until the day after its
arrival at Detroit Lakes, we.find that this is merely
the normal concern of a carrier over whether the
freight entrusted to it has been timely delivered. It in
no way affects our finding, that Nelson, who is I of
about 15 dray agents for the Employer, determines
how this is to,be accomplished.
The Board applies the common law right-of-con-
trol test in determining whether individuals are
employees or independent contractors.6 Under this
test, an employer-employee relationship exists when
the, employer reserves not only the right to' control
the, result to be achieved, but also the means to be
used in attaining the result. On the other hand, where
the employer has reserved only the right to control
the ends to be achieved, an independent contractor
relationship exists. It is clear that application of this
test is not a "perfunctory exercise.", In order to
determine the nature of the relationship, the Board
analyzes, the facts presented in the particular case,
balances them, and arrives at a, result.7
In the instant case,, we find, contrary to the
Regional Director, that Brian Nelson is an independ-
ent contractor. We agree -with the Employer that it
has not reserved to itself control over the means by
which Nelson performs his drayage operation.8 In
reaching, this finding we note particularly the
to' the Detroit Lakes terminal is to secure compliance with these regulations
The, Board has had the specific regulations before it in so many cases that,
even in the absence of reference to particular regulatory provisions in
Elsholtz' testimony, it would seem clear that it is these regulations which the
Employer would have its supervisor implement.
s While it is true that Nelson responded affirmatively to a leading
question as to whether the supervisor on his twice , monthly visits offers
suggestions to him and to his drivers in the face of Secretary-Treasurer
Elsholtz' testimony that Nelson alone had control over the means of the
drayage operation, we find the record to be unclear as to what Nelson
meant . Even assuming that on such occasions the supervisor gave
suggestions as to the method of operations at Detroit Lakes , we do not
believe that this is inconsistent with our conclusion that the Employer's
main concern was with the results to , be achieved by, Nelson, its
subcontractor, rather than the means to be used by him in achieving these
results . We find the record amply establishes that day-to -day control over
the operation is essentially the responsibility of Nelson under his, dray
agency contract.
6 NL R B v United Insurance Co ofAmerica, 390 U S 254 ( 1968).
7 National Freight, Inc, Federal Freight, Inc, and Sun Transportation,
Inc., 153 NLRB 1536, 1538-39 (1965)
8 George Transfer & Rigging Co., Inc, 208'NLRB 494 (1974).
TWIN CITY FREIGHT , INC 1221
following: Nelson uses his own discretion to deter-
mine the order and timing of deliveries, Nelson is
responsible for the hire, discipline, scheduling,
compensation, and discharge of his drivers, unlike
those drivers conceded to be employees of the
Employer, Nelson is paid a fee based on weight and
mileage, and receives no guarantee as to the number
of hours he will work or as to his total pay; Nelson,
unlike the Employer's employees, may deliver the
Employer's freight by any vehicle he deems most
efficient; Nelson is not required to report to work at
any set time; he is free to sell his tractor or work for a
competitor; he pays for his own gas, tires, and
maintenance on the tractor, and obtains his own
liability and collision insurance; and the Employer
withholds no payroll taxes from Nelson's paychecks.
In view of the foregoing, we conclude that Brian
Nelson is an independent contractor and that
Graham is employed by him and not the Employer.9
Accordingly, we shall dismiss the petition.
ORDER
It is hereby ordered that the petition filed herein
be, and it hereby is, dismissed.
MEMBER J ENKINS, dissenting:
I cannot agree with the majority's finding that
Brian Nelson is an independent contractor and not
an employee of the Employer. The majority's
decision disregards the Regional Director's finding
that the Employer has complete control over the flow
of freight passing through the Detroit Lakes terminal
so that Nelson has no real opportunity to make any
decisions that can significantly increase his earnings.
Such a finding, coupled with the other evidence of
control, albeit indirect, which the Employer exercises
over Nelson's operations, requires the conclusion
that he is an employee and not an independent
contractor. Moreover, the paucity of evidence indi-
cating some limited control by Nelson over his own
operations is based on the general, conclusional, and
uncorroborated testimony of the Employer's witness-
es.
The Employer did indeed state, as noted by the
majority, that it exercises no control over the
activities of the dray agent once its freight is
delivered to the local terminal. However, this
testimony, typical of that which the majority has
relied on, merely states the object of our inquiry and
adds nothing in support of the majority's conclusion.
Contradicting such statement, on the other hand, is
Nelson's testimony that a supervisor visits the local
terminal every 2 weeks and does, in fact, give
directions as to how the routes are to be run.
Secretary-Treasurer Elsholtz' testimony that such
visits are merely to insure compliance with Govern-
ment regulations is unsupported by reference to any
specific Interstate Commerce Commission, Depart-
ment of Transportation, or state regulations and does
not, contrary to the implication made by the
majority, impeach Nelson's contrary testimony
The fact, relegated by the majority to a footnote,
that the Employer unilaterally removed part of
Nelson's territory and installed in his place Ordean
Christinson, provides ample proof of the Employer's
actual control over the operation of its dray agencies.
