Kreitz Motor Express, Inc.

National Labor Relations Board - Board Decisions

Apr 10, 1974

210 N.L.R.B. 27 (N.L.R.B. 1974)

KREITZ MOTOR EXPRESS , INC. 27
Kreltz Motor Express, Inc. and Teamsters Interna-
tional Union and Local 429 , and Truck Drivers
Union, Local No. 407 a/w International Brother-
hood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America, Petitioners. Case
4-RC-10526
April 10, 1974
DECISION AND ORDER
BY MEMBERS JENKINS, KENNEDY, AND
PENELLO
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a
hearing was held on October 17 and 18, 1973, before
Hearing Officer Joan F. Homer. Following the
hearing and pursuant to Section 102.67 of the
National Labor Relations Board Rules and Regula-
tions, Series 8, as amended, and by direction of the
Regional Director for Region 4, this case was
transferred to the National Labor Relations Board
for decision. Thereafter, the Employer filed a brief
and a request for oral argument," and Petitioners
filed a brief.2
The Board has reviewed the Hearing Officer's
rulings made at the hearing and finds that no
prejudicial error was committed. The rulings 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 and it will effectuate the
purposes of the Act to assert jurisdiction herein.
2. The labor organizations involved claim to
represent certain employees of the Employer.
3. No question affecting commerce exists con-
cerning the representation of employees of the
Employer within the meaning of Sections 9(c)(1) and
2(6) and (7) of the Act.
The Petitioners seek a unit of all single owner-
operators and nonowner drivers and helpers operat-
ing throughout the Employer's system. The Employ-
er (Kreitz) contends that the unit sought is in^ppro-
priate in that the single owner-operators are inde-
pendent contractors and the nonowner drivers are
employees of the multiple owner-operators who are
also independent contractors. We agree with the
Employer's contention.
Kreitz is an "irregular route' 13 common carrier,
operating under authority issued by the Interstate
$ The Employer's request for oral argument is hereby denied, since the
record, including the briefs, adequately presents the issues and positions of
the parties.
2 We do not rule on Intervenors prayer to intervene, inasmuch as we are
dismissing the petition as requested by the Intervenors.
Commerce Commission, engaged in the interstate
transportation of heavy machinery and other bulky
items , which because of their weight and dimensions
require special handling or rigging. Kreitz maintains
its principal offices in Wyomissing, Pennsylvania,
and sales offices in Cleveland, Ohio; Winston- Salem,
North Carolina; and New York City. In addition to
the sales offices, Kreitz has commission salesmen
throughout the area it serves.
As an irregular route common carrier, Kreitz is
subject to Interstate Commerce Commission and
Department of Transportation regulations, as well as
related state restrictions. These regulations control,
to a great degree, the Employer's relationship with
the owner-operators.
At the time of the hearing in this case, Kreitz
owned no tractors, but rather leased this equipment
from owner-operators (both single and multiple).
Kreitz has lease agreements with approximately 30
single owner-operators (some of whom also lease
trailers to Kreitz) and 3 or 4 multiple owner-
operators who collectively lease approximately 14
tractors. The terms of the lease are spelled out in a
document supplied by Kreitz entitled "Equipment
Lease Agreement." The term of the lease is for a
minimum of 30 days, after which it can be terminat-
ed immediately by written notice sent by either
party, or if breached by either party.
The lease provides, inter alia, that the owner will
provide equipment in good, safe , and efficient
operating condition; that the equipment shall be
maintained at the owner's expense; and that the
owner is responsible for all costs of operation,
including: (a) fuel, oil, lubricants, tires, chains,
binders, and tarpulins, etc; (b) wages or other
remuneration of operators, drivers, and helpers; (c)
payments for injury or damages to the operator,
driver, and helpers. and to the equipment whether
the equipment is being operated in Kreitz's service or
otherwise; (d) public liability insurance and insur-
ance for fire, theft, and collision; (e) workmen's
compensation, social security, and other payroll
taxes, and (f) licenses, registration fees, toll fees, use
permits, and other fees and taxes. The lease also
provides that if Kreitz must make any of these
payments for the driver, it can reimburse itself from
moneys owed to the owner. The lease further
provides that the owner must submit his vehicle for
inspection by Kreitz at the time of the signing of the
lease and periodically thereafter, and must allow
Kreitz to place its identification on the vehicle. As to
3 As an irregular route carrier, Kreitz can travel any route in the States in
which it is authorized to operate These States are Ohio, New York,
Connecticut, Rhode Island , Massachusetts , New Jersey , Pennsylvania,
Maryland, Delaware , Virginia, West Virginia , and North Carolina.
