United Insurance Co.

National Labor Relations Board - Board Decisions

Jan 14, 1959

122 N.L.R.B. 911 (N.L.R.B. 1959)

UNITED INSURANCE COMPANY 911
WE WILL NOT in any like or related manner interfere with, restrain, or coerce
our employees in the exercise of their right to self-organization, to form
labor organizations, to join or assist the above-named or any other labor
organization, to bargain collectively through representatives of their own
choosing, and to engage in concerted activities for the purposes of collective
bargaining or other mutual aid or protection, or refrain from any and all
such activities, except to the extent that such rights may be affected by an
agreement requiring membership in a labor organization as a condition of
employment, as authorized in Section 8(a)(3) of the Act.
ROYAL BRAND CUTLERY COMPANY, A DIVISION
OF BROCKELMAN BROTHERS, INC.,
Employer.
Dated------------------- By-------------------------------------------
(Representative ) (Title)
This notice must remain posted for 60 days from the date hereof, and must not be
altered, defaced, or covered by any other material.
United Insurance Company and Insurance Agents' International
Union, AFL-CIO. Case No. 4-CA-1576. January 14, 1959
DECISION AND ORDER
On May 15, 1958, Trial Examiner Sydney S. Asher, Jr., issued his
Intermediate Report in the above-entitled proceeding, finding that
the Respondent had engaged in and was engaging in certain unfair
labor practices, and recommending that it cease and desist therefrom
and take certain affirmative action, as set forth in the copy of the
Intermediate Report attached hereto. Thereafter, the Respondent
and the Charging Party filed exceptions to the Intermediate Report
and supporting briefs.
The Board has reviewed the rulings made by the Trial Examiner
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the
Intermediate Report, the exceptions and briefs, and the entire record
in the case,' and hereby adopts the Trial Examiner's findings, con-
clusions, and recommendations 2
i The Respondent ' s request for oral argument is denied , as the record , and the excep-
tions and briefs , adequately present the issues and the positions of the parties.
2 We agree with the Trial Examiner 's finding that paragraph 13 of the 1956 consent-
election agreement did not foreclose the Respondent from raising the issue of the alleged
independent contractor status of its debit agents here . However, unlike the Trial
Examiner , we do not base our finding on an interpretation of paragraph 13 as being an
intended waiver of the right to raise such issue only for purposes of the representation
case. Nor do we base our finding on the inference created by such an interpretation that
a consent-election agreement is not binding in a companion refusal-to -bargain case arising
therefrom where no jurisdictional fact is involved , or on the further inference that the
companion refusal -to-bargain case is a separate and independent proceeding from the
representation case. See The Baker and Taylor Co ., 109 NLRB 245. See also Pittsburgh
Plate Glass Company v. N .L.R.B., 313 U.S . 146. We rather base our finding on the fact
that independent contractors are statutorily excluded from the coverage of the Act in
Section 2 ( 3), and for that reason the possible independent-contractor status of the debit
agents could not be waived and was subject to litigation before the consent -election
certification could be conclusive . Cf. Montgomery Ward & Co., Incorporated , 115 NLRB
645, 646, 647.
122 NLRB No. 112.
912 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ORDER
Upon the entire record in the case , and pursuant to Section 10(c)
of the National Labor Relations Act, as amended , the National Labor
Relations Board hereby orders that the Respondent , United Insur-
ance Company , Chicago, Illinois, its officers, agents , successors, and
assigns shall :
1. Cease and desist from :
(a) Refusing to bargain collectively with Insurance Agents' Inter-
national Union, AFL-CIO, as the duly certified exclusive bargaining
representative of its employees in the following appropriate unit :
All licensed debit agents in the Commonwealth of Pennsylvania,
including licensed debit agents who work in Pennsylvania but are
attached to the Respondent 's district offices in Wilmington, Delaware,
Hagerstown , Maryland , and Youngstown , Ohio, but excluding ordi-
nary agents , special agents, supervisors or superintendents , managers,
office clerical employees, and all other supervisors as defined in the
Act.
(b) In any like or related manner interfering with, restraining, or
coercing its employees in the exercise of their right to self-organiza-
tion, to form , join, or assist , and bargain collectively through, the
above-named labor organization , or any other labor organization of
their own choosing.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act:
(a) Upon request, bargain collectively with the above -named labor
organization as the exclusive representative of the employees in the
appropriate unit described above with respect to rates of pay , wages,
hours of employment, and other conditions of employment, and if
an understanding is reached , embody such understanding in a signed
agreement.
