Local 814, Teamsters

National Labor Relations Board - Board DecisionsApr 7, 1976

223 N.L.R.B. 752 (N.L.R.B. 1976)

752 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Local 814, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of Ameri- ca (Santini Brothers , Inc.) and Karl Leib, Jr., Esq. Local 814, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of Ameri- ca and Santini Brothers , Inc. and Karl Leib, Jr., Esq. Cases 2-CC-1247 and 2-CE-52 April 7, 1976 SUPPLEMENTAL DECISION AND ORDER On January 8, 1974, the National Labor Relations Board issued its Decision and Order' herein which adopted the Decision of Administrative Law Judge Herzel H. E. Plaine, who found, inter alia, that the owner-operators are independent contractors. On April 30, 1975, the United States Court of Ap- peals for the District of Columbia 2 expressed its be- lief that the Board's Decision and Order in the in- stant proceeding and in Molloy,' both of which deal with the status of owner-operators, are "factually similar and ostensibly inconsistent ." The court there- fore remanded the instant proceeding for "clarifica- tion" by the Board. Thereafter, the Board issued a notice to the parties requesting that they file statements of position with respect to the matters raised by the court's remand. The Union and the Charging Party have filed re- sponses thereto. Upon consideration of the issues set forth by the court and in light of the entire record in this proceed- ing, including the parties ' statements of position, we make the following findings: As indicated above, the Board in the instant pro- ceeding adopted the Decision of Administrative Law Judge Plaine , who concluded that the owner-opera- tors of Santini , a member of the moving and storage industry of New York, are not employees within the meaning of Section 2(3) of the Act. However, on the following day, the Board also adopted the Decision of Administrative Law Judge Sidney Sherman in Mo- loy, supra, who concluded that the owner-operators of Molloy, another member of the moving and stor- age industry of New York, are employees within the meaning of the Act. In deciding whether owner-operators in each par- ticular case are independent contractors or employ- '208 NLRB 184. 2 Local 814, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America [Santini Brothers , Inc.( v. N. L. R. B.. 512 F.2d 564. 7 Local 814, International Brotherhood of Teamsters. Chauffeurs, Ware- housemen and Helpers of America (Molloy Brothers Moving and Storage. Inc.). 208 NLRB 276 (1974). ees, the Board has often stated that it will apply the right-of-control test and in doing so will take into account all the factors bearing on their status. Thus, although the owner-operators in Santini are subject to ICC (Interstate Commerce Commission) and DOT (Department of Transportation) regulations, which require Santini to exercise control over such matters as safety checks and the health and qualifica- tions of the owner-operators, Administrative Law Judge Plaine held that, in the absence of other non- governmental factors which establish extensive con- trol by Santini, the owner-operators are sufficiently free from "carrier direction and supervision of per- formance" to warrant finding them to be indepen- dent contractors. As Administrative Law Judge Plaine correctly observed in this connection, both the Supreme Court and the Board have, over a span of more than 25 years, held in a number of cases 4 in- volving the moving and trucking industry that "even in a governmentally regulated business, arrange- ment[s] for doing business, similar to [those] in [San- tini ], whereby small businessmen undertake perfor- mance of part of the principal function of the larger businessmen . . . indeed [constitute] independent contracting." In determining that the owner-operators in San- tini are independent contractors, Administrative Law Judge Plaine took cognizance of Administrative Law Judge Sherman's Decision in Molloy and a number of other Board Decisions 5 wherein owner-operators were held to be employees rather than independent contractors. While they, too, involved a "governmen- tally regulated business," Administrative Law Judge Plaine correctly found they were distinguishable be- cause in Molloy and similar cases, unlike Santini, "there was a layer of carrier regulation put upon the [owner-operators] beyond what was required by gov- ernment regulation, impairing the [owner-operators'] independence." Thus, in Molloy, there was "perva- sive control over the [owner-operators'] mode of op- eration, particularly their on-the-job training, their procedures in loading and unloading cargo, their dealings with customers, and . . . such control ex- ceed[ed] governmental requirements to a significant degree." 6 In addition, Santini is distinguishable from Molloy in the following respects: In Molloy, owners were required to attend training classes where they used as a text a 102-page drivers' manual which was a compilation of the rules estab- 4 See Harrison v. Greyvan Lines, Inc. (sub nom . United States v. Silk d/b/a Albert Silk Coal Co.), 331 U.S. 704 (1947 ), and the cases cited by Adminis- trative Law Judge Plaine. 