210 NLRB No. 11
28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
remuneration, the lease provides that the owner will
be paid 60 percent of the line revenue for use of a
tractor and 70 percent for the use of a tractor and
trailer.4 In addition, the lease agreement provides
that Kreitz can sublease the owner's equipment when
permitted by applicable regulations. The record
establishes that, in practice, Kreitz never subleases
an owner's equipment without first obtaining the
owner's permission.
All prospective Kreitz drivers (both owner-opera-
tors and nonowner drivers) are required to complete
a Kreitz application.5 Thereafter, the applicant must
obtain a physical examination and submit a physi-
cian's certificate to Kreitz. If the results of the
physical examination are satisfactory, the driver then
takes a driving test administered by Kreitz.6 Subse-
quently, Kreitz' operations manager inspects the
vehicle to see if it meets I.C.C. and D.O.T. standards.
Kreitz requires that all drivers have a knowledge of
state and Federal motor carrier laws and regulations.
Kreitz also requires all drivers to provide
$50,000/100,000 public liability insurance against
bodily injury and property damage, including a
minimum of $10,000 of insurance covering the
owner's equipment while the vehicle is being operat-
ed by the owner for purposes other than Kreitz'
business.
The record indicates that Kreitz does not withhold
any Federal, state, or social security taxes, nor does it
cover unemployment or workmen's compensation,
for either the owners or their drivers. Furthermore,
neither the owners nor the drivers receive vacation or
holiday pay or any of the other benefits provided by
Kreitz to its regular salaried employees. Kreitz does,
however, provide special bonuses for drivers. These
include a safety bonus, and a bonus for introducing
new drivers to Kreit2,. The safety bonus consists of 1
percent of the driver's line haul revenues for each 12
consecutive months that his cargo claims do not
exceed $1,000.7 For cargo claims in excess of $1,000,
the bonus is calculated by subtracting 10 percent of
the claims over $1,000 from 1 percent of the previous
12 month's line haul revenue. In addition t" the
monetary safety bonus, the drivers also receive either
a pair of pants or a shirt for 6 successive months
without an accident.
For each new driver introduced to Kreitz, an
owner-operator receives $5 after the new driver has
completed a 90-day probationary period. The owner-
operator also receives an additional $10 if the new
4 It appears that these rates are inflexible. Owner-operators can,
however, obtain additional amounts under certain circumstances discussed,
infra
5 D.O.T regulations require that potential dnvers fill out an application
on which they are required to give a 3-year employment history. Kreitz'
driver completes 6 months of service and $5 for each
month of service thereafter, up to 6 months.
Kreitz also provides its owner-operators with the
option of receiving an additional 1 percent of the line
haul rate if the owner-operators provides insurance
coverage for the first $1,000 of cargo damage, rather
than just the first $500, which is a minimum required
of all drivers. If an owner-operator does not have
sufficient funds to purchase the minimum coverage,
Kreitz will advance this money to him. Kreitz also
advances part of the revenues from a shipment to
help the drivers cover expenses in route. However,
Kreitz does not loan money to drivers for any other
purpose and provides no financial assistance for the
purchase of tractors or trailers.
In addition to the bonuses mentioned above,
owner-operators also receive amounts in excess of
those mentioned in the lease if they have to make
multiple stops, if they solicit their own load, and for
detention time. Thus, they receive an additional 5
percent of their line revenues for soliciting their own
loads and 85 percent of the tariff for detention time.
The owner-operators also receive additional amounts
for delivering "rush" loads.
The drivers are not required to wear uniforms nor
are the trucks required to be painted a particular
color. As previously mentioned, Kreitz does reserve
the right to require the owners to put a Kreitz sign on
the trucks.
Once an owner has signed a lease with Kreitz, he
will generally telephone the Wyomissing, Pennsylva-
nia, office to learn of available loads. It appears that
drivers can refuse loads, in which case they are
offered the next available load. Kreitz also allows
drivers to "trip lease"; i.e., drivers soliciting their
own loads.
Once a driver has agreed to take a load, Kreitz
instructs the driver as to the time, place, and date of
pickup, and any other instructions necessary for the
driver to have. When the driver arrives at the
shipper's location, he is required to call Kreitz and
give them a detailed description of the shipment. The
driver is solely responsible for the loading of the
shipment, including any special rigging or tarpaulins.