(b) Post at its offices throughout the Commonwealth of Pennsyl-
vania copies of the notice attached hereto marked "Appendix."'
Copies of said notice , to be furnished by the Regional Director for
the Fourth Region, after having been duly signed by an authorized
representative of the Respondent , shall be posted by it immediately
upon receipt thereof, and maintained by it for sixty (60) consecu-
tive days thereafter in conspicuous places, including all places where
notices to employees are customarily posted . Reasonable steps shall
be taken by the Respondent to insure that said notices are not
altered, defaced , or covered by any other material.
3 In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals , Enforcing an Order."
UNITED INSURANCE COMPANY 913
(c) Notify the said Regional Director in writing, within ten (10)
days from the date of this Order, as to what steps it has taken to
comply herewith.
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, you are notified that :
WE WILL NOT refuse to bargain collectively with Insurance
Agents' International Union, AFL-CIO, as the duly certified
exclusive bargaining representative of our employees in the ap-
propriate unit described below.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce our employees in the exercise of their right
to self-organization, to form, join, or assist, and bargain collec-
tively through the above-named labor organization, or any other
labor organization of their own choosing.
WE WILL bargain collectively, upon request, with Insurance
Agents' International Union, AFL-CIO, as the exclusive repre-
sentative of all employees in the bargaining unit described below,
with respect to rates of pay, wages, hours of employment, or
other conditions of employment, and if an understanding is
reached, embody such understanding in a signed agreement. The
bargaining unit is :
All our licensed debit agents in the Commonwealth of
Pennsylvania, including licensed debit agents who work in
Pennsylvania but are attached to our district offices in Wil-
mington, Delaware, 1-Iagerstown, Maryland, and Youngs-
town, Ohio, but excluding ordinary agents, special agents,
supervisors or superintendents, managers, office clerical em-
ployees, and all other supervisors as defined in the Act.
UNITED INSURANCE COMPANY,
Employer.
Dated--- ------------- By-------------------------------------
(Representative ) ( Title)
This notice must remain posted for 60 days from the date hereof,
and must not be altered, defaced, or covered by any other material.
INTERMEDIATE REPORT
This case involves allegations that United Insurance Company, Chicago, Illinois,
herein called the Respondent , refused on or about May 9, 1957, and at all times
since has continued to refuse , to meet with, negotiate with, or otherwise bargain
collectively with Insurance Agents' International Union, AFL-CIO, the Charging
505395-60-vol. 122-59
'914 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Panty,: herein called the Union, as the 'exclusive representative of' certain of the
Respondent's. employees in an appropriate bargaining unit, although the. Union. was
then, and has at all times since been, the exclusive bargaining representative of
such employees for the purposes of collective bargaining. It is alleged-that this
conduct violated Section 8(a)(1) and (5) of the National Labor Relations Act, as
amended (61 Stat. 136), herein called the Act.- After the filing of a complaint
by the General Counsel,' the Respondent filed an answer admitting certain juris-
dictional facts, averring that the individuals whom the Union sought to represent
were not then and are not now employees of the Respondent within the meaning
,,of the Act,.and consequently denying that the Union was at any time the exclusive
collective-bargaining representative of any of the Respondent's employees. A
'.hearing was held. before me in Philadelphia, 'Pennsylvania, on various: dates be-
tween September 11 and 30, 1957, inclusive. All parties were represented and
participated fully in the hearing.2 After the closing of the hearing, the Union and
the Respondent filed briefs, which have been duly considered.
Upon the entire record in this case,3 and from my observation of the witnesses,
I make the following:
FINDINGS OF FACT
There is no dispute, the Board has held,4 and it is found, that the Respondent
is engaged in commerce within the meaning of the Act and its operations meet
the Board's jurisdictional standards,5 and that the Union is a labor organization
within the meaning of the Act.