5 See Pony Trucking, Inc., 198 NLRB 686 (1972), and other cases cited by Administrative Law Judge Plaine. 6 See Molloy Brothers , supra at 279. 223 NLRB No. 121 LOCAL 814, TEAMSTERS lished by the owners that have no counterpart in DOT regulations, whereas here drivers may attend United Van Lines' training program but are not dis- ciplined for failing to do so.' Molloy owners were disciplined for not complying with the various direc- tives, bulletins, and instructions, many of which went beyond the required governmental controls and in- cluded procedures for loading and unloading freight, whereas here United's manual suggests procedures for loading cargo, but neither United nor Santini su- pervises the owner-operators when they load, unload, or drive. The Molloy manual listed infractions which were subject to disciplinary action, including dis- charge, such as preventable accidents, failing to check out with the Allied dispatcher, failure to report to the Allied agent at destination, refusal to load, misconduct, and dishonesty, whereas here there are no analogous requirements by Santini or United. Santini's owner-operators themselves pay for any health insurance they may carry, whereas Molloy as- sumed the costs of health insurance for the owners. In Santini, the owners bear the costs and incidents of operation and the Company does not advance trip expenses, whereas Molloy alone bore the risk of any default by a customer in payments for services ren- dered by owner-drivers, and it advanced trip expen- ses from a reserve account accumulated from the owner-operators' commissions. Further, in Molloy, the company established a profit-sharing plan for the owners, while in Santini there is no similar arrange- ment. Only when Santini converted to the contract- ing method of long-distance moving did it loan the operators money to buy trucks, and these loans were paid off by 1973; in contrast, Molloy has made loans to owners in substantial amounts for various purpos- es. Finally, Santini has its own operating authority from the Interstate Commerce Commission, whereas Molloy did not and had to depend on Allied Van Lines' certificate.' It is obvious from the above that the controls im- posed upon Molloy's owner-operators were much greater than those exercised over the Santini drivers, and that Santini is in sharp contrast to Molloy, in which the facts show "pervasive control" over owner- operators which "exceed[ed] governmental require- ments to a significant degree." 9 Accordingly, we shall adhere to the Decision and Order in the instant proceeding. 7 Santini is an agent or franchise representative of United Van Lines. 8 Molloy is an affiliate of Allied Van Lines. 9 The basic standards for determining employee or independent contrac- tor status are well settled and need not be debated. The issue in each case is the application of those standards to the facts. Our dissenting colleagues set forth at great length their reasons for disagreeing with our conclusions based on those facts, but those "reasons" consist of their own comments concerning what they believe to be the situation rather than what the facts show on their face. For example , their equation of the right of Santini's ORDER 753 Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board affirms its Decision and Order issued in this proceeding on January 8, 1974. MEMBERS FANNING and JENKINS, dissenting: The Court of Appeals for the District of Columbia remanded this case to us for a clarifying explanation of the reasons for reaching a different result in this case from that reached in Local 814, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Molloy Brothers Moving and Storage, Inc.), 208 NLRB 276 (1974). In adhering to the Board's original decision that Santini's drivers are not employees, our colleagues now conclude that Molloy exercised sufficiently greater control over the long-haul drivers than Santini to justify a different result. In our view, the basic and significant aspects of the relationship between the carriers and the long-haul drivers are identical in both; Molloy and Santini. The differences in control relied `upon by the majority, if they exist, are too inconsequential to warrant the conclusion that the long-haul drivers are employees in Molloy and independent contractors in Santini. We therefore disagree with our colleagues and con- clude that the long-haul drivers in Santini, as well as in Molloy, are employees of the carriers and not inde- pendent contractors)0 Considerable support for this conclusion is provid- ed in the standards applied by the Supreme Court to sustain an employment relationship in N.L.R.B. v. United Insurance Co. of America, 390 U.S. 254 (1968), a case arising under the National Labor Relations Act. The Court disregarded the absence of details of daily supervision and stressed the significance of a number of factors defining the overall relationship which are present here. In