C. C. Eastern, Inc.

National Labor Relations Board - Board Decisions

Dec 16, 1992

309 N.L.R.B. 1070 (N.L.R.B. 1992)

1070
309 NLRB No. 170
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 A corrected order was issued on April 27, 1992.
C.C. Eastern, Inc. and Local 701, International
Brotherhood of Teamsters, AFL–CIO, Peti-
tioner. Case 22–RC–10594
December 16, 1992
DECISION ON REVIEW AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS OVIATT
AND RAUDABAUGH
On March 26, 1992, the Regional Director for Re-
gion 22 issued a Decision and Direction of Election in
the above-entitled proceeding. He found that the
owner-operator drivers of the Employer are employees
within the meaning of Section 2(3) of the National
Labor Relations Act (the Act), and that a unit of driv-
ers is an appropriate unit for the purpose of collective
bargaining.
Thereafter, in accordance with Section 102.67 of the
Board’s Rules and Regulations, the Employer filed a
timely request for review of the Regional Director’s
decision, contending that the Regional Director’s deci-
sion that the owner-operators were employees is con-
trary to the Board’s decision in Central Transport, 299
NLRB 5 (1990), and that the drivers are independent
contractors. On April 24, 1992, the Board granted the
Employer’s request for review.1 The election was held
as scheduled on April 24, 1992, and the ballots were
impounded pending the Board’s Decision on Review.
The Employer and the Petitioner filed briefs on review
in support of their positions.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the entire record in this
case, including the briefs on review with respect to the
issue on review and has decided, for the reasons set
forth below, to affirm the Regional Director’s decision.
The pertinent facts are fairly set forth in the attached
Regional Director’s decision (pertinent portions are at-
tached). Briefly stated, the Employer operates a freight
terminal in North Brunswick, New Jersey, out of
which 14 owner-operator drivers make local freight de-
liveries or pickups that have originated with or are des-
tined for line freight haulage. These drivers own their
own tractors, for which they pay all expenses, and are
responsible for their own costs such as insurance,
maintenance, tires, and tolls. Drivers sign a contract
with the Employer that designates them as independent
contractors. They are provided no fringe benefits, and
no taxes or other payments are withheld from their
compensation, which is based on mileage and weight
computation.
Drivers service Employer-assigned geographic areas
in which they are to make deliveries in the mornings
and pickups in the afternoons. Those areas are subject
to change on a daily or permanent basis, by the dis-
patcher or terminal manager, depending on the Em-
ployer’s needs. Drivers usually arrive in the morning
to find fully loaded or almost fully loaded trailers, the
order of which usually determines the order of deliv-
ery. The order of loading, controlled by the dock su-
pervisor, is not necessarily the most efficient order for
purposes of delivery, as freight is loaded onto the de-
livery trailers in the order in which it comes off the
line haul trailers. Four of the drivers regularly or occa-
sionally reload their trailers without compensation—a
function that may take anywhere from one-half to 3
hours.
The drivers are not permitted to work for competitor
employers or accept work from other employers during
normal weekday business hours. They are permitted to
accept other employment during evening and weekend
hours, and to hire their own assistant or replacement
drivers. The record shows no instances of drivers
working for other companies during evening or week-
end hours, and only one instance of a driver hiring a
replacement while on a 2-week military leave 5 years
ago.
Drivers are eligible for a yearly bonus. The individ-
ual owner-operator has a pool amount of $3000 per
calendar year, and receives 50 percent of the pool
amount the first year with the remainder deferred over
the next 2 years. In subsequent years, the owner-opera-
tor will receive one-third of the pool amount plus pre-
vious deferred amounts with the remainder deferred
over the next 2 years. This amount may be eroded
based on driver deficiencies, such as lack of availabil-
ity, accidents, or deficient administrative work. Warn-
ings are issued to drivers for these and other offenses,
and are reflected in deductions from the earlier estab-
lished bonuses. Most drivers have one or more warn-
ings.
Based on the foregoing and the record as a whole,
we conclude, in agreement with the Regional Director,
that the owner-operators are employees and not inde-
pendent contractors. We find that Central Transport,
supra, which concerned the status of owner-operator
drivers at a corporate affiliate of the Employer, who
were found by the Board to be independent contrac-
tors, is significantly distinguishable from the instant
case.