Once the truck is loaded the driver will call Kreitz to
receive instructions as to which "gateway" he is to
pass through in order to obtain the necessary papers
and permits. These gateways are areas maintained by
Kreitz in order to make it convenient to pass the
permits and paperwork to the drivers. If the driver is
unable to go through one of the designated gateways,
application requires dnvers to submit a full employment history
6 D.O.T. regulations require that a driver be tested on Federal Highway
Authority rules and regulations.
7 The 12-month period does not begin until the driver has been under
contract with Kreitz for 3 months.
KREITZ MOTOR EXPRESS, INC. 29
Kreitz will send a person out to meet a driver on his
route and give him the necessary papers. With the
exception of passing through gateways and restric-
tions caused by the size of the load, drivers are free
to choose their own routes.
If a customer has specified that he wants delivery
at a specific time and place, this information will be
communicated to the driver and he will be expected
to meet this schedule if at all possible. When no
delivery is specified, the driver is free to use his own
discretion in scheduling delivery.
While in route, Kreitz drivers are subject to
inspection by the Better Driving Institute. This
organization is under contract to Kreitz' insurance
carrier. Although Kreitz receives copies of B.D.I.'s
reports, it has not terminated any lease based on
them.
In determining whether an individual is an employ-
ee or an independent contractor, the Board has
consistently applied the common law agency right of
control test. N.L.R.B. v. United Insurance Co., 390
U.S. 254 (1968). When the person for whom the
services are performed retains the right to control the
manner and means by which the result is to be
accomplished, the relationship is one of employment;
while, on the other hand, where control is reserved
only as to the results sought, the relationship is that
of an independent contractor.
After carefully analyzing the facts presented in the
case we have concluded that they are almost
identical to those in George Transfer and Rigging Co.,
208 NLRB No. 25, in which we found (Members
Fanning and Jenkins dissenting) that the owner-
operators were independent contractors. Therefore,
we must conclude that the owner-operators involved
herein are independent contractors. As we stated in
George, supra, it would appear that the degree of
control over the owner-operators and their equip-
ment required by Federal and state regulations, and
the fact that Kreitz unilaterally sets the rates of
compensation would appear, at first glance, to
require a finding that the owner-operators are
employees. However, we do not believe that they
establish that Kreitz controls the means by which the
owner-operators perform their day-to-day duties. We
note, in this regard, that one of the main factors
mitigating in favor of a finding in George, supra, that
the owner-operators were employees was the employ-
er's refusal to allow the owner-operators to trip €^e
Unlike George, Kreitz allows its owner-operators to
trip lease.8
In addition to the right of the owner-operators. to
trip lease the following factors indicate that the
controls exercised by Kreitz relate solely to the
results to be achieved under the leases : (1) the owner-
operators exercise a substantial degree of freedom in
scheduling the use of their equipment in that they
determine what days and hours they work, when and
where to purchase fuel and have repairs made, and
where to park their tractors when not in use; (2) the
owner-operators can refuse loads without penalty,
and with the exception of passing through gateways,
are free to choose their own routes; (3) the owner-
operators decide whether to hire or fire a driver, what
work rules to impose on their drivers, and what rates
of pay and benefits the drivers will receive; (4) the
owner-operators pay virtually all costs of operation
and maintenance; (5) the owner-operators are
subject to only minimal day-to-day supervision by
Kreitz; (6) owner-operators and their drivers do not
participate in benefits provided to other employees;
and (7) the owner-operators are free to purchase
whatever type of equipment they desire (as longasit
complies with Federal regulations) and Kreitz does
not loan money to the owner-operators to purchase
this equipment.
In view of the foregoing, we conclude that the
single and multiple owner-operators are independent
contractors, and that the nonowner drivers are
employees of the independent contractors rather
than of the Employer.9 In light of the fact that there
are no employees driving directly for the Employer,
we shall dismiss the petition.
ORDER
It is hereby ordered that the petition herein be, and
it hereby is, dismissed.
MEMBER JENKINS , dissenting:
For the reasons stated in my dissent in George
Transfer and Rigging Co., 208 NLRB No. 25, I would
find the drivers to be employees and would direct an
election.
e Conley Motor Express, Inc., 197 NLRB 624.
George Transfer and Rigging Co., supra; Conley, Motor Express, Inc.,
supra; Fleet Transport Company, Inc., 196 NLRB 436.