concluding that the agents in United Insurance Co., were employees, rather than independent contractors, the Supreme Court noted that (1) "the agents do not operate their own inde- pendent business, but perform functions that are an essential part of the company's normal operations"; (2) "they do business in. the company's name with considerable assistance and guidance from the com- pany and its managerial personnel and ordinarily sell only the company's policies"; (3) the agents' agree- ment "that contains the terms and conditions under which they operate is promulgated and changed uni- drivers to refuse a load with impunity with permission for a regular employ- ee to take a day off is strained and meaningless-it is rare, indeed, that blanket prior permission is given to employees to take time off without notice or clearance and regardless of the workload. 10 Santini's local and short-haul drivers are admittedly employees. 754 DECISIONS OF NATIONAL LABOR RELATIONS BOARD laterally by the company"; (4) "the agents account to the company for the funds they collect under an elaborate and regular reporting procedure"; and (5) "the agents have a permanent working arrangement with the company under which they may continue as long as their performance is satisfactory." Comparable factors indicative of an employment relationship are present here . The long-haul drivers do not engage in a business of their own , separate and apart from that of Santini. They are an integral part of Santini's long-distance household moving business and on a regular and continuing basis per- form all the services of loading , hauling, and unload- ing the household goods of each of the shippers from the household of origin to the household of destina- tion . The goods are hauled in Santini -owned trailers. The drivers are paid on a commission basis, receiving a percentage of the total moving charges as their compensation. Although the tractors are owned by the drivers, both the tractors and trailers are painted with the name and colors of Santini or its contract associate, United. Not only do the tractors and trail- ers carry the name of Santini or United, but the goods hauled travel only under bills of lading of San- tini or United and the long-haul drivers regularly carry only the loads of Santini or United. Employees of Santini, without participation by the drivers , inspect the proposed long-distance ship- ments, estimate their cost, write up orders , arrange for the pickup date, prescribe the delivery time, as- semble the proposed moves that will make an appro- priate van load, and advise the driver in advance of his arrival in the area of the availability of the load which has been put together by Santini. Upon the driver's arrival , Santini 's dispatcher turns over to him the several orders for service and bills of lading that will comprise a load. The driver then proceeds to the homes of the shippers for pickup of the household goods and delivery at destination. The 24 drivers who constitute Santini 's long-haul household movers operate under identical agreements whose terms and conditions are prescribed by Santini." Over 90 per- cent of Santini 's household moving is carried out on a C.O.D. basis and the driver is required at destina- tion to collect payment from the shipper and prompt- ly account for payments to the carrier. After effect- ing delivery , collecting the charges, and remitting them to Santini, the driver indicates to Santini's dis- patch office his availability for the next assignment. As noted, he works exclusively for Santini (or Unit- ed) and does not offer his tractor, painted with Santini's name and colors and pulling Santini 's trail- 11 Some older agreements , not varying in significant respects. are still in effect. er, in the general market for moving services. Al- though the agreements with the long-haul drivers are terminable by either party on short notice, the long- haul drivers constitute a regular force whose driving arrangements with Santini will continue as long as their work is satisfactory. The foregoing incidents of the long-haul drivers' relationship with Santini parallel many of those found by the Supreme Court to be significant indica- tors of an employment relationship in the United In- surance Company case and, in our view, should have the same effect here. This conclusion is fortified by the fact that, pursuant to the regulations of the Inter- state Commerce Commission and Department of Transportation with which carriers are required to comply, Santini strictly controls nearly every phase of the work of the drivers, including maintenance of equipment, hours of service, observance of safety standards, and the keeping of detailed records. The control over the drivers, which regulates every signif- icant aspect of the manner and means of their perfor- mance of the long-distance hauling, is no less be- cause it is exercised pursuant to governmental direction. The regulations are imposed upon the car- riers and, to remain in business, they are required to control the manner and