A. The sequence of events
On July 22, 1953, Insurance Workers of America, CIO, Local No. 5, herein
called the Insurance Workers, filed with the Board a representation petition in
Case No. 4-RC-2052, seeking certification as bargaining representative for all
debit agents of the Respondent in Philadelphia, Pennsylvania. On August 10, 1953,
pursuant to notice duly issued by the Regional Director,6 a hearing was held on
this petition during which the Union intervened. On August 26, 1953, the Union
filed with the Board a representation petition in Case No. 6-RC-1341, seeking
-certification as bargaining representative for all debit agents of the Respondent in
Pittsburgh, Harrisburg, and Hanover, Pennsylvania. On September 2, 1953, the
Board transferred Case No. 6-RC-1341 from the Sixth Region to' the Fourth
Region and renumbered it as Case No. 4-RC-2110. On September 15, 1953, the
Board remanded Case No. 4-RC-2052 to the Regional Director, with directions
to reopen the record in Case No. 4-RC-2052 and to consolidate that case with
Case No. 4-RC-2110 for purposes of further hearing. On October 12 and 13,
1953, pursuant to notice duly issued by the Regional Director, a consolidated hear-
ing was held in Cases Nos. 4-RC-2052 and 4-RC-21 10. On May 11, 1954, the
Board issued a Decision, Order, and Direction of Election in Cases Nos. 4-RC-2052
'The designation "General Counsel" includes the General Counsel of the National
Labor Relations Board and his representative at the hearing.
a Over the Respondent's objection, the Charging Party was permitted to participate
fully as a party, despite the absence of a formal motion to intervene. John L. Clemmey
Company, Inc., 118 NLRI 599, footnote 1.
3 Respondent's Exhibits Nos. 1 through 21-I were part of an offer of proof which was
rejected, and they therefore have not been considered. General Counsel's Exhibit No. 14,
although bound with the other exhibits, was never offered in evidence. It likewise has
not been considered. Union's Exhibit No. 5 was received in evidence and has been con-
sidered. The reporter's stamp thereon, which indicates that the exhibit was rejected, is
corrected to . reflect the fact that it was received.
After, the. close of the hearing, on motion of the Respondent, and in the absence of
objection, the transcript was corrected in certain specified respects.
4 Cnited Insurance Company, 108 NLRB 843.
5 The Respondent is an Illinois corporation with its principal place of business in
Chicago, Ill. It is engaged in the sale of insurance in 40 States and the District of
Columbia, and maintains branches in the Commonwealth of Pennsylvania. During 1950,
the Respondent collected premiums in excess of $30,000,000, of which more than $3,000,000
was collected in Pennsylvania. During the same period, the Respondent. remitted from
its Pennsylvania offices to points outside Pennsylvania more than $50,000 derived from
premiums collected in Pennsylvania.
O The designation "Regional Director" is used to describe the Regional Director or
'Acting Regional Director for the Board's Fourth Region.
UNITED INSURANCE COMPANY 91.5
and 4-RC-2110,7 in which it directed an election among all debit agents of the
Respondent in Pennsylvania, including those attached to the Respondent's district
,offices in Wilmington, Delaware, and Hagerstown, Maryland, working in Penn-
sylvania. 'As 'the unit requested in Case No. 4-RC-2052 was deemed by the
Board to be inappropriate, and as the Insurance Workers did not wish to appear
on the ballot in a Statewide unit, the 'Board dismissed the petition in that case.
This Decision, Order, and Direction of Election, referred to herein as the 1954
decision, will be discussed at greater length below. On June 2, 1954, at the
Union's request, the Board permitted the Union to withdraw its petition in Case
No. 4-RC-2110, with prejudice to its filing a new petition for 6 months.
On November 5, 1956, the Union filed with the Board a representation petition
in Case No. 4-RC-3194, seeking certification as bargaining representative for all
debit agents of the Respondent in Pennsylvania. On November 27, 1956, the
Respondent and the Union entered into an agreement for consent election, which
was duly approved by the Regional Director. Paragraph 13 of this agreement
stated:
By consenting to this Agreement, the Employer does not waive its position
that licensed debit agents of United Insurance Company of America are in-
dependent contractors and not employees but waives the right to raise such
issue in these proceedings.
Pursuant to this agreement, an election was conducted on December 18, 1956.
On December 21, 1956, the Union filed objections to the election. On February 12,
1957, the Regional Director set the election aside and ordered a new election. A
rerun election was conducted on March 12, 1957. On March 21, 1957, the Re-
, spondent filed objections to the rerun election. On May 7, 1957, the Regional
Director dismissed such objections and certified the Union as the exclusive bar-
gaining representative for all debit agents of the Respondent in Pennsylvania,
with certain exclusions.