The owner-operators in Central Transport were en-
gaged in greater entrepreneurial activity than those in
the instant case. In that case, unlike here, owner-opera-
tors were permitted to work for competitor companies,
and one of the three owner-operators at issue regularly
hauled for other firms, including competitors, and reg-
ularly hired his own drivers to drive for other compa-
nies and Central Transport. The Board found that the
size and scope of this latter person’s operation tended
1071C. C. EASTERN, INC.
2 We note that in North American Van Lines v. NLRB, 869 F.2d
596 (D.C. Cir. 1989), the court found that the company’s incentive
system of owner-operator driver rewards and punishments allowed
the employer to ensure that the drivers’ overall performance met its
standards, but that this did not render the drivers’ employees, since
the incentives and disciplinary measures were not used to control the
manner and means of the drivers’ performance. We find that case,
however, to be distinguishable from this case. In North American
Van Lines, unlike here, the drivers had complete discretion to turn
down assignments, and the incentive system was designed to moti-
vate drivers to accept assignments by rewarding those who took un-
desirable loads, and disciplining those who did not over long periods
of time have a sufficient number of loads. The court found that the
‘‘drivers’ ability to decline particular loads is manifest and the exer-
cise of that ability leads to significant independence in practice.’’ Id.
at 602. Here, by contrast, drivers are not permitted to turn down as-
signments except for stops outside of their designated territory, and
the disciplinary system apparently functions to exert control over the
manner and means by which they perform their work.
to indicate that he was in the hauling business. By
contrast, in the instant case there is no evidence that
any of the 14 owner-operators themselves worked for
other companies or hired their own drivers to do so,
or that they hired drivers to work for the Employer.
We additionally note that all owner-operators in Cen-
tral Transport were required to provide replacement
drivers when on vacation or otherwise unavailable; in
the instant case the Employer has no such requirements
and replacement drivers are virtually never used.
Finally, the drivers in the instant case receive warn-
ing notices with respect to defects concerning their
availability, accident record, and administrative work
which affects the amount of bonus money they collect
at the end of the year. By contrast, the drivers in Cen-
tral Transport were not subject to any kind of discipli-
nary system, not even an informal one.2 Instead, the
employer would threaten to find another driver to work
on a particular run or to cancel the driver’s contract if
it was displeased with the driver’s performance.
In conclusion, we find this case to be distinguishable
from Central Transport because of the owner-opera-
tors’ comparative lack of entrepreneurial activity and
the disciplinary system which the Employer uses to
exert control over the manner and means by which the
owner-operators perform their work. Accordingly, we
find the owner-operators to be employees within the
meaning of Section 2(3) of the Act.
ORDER
This proceeding is remanded to the Regional Direc-
tor for further appropriate action, including the opening
and counting of the ballots cast in the April 24, 1992
election.
APPENDIX
Regional Director’s Report
An initial petition in Case 22–RC–10572 was filed by the
Petitioner on December 23, 1991, naming Central Transport,
Inc. as the appropriate employing entity. During the course
of a hearing held pursuant to that petition on January 22,
1992, significant record evidence indicated that C. C. East-
ern, Inc. and not Central Transport, Inc. was the appropriate
employing entity and should have been so named in the peti-
tion. Despite being offered an opportunity to amend the peti-
tion at hearing to reflect the appropriate Employer, the Peti-
tioner declined to do so. Based on the record resulting from
that hearing, I concluded that there was insufficient evidence
to find the named Employer, Central Transport, Inc., to be
the appropriate employing entity. I therefore issued on Feb-
ruary 6, 1992, a Decision and Order dismissing that petition.
A subsequent petition was filed on February 10, 1992, identi-
fying the Employer as C. C. Eastern, Inc. The parties have
stipulated that the record resulting from the January 22, 1992
hearing would form the basis of the instant decision.
The name of the Petitioner appears as amended at the
hearing.
A brief filed by the Employer and closing argument by the
Petitioner have been duly considered.