means of performance by the drivers. Certainly Santini's responsibility to third per- sons for damages resulting from any breach of these standards would be no less because they are Govern- ment imposed. This is the essence of the employment relationship at common law which is controlling here. Moreover, it would seem that the principal signifi- cance of the "manner and means" test in resolving the independent contractor-employee question is the determination of whether the individual performing services for another has sufficient freedom of action in producing a result for which he has contracted so that he is truly an independent businessman and solely responsible for his conduct. When the manner and means of performance of the agreed work are controlled by the nature of the employer's business, the individual does not have the freedom of an inde- pendent businessman and his obligation to comply with the employer's business requirements weighs heavily in favor of an employment relationship. The drivers' lack of any substantial proprietary in- terest in the business of moving household goods over long distances, and the absence of any real op- portunity for entrepreneurial decisions by which the drivers can measurably influence their profits and losses also point to an employment relationship. Al- though the individual drivers usually own a tractor which is a physical asset of substantial value, this is not a proprietary interest in the business of long-dis- LOCAL 814, TEAMSTERS tance moving. The trailers in which the household goods are hauled, as well as all other physical assets employed to carry on the long-distance moving busi- ness , are owned by Santini. But, more importantly, all the goodwill, institutional, and enterprise value resulting from operation of a long-distance moving business for a period of years belongs to Santini. If a driver is terminated or decides to discontinue driv- ing, he has nothing to sell but his tractor. The value of the long-distance moving business remains entire- ly with Santini. Similarly, the drivers' earnings are controlled al- most entirely by the amount of business which Santi- ni generates. The drivers' only function is to pick up the loads generated and put together by Santini and deliver them as Santini directs. Santini's activities alone determine the amount of business that will be available and the entrepreneurial character of the drivers' earnings stems almost entirely from Santini's efforts. Under their agreement with Santini, the driv- ers receive a fixed percentage of the total charge for the move and out of this percentage they pay the expenses of loading, unloading, and operating the moving equipment. Although there may be some variations in these costs with different drivers, there is no evidence of any significant differences in earn- ings among drivers resulting from management ex- pertise. It is apparent that these costs are fairly well standardized and measurable, are taken into account in fixing the drivers' commissions for services, and do not provide any meaningful opportunity for influ- encing drivers' earnings. In attempting to distinguish the present case from Molloy, our colleagues perceive greater control in Molloy over the drivers' mode of operation." In its reliance upon differences between Molloy and Santi- ni, the majority refers to Molloy's control over the drivers' mode of operation, particularly their on-the- job training, their procedures in loading and unload- ing cargo, and their dealings with customers. It illus- trates this claimed greater control by the statement that Molloy drivers are subject to disciplinary action for preventable accidents, failure to check with the carrier's dispatcher, failure to report to the carrier agent at destination, refusal to load, misconduct, and dishonesty. It also refers to the fact that the Santini drivers pay for their own health insurance, do not enjoy a profit-sharing plan, are advanced trip expen- ses from a reserve account of their commissions, are 12 In this connection , it should be noted that the Administrative Law Judge in Molloy observed that the form of contract with the long-distance drivers currently in use required their compliance only with Government regulations . He further found , however, that the earlier form contract which required compliance with additional regulations and instructions of the car- riers remained in use to some extent and that, in any event, compliance with various directives , bulletins, and instructions of the carriers was required. 