B. The appropriate unit
1. Contentions of the parties
The complaint, as amended at the hearing, alleges that all licensed debit agents
of the Respondent in the Commonwealth of Pennsylvania, including licensed debit
agents working in Pennsylvania but attached to the Respondent's district offices in
Wilmington, Delaware, Hagerstown, Maryland, and Youngstown, Ohio, but ex-
cluding ordinary agents, special agents, supervisors, managers, office clerical em-
ployees, and all other supervisors as defined in the Act, constitute a unit appro-
priate for the purposes of collective bargaining. In support of this allegation,
the General Counsel and the Union contend that the debit agents engaged by
the Respondent to work in Pennsylvania are employees within the meaning of
the Act. The answer denies that the unit described in the complaint is appropriate
for the purposes of collective bargaining, on the ground that the Respondent's
licensed debit agents in Pennsylvania are independent contractors and not em-
ployees within the meaning of the Act. The question whether these licensed
debit agents are employees, on the one hand, or independent contractors, on the
other, constitutes the sole issue in this case.8 The Respondent in effect concedes
that, if its licensed debit agents in Pennsylvania are employees, the unit set forth
in the complaint is otherwise appropriate.
2. Effect of the 1954 decision
The 1954 decision was based upon a nonadversary hearing in a representation
proceeding in which the Respondent and the Union were parties. The sole issue
there, as here, was the status under the Act of the Respondent's licensed debit
agents in Pennsylvania. After making numerous findings of fact regarding the
details of the relationship between the Respondent and its agents, the Board there
concluded that the agents were employees within the meaning of the Act, rather
than independent contractors. As no certification resulted from that decision, the
.Respondent was unable to test its validity in court proceedings.
108 NLRB 843.
I cannot agree with the Union that the agreement for consent election forecloses the
Respondent from raising this issue here, nor am I convinced that paragraph 13 of that
agreement , quoted above, preserves that issue only in non -Board proceedings . Linterpret
paragraph 13 as a waiver of the Respondent's position that its licensed debit agents are
independent contractors only for the purposes of Case No . 4-RC-3194.
916 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In the instant case, the Respondent contends, first, that the Board's ultimate con-
clusion in the 1954 decision was erroneous, and, second, that that case has been
concluded and has no binding effect upon this case, which is an entirely separate
and distinct proceeding. In short, the Respondent maintains that the status issue
should be tried here completely de novo. The General Counsel and the Union
conversely insist that, as the parties and the issue are the same here as they were
then, the 1954 decision is binding here with respect to the facts existing, and the
legal relationship established thereby, at the time of the 1954 decision. I ruled
that, as a Trial Examiner, I was bound by the Board's findings regarding the
situation existing on the date of the 1954 decision,9 and would only permit evidence
-concerning what changes had occurred in the relationship between the Respondent
.and its agents since then.
In its brief, the Respondent in effect seeks reconsideration of this ruling. Point-
ing to the Union's voluntary withdrawal of the earlier petition shortly after the
1954 decision issued, able counsel for the Respondent urges application of the rule
of law "that when a plaintiff suffers a nonsuit or dismisses his action it is as if the
suit had never been brought," and maintains that the doctrine of res judicata does
not apply to administrative proceedings.io
As to the Respondent's contention that the 1954 decision was erroneous, that
question is for the Board to determine when and if this proceeding reaches the
Board level. As a Trial Examiner, I am not empowered to review or set aside
a prior determination of the Board. Let us turn then to the Respondent's conten-
tion that the 1954 decision is not binding here because the petition there was
later withdrawn by the Union. It has long been the Board's policy, in unfair
labor practice proceedings involving charges of refusal to bargain with certified
representatives, that the issues decided in a prior representation proceeding may
not be relitigated. In the absence of new evidence, or evidence of a change in
the facts surrounding a prior unit determination, or the presentation of evidence
unavailable to a respondent in the prior representation, proceeding, the Board
has uniformly refused to redetermine these issues in an unfair labor practice
proceeding." And I can perceive no valid reason for distinguishing between those
representation cases which were carried through to certification and those where
the petition was withdrawn before certification had been achieved. Whatever the
rule might be in civil cases, as a Trial Examiner, I am bound by the Board's
decisions unless they have been vacated,12 which the 1954 decision was not. I
accordingly adhere to my ruling at the hearing that the 1954 decision is binding
here with regard to the situation existing at that time.13
3. The prima facie case
At the hearing, after the General Counsel and the Union had rested, the Respond-
ent moved to dismiss the complaint on the ground that a prima facie case had not
been made out. That motion was denied. In its brief, the Respondent in effect
seeks reconsideration of that ruling, on the ground that the General Counsel and
the Union failed in the case-in-chief to produce evidence that the Respondent's
debit agents are employees within the meaning of the Act.