Elsholtz testified that, for some time before this
decision was made, the Employer had discussed with
Nelson its dissatisfaction with the way its freight was
being delivered to this territory. Subsequently, the
Employer unilaterally decided to install Christinson
as its agent, working out of the same terminal and
covering the exact same territory as was covered by
Nelson and the Graham brothers. The record
contains no evidence that this decision was motivat-
ed by a desire to increase profits or otherwise
enhance the Employer's business. Clearly implicit in
the Employer's actions is the lesson that, if the freight
is not delivered in the manner in which the Employer
desires, an agent is subject to having part of his
agency taken away from him. Can there be any
serious question that an employer does not lose any
of his right to control an employee when he chooses,
rather than discipline of some other type, to take
away from that person those tasks which he is not
performing to the Employer's satisfaction, thus
reducing his earnings proportionately? Notwith-
standing the majority's opposite conclusion, it is
clear that the Employer has exercised direct control
over the amount of Nelson's earnings by unilaterally
dividing his territory among other agents. By so
doing, after communicating to Nelson its dissatisfac-
tion with the manner in which some of its freight was
being delivered, the Employer has effectively assert-
ed its right to control how he makes his deliveries.
In addition to the cursory treatment given the
evidence with respect to the Employer's actual
control over Nelson's operations, the majority, in
listing the factors which show the degree of control
that Nelson exercises over his own work, has failed to
mention other evidence which, in my view, substan-
tially undermines these factors. For example, the
majority says that Nelson uses his own discretion to
determine the order and timing of deliveries, yet
Christinson, who operates on the same basis as
Nelson, testified that he is obligated to deliver the
s As neither Nelson nor Graham is an employee of the Employer,
Ordean Christinson , the sole remaining driver operating from the Employ-
er's Detroit Lakes terminal , may not constitute an appropriate unit for
collective-bargaining purposes We need not and do not reach the issues
raised as to his independent contractor status
1222 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
freight on the same day he - picks it up . Nelson
himself testified that he must get clearance from the
Employer if he wants to delay delivery of a volume
load until the day following its arrival at the
terminal.
The same is true of the majority 's reliance on
Nelson's ability to hire and control other drivers.
Even though Nelson testified that he can hire and
fire drivers , the record shows that the only drivers
working under his agency were the Graham brothers,
who were there when he took it over . Nelson also
testified that one of the brothers was laid off because
of the Employer's decision to install Christinson and
that when the Employer's supervisor is at the
terminal it is the supervisor who directs the Grahams
in how the operation should be run.
The majority also relies on the fact that Nelson is
paid a fee based on the weight and mileage of freight
he delivers, but acknowledges that he receives
additional compensation from the Employer for
work he performs unloading freight which Christin-
son delivers.
Likewise , little weight can be given the Employer's
testimony that Nelson may use any vehicle to deliver
the freight, report to work any time he chooses, sell
his tractor, or work for a competitor . For in fact
Nelson has done none of these things and, unless he
gets permission from the Employer to do otherwise,
must deliver the freight on the day it arrives-a hard
fact which forecloses Nelson from doing most of the
other things the Employer says he may do. As to
Nelson 's privilege of selling the tractor , he bought it
from the Employer and the Employer testified' that
"We more or less have an agreement with them,
verbal agreement, they don't turn around and sell' the
equipment for a profit , but use it in the operation."
Thus it is plain that most of the facts on which the
majority relies are illusory . Finally, the remaining
factors cited by the majority, i.e., that Nelson pays
for insurance and maintenance on his tractor and no
payroll taxes are deducted from his paychecks, do
not supply an adequate basis for concluding that he
is an independent contractor. The Board on numer-
ous occasions has found individuals to be employees
and not independent contractors in cases where these
factors were also present . See, e .g., Pilot Freight
Carriers, Inc., 208 NLRB,853 (1974); Land O'Lakes,
Inc., 204 NLRB 519 (1973); Contractor Members of
the Associated General Contractors of California, Inc.,
201 NLRB 311 (1973). Not deducting payroll taxes
from Nelson's pay is of little weight , since there is a
substantial self-serving factor in this circumstance,
and the Internal Revenue Service has little adversary
interest in which way the, issue is resolved if the
alleged independent contractor appears solvent.
Insurance premiums are fairly standardized,' ` and
readily compensated by changes in commission rates,
accordingly, their payment is of little weight in
determining rights of control matters.
Based on the 'above , plus Nelson 's testimony that
he spends only 1 hour a week, directing the activities
of the other driver working out of the Detroit Lakes
terminal, I would find Nelson to be an employee ' of
the Employer, properly within the unit petitioned for,
and would therefore affirm the Regional Director's
Decision and Direction of Election, except as to his
finding that Nelson is a supervisor.
MEMBER FANNING , dissenting:- ' ,
I agree with Member Jenkins that Brian Nelson is
not an independent contractor but rather is an
employee of the Employer . Contrary to Member
Jenkins, -however , and in agreement with the Region-
al Director , I would find Nelson to, be a supervisor
within 'the meaning of the Act as Nelson -may hire
and fire employees and direct them in their work. I
would ` therefore find, as - an appropriate unit, the
employee supervised by Nelson and the other driver
involved here, Ordean Christinson, and direct an
election in that unit.