755 not disciplined for failing to attend United's training program, and are not supervised when they load, un- load, or drive. It noted finally that Molloy had no separate operating authority from the Interstate Commerce Commission and depended on Allied Van Lines' certificate. Even if the above factors relied on by the majority represented differences in control over the drivers, we would be unable to agree that they are of suffi- cient substance to overcome the basic aspects of the relationship which are determinative of an employ- ment situation. But there is a serious question as to whether there are significant differences in the con- trols exercised by Molloy and Santini over their long- distance drivers even in the respects noted. As to on- the-job training, it is clear that a training program is available for the Santini drivers. The lack of signifi- cance of failing to require its drivers to attend the training program is evidenced by Santini's acknowl- edgement that its long-distance movers are "quali- fied, experienced drivers." As to loading and un- loading, a manual of instructions is available for Santini drivers. But here again one may query wheth- er such direction is necessary for "qualified, experi- enced drivers." The absence of supervision in loading, unloading, or driving seems similarly meaningless. It does not appear that Molloy has a supervisor present to oversee these operations. Nor can it be assumed that in its local and short-haul moving operations carried out by admitted employ- ees Santini provides additional personnel to super- vise its experienced and qualified employee movers. With respect to the items listed as involving discipli- nary action by Molloy, it must be remembered that Santini has the authority to terminate drivers on short notice and it is inconceivable that Santini would not exercise this authority when appropriate in the face of preventable accidents, misconduct, or dis- honesty. It is also clear that the Santini drivers check regularly with its dispatchers and agents at destina- tion in carrying out their delivery functions. The privilege of Santini's drivers to refuse a load amounts to little more than allowing a regular employee to take a day off from time to time. Abuses with respect to any of these matters are obviously subject to Santini's right to refuse loads or terminate the driving arrangement. Provisions for profit sharing, which give Molloy drivers an additional percentage based on volume, and payment for health insurance are merely aspects of compensation and are not significant indicators of an independent contractor or employment relation- ship. The fact that trip expenses are advanced by Santini from a reserve account of unpaid commis- sions certainly can have little effect in determining 756 DECISIONS OF NATIONAL LABOR RELATIONS BOARD whether the drivers are employees . Does the majority assume that Molloy's drivers are always fully paid with no commission balances ever owing them? How the fact that "unlike Santini , Molloy has no separate operating authority from the Interstate Commerce Commission" increases the controls Molloy has over its long-distance drivers is not explained by the ma- jority nor readily apparent. The majority asserts that our dissent is based upon our disagreement with the application of well -settled standards to the facts and our refusal to accept "what the facts show on their face ." Our quarrel with the majority, however, is not confined to the applica- tion of agreed-upon standards . We believe the major- ity is applying erroneous standards and this is evi- denced by the inconsequential factors upon which it relies to justify reaching a different result in this case from that in Molloy. It applies standards of control which touch only peripheral aspects and do not go to the essence of the relationship . Testing the employ- ment relationship by the standards we have set forth above , on the undisputed facts, precludes a finding that the long-haul drivers are independent contrac- tors. We acknowledge , as the majority asserts , that we do not mechanically accept "what the facts show on their face" and therefore find it necessary to probe in order to ascertain the real significance of surface "facts ." We are all too familiar with the ability of the dominant party such as Santini to include in the working arrangement provisions which are no more than window dressing to accomplish a preconceived result . The right of Santini's drivers to refuse a load, which the majority cites as exemplifying our ap- proach , illustrates this process . Although this right of refusal may create an appearance of freedom of ac- tion, its significance can only be weighed in terms of its actual operation . There is no showing of the ex- tent to which this right was actually utilized , that it was a matter of consequence in the conduct of the long-haul moving business , or that it operated in a manner other than to permit a day off for drivers whose hours were long and irregular and whose com- pensation depended on the loads they delivered. Moreover , the ability to refrain from work occasion- ally does not negate an employment relationship. Certainly , for example , longshoremen are no less em- ployees because they may decide to skip the shape- up occasionally. For all the foregoing reasons, we conclude that in all important respects the factual situations in Molloy and Santini are similar , that the Board's decisions are inconsistent , and that the long-distance drivers in both cases are employees , not independent contrac- tors.