The Employer contends that the instant petition is inappro-
priate because the petitioned for drivers are not employees
within the meaning of Section 2(3) of the Act but rather
independent contractors. To support its position the Employer
points to the agreement signed by the drivers establishing
them as independent contractors; the fact that the drivers
have made substantial investments, between $20,000–
$40,000, to purchase their own tractors; that they are free to
hire assistants and/or substitute drivers; that they are pro-
vided no fringe benefits and no taxes or other payments are
withheld from their compensation which is based on mileage
and weight computation; that there are no scheduled hours of
work or uniforms; that there is no displinary procedure and
that the Employer exercises no day-to-day control over the
accomplishment of their tasks. The Petitioner’s position is
the converse, that the drivers possess significant indicia of
employee status and should be found to be employees of
C. C. Eastern, Inc.
The Employer operates a freight terminal in North Bruns-
wick, New Jersey, the only facility involved herein. Freight
is transported in and out of the North Brunswick terminal by
Central Transport, Inc., a line hauler covering 24 states from
Texas to the East Coast. Freight that is brought into the ter-
minal by line haul is then unloaded, sorted and progressively
reloaded onto local delivery trailers, i.e., the freight is loaded
as it comes onto the dock as determined by the dock super-
visor. Fourteen drivers working out of the North Brunswick
terminal make the local freight deliveries or pickups that
have originated with or are destined for line freight haulage.
These drivers own their own tractors for which they pay all
expenses and pull trailers designated by the Employer. Their
workday begins between 7–9 a.m. when they report to the
terminal to pick up their assigned trailers which have been
loaded during the night. The order in which the freight has
been loaded generally determines the order of delivery. Driv-
ers record the time they leave the terminal and the time they
arrive at and leave each stop during the day. Drivers service
1072 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
designated territories and must make all stops in their terri-
tories. They can only refuse stops outside their territories.
Extra work or even a part of a regular driver’s territory may
be covered by a floater. These decisions are made by the dis-
patcher or terminal manager based on the Employer’s need.
Drivers call in several times a day to ask about charge ex-
ceptions, damaged goods, collection problems, and informa-
tion about pickups. Drivers are responsible for their own
costs such as insurance, maintenance, tires, tolls, and any
other expense associated with vehicle ownership. Only the
parking of their tractors at night on the Employer’s premises
is free.
Turning to the single issue before me, whether the peti-
tioned-for drivers are employees within the meaning of the
Act and therefore appropriately the subject of the instant pe-
tition, I have fully considered the record evidence and find
that the drivers enjoy an employer/employee relationship
with C. C. Eastern, Inc. I base my decision on the significant
impact of the Employer’s requirement on driver autonomy,
discussed infra, as measured against the common law right-
of-control test employed by the Board to determine whether
individuals are employees or independent contractors. As
noted by the Board in Roadway Package System, 288 NLRB
196 (1988), citing to Amber Delivery Service, 250 NLRB 63,
64 (1980), enf. in relevant part 651 F.2d 57 (1st Cir. 1981):
‘‘[A]n employer/employee relationship exists when the em-
ployer reserves the right to control not only the ends to be
achieved, but . . . the means to be used in achieving such
ends.’’ For an independent contractor relationship to exist,
entrepreneurial or proprietary characteristics should be exhib-
ited. Roadway, supra at 198, citing to Mission Ford Corp.,
280 NLRB 251 (1986).
Despite the Employer’s assertion that there are no restric-
tions on drivers except to service accounts, the record indi-
cates otherwise. Drivers service assigned areas in which they
ar to make deliveries in the mornings and pickups in the
afternoon. Those areas are subject to change on a daily or
permanent basis, by the dispatcher or terminal manager, de-
pending on the Employer’s need. It was also asserted by the
Employer that drivers controlled the order in which they
serviced customers except for appointments, i.e., calls from
customers requesting specific pickup times which were esti-
mated to be approximately 10 percent of the stops. However,
the order in which freight was loaded onto trailers was often
the determining factor in how a driver ordered his deliveries.
As freight is progressively loaded from midnight to morning,
i.e., it goes on to the local delivery trailer in the order in
which it comes off the line haul trailers, not necessarily in
the most efficient delivery order. Drivers usually arrive in the
morning to find fully loaded or almost fully loaded trailers.
Although the Employer noted that a driver could load or re-
load a trailer himself, and one or two do so, the driver is
not paid for time spent loading and unloading. Thus, the
order of loading which is controlled by the dock supervisor,
usually determines the order of delivery. Pickups are simi-
larly controlled by the Employer in that the dispatcher, to
whom the drivers call in several times per day, will tell the
drivers what pickup should be made and often in what order
they should be made. Combined with the pick ups by ap-
pointment, the record indicates that drivers have little discre-
tion in determining their day.
In support of entrepreneurial indicia, the Employer indi-
cates that in addition to generating income by an efficient
method of customer pickup and delivery, thereby allowing
more service to more customers and controlling their operat-
ing costs, drivers are expected to cultivate relationships with
people that result in more business. Yet the record reflects
not a single instance in which a driver gave a lead to a mem-
ber of the Employer’s sales staff that resulted in new busi-
ness. Given that drivers have limited contact with the cus-
tomer personnel, have no input into what the company
charges, do not usually take payment from the customers, it
being paid directly to the company, and that the Employer,
not the drivers, controls the drivers’ service area, it is dif-
ficult to envision significant entrepreneurial opportunities.
Despite the Employer’s assertion that drivers are free to en-
gage in entrepreneurial activities, with the exception of serv-
icing competitors, when not making deliveries to and pickups
from the Employer’s customers, the record indicates that
drivers work 40–50 hours per week for the Employer, mak-
ing any additional driving work unlikely. Moreover, the
record is devoid of evidence that any driver engages in sig-
nificant entrepreneurial endeavors outside his regular em-
ployment.
Despite the Employer’s disclaimer of a disciplinary proce-
dure, the Employer asserts significant control over driver per-
formance and accountability by its bonus system. At the be-
ginning of the year a certain percentage of generated income
is earmarked for the driver as a bonus. That bonus, however,
may be eroded throughout the year by lack of availability,
accidents, or deficient administrative work. Warnings are
issued to drivers for these and other offenses. Those warn-
ings are reflected in deductions from the earlier established
bonus. Most drivers have one or more warnings. In addition
to the bonus for established drivers, the Employer also pro-
vides a guarantee for new drivers. The guarantee is $1000
per week for 8 weeks. To be eligible for the guarantee a
driver must be available for Saturday work as well as Mon-
day through Friday, during which days he is expected to
work 9 hours per day packing, delivery, and soliciting.
The factors cited, supra, indicate a significant erosion of
the entrepreneurial enterprise in which an independent con-
tractor would be expected to be engaged. The Employer con-
trols the customer base by controlling the service areas which
it may choose to enlarge, curtail, or switch at any given time.
The Employer also controls the rates charged to customers,
offering discounts to some but not others, areas in which the
driver is allowed no input. Nor is the driver able to negotiate
rates for his own services, all drivers being paid a standard
mileage and freight rate. The bonus program, while it might
have been indicative of entrepreneurial incentive, is a de
facto if not de jure disciplinary tool. Additionally, the Em-
ployer imposes significant restrictions on the drivers’ ability
to work at a similar enterprise by restricting the drivers’ abil-
ity to work for competitors and requiring attendance to the
Employer’s customers for 40–50 hours per week.
The Employer directs my attention with particularity to
Don Bass Trucking, 275 NLRB 163 (1985); Capitol Parcel
Delivery Co., 269 NLRB 52 (1984); and Central Transport,
299 NLRB 5 (1990), as supportive of its position that the
drivers involved herein are independent contractors and not
employees. Having reviewed those cases I find them distin-
guishable. The instant case involves significant control of
1073C. C. EASTERN, INC.
employee conduct in the completion of a task, not merely the
securing of an end result. Cases cited by the Employer ex-
hibited less concern with how the task was completed, there-
by permitting greater entrepreneurial enterprise, and none
with disciplining the drivers for various infractions of the
work rules imposed by the Employer. Because no one factor
is controlling in determining whether one is an employee or
an independent contractor, all the factors must be considered
together and a conclusion drawn from the weight of the evi-
dence. Based on all of the record evidence I find the drivers
to be employees of C. C. Eastern, Inc. within the meaning
of the Act.