9 The Respondent suggests that, if the 1954 decision is binding at all, the crucial date
is October 13, 1953, when the hearing closed, rather than May 11, 1954, when the deci-
sion issued. As no substantial changes appear to have taken place between these dates
the question as to which date should be controlling need not be determined.
1ON.L.R.B. v. Baltimore Transit Company, 140 F. 2d 51 (C.A. 4), cert. denied 321
U.S. 795, cited by the Respondent, is inapposite. That case held that the Board had
power to reverse its prior administrative determination. Here, however, the Board has
not sought to reverse the 1954 decision.
1N.L.R.B. v. Worcester Woolen Mills Corporation, 170 F. 2d 13, 16 (C.A. 1), cert.
denied 336 U.S. 903; N.L.R.B. v. American Steel Buck Corp., 227 F. 2d 927 (C.A. 2) ;
Grede Foundries, Inc., 83 NLRB 201, footnote 2, enfd. 189 F. 2d 258 (C.A. 6), cert, denied
342 U.S. 886; American Finishing Company, 90 NLRB 1786, 1795; and The Baker and
Taylor Co., 109 NLRB 245. This applies also where the parties have entered into an
agreement for consent election. The Baker and Taylor Co., supra.
1e By either the Board or the United States Supreme Court. Insurance Agents' Inter.
national Union, AFL-CIO (The Prudential Insurance Company of America), 119 NLRB
768; Novak Logging Company, 119 NLRB 1573; and Scherrer and Davisson Logging
Company, 119 NLRB 1587.
W At the hearing, I denied the General Counsel's motion to incorporate into the record
herein the complete transcript of testimony of the hearing in the 1954 proceedings.
I likewise adhere to that ruling.
UNITED INSURANCE COMPANY 917
At the time the motion was made, the General Counsel had shown the certifica-
tion of the Union by the Regional Director on May 7, 1957, a subsequent request
by the Union that the Respondent bargain with it as the exclusive representative
of all employees in the unit covered by the certification, and a refusal of that
request by the Respondent. Where the unfair labor practice in question is a re-
fusal to bargain in violation of Section 8(a) (5) of the Act, such evidence, without
more, establishes a prima facie case.14 But even assuming, contrary to the above,
that the General Counsel was required to produce in his case-in-chief proof of
the status of licensed debit agents as employees, that burden was met. For the
1954 decision constitutes a finding that they were employees at that time, and
a state of affairs once shown to exist is presumed to continue until the contrary
is shown.15 For these reasons, I adhere to my ruling at the hearing denying the
Respondent's motion to dismiss the complaint.
4. Duties of licensed debit agents
Let us turn, then, to a comparison of the Board's findings in the 1954 decision
with the facts as shown in the instant hearing, to ascertain what changes have
occurred in the interim regarding the relationship between the Respondent and its
licensed debit agents.
In the 1954 decision the Board found that at that time:
The debit agents sell insurance and collect premiums thereon. In Penn-
sylvania, in order to sell insurance an agent must take an examination and
be licensed by the State. The agent pays for his own license, but the Em-
ployer must certify that it has appointed him to sell for it. If his agency is
terminated, the Employer notifies the insurance department; the license is
canceled; and the agent cannot continue to sell insurance unless he is licensed
to do so for another company. The agent is also required to furnish a bond,
for which he pays.
On the same subject, the record in the instant case shows that, at present:
Licensed debit agents sell industrial life insurance,16 ordinary life insurance,
health and accident insurance, and hospitalization insurance, and collect premiums
thereon. As a rule, industrial life insurance constitutes the major portion of their
sales. The premiums charged policyholders are determined according to rate
manuals supplied by the Respondent to all agents,17 and the policies sold are
likewise supplied by the Respondent. The premiums charged and the policies issued
must be approved in advance by State insurance officials.
When an agent sells a new policy or collects a premium on an old policy he
notes this fact in a "debit book" supplied to him by the Respondent. He may
make his own arrangements with the policyholder regarding the frequency with
which premiums will be paid. For example, although premiums on industrial
insurance are due weekly, the agent and the policyholder may agree between them
for convenience that the premiums will be paid every 2 weeks, in double the
amount of the weekly premium. However, State law requires that industrial
policies be lapsed when premiums become 4 weeks in arrears. The Respondent
forbids its agents to continue to carry a lapsed policy on their "debit books," and
requires them to report lapsed policies promptly, on forms which it provides.
The agents also service the insurance needs of their policyholders. For ex-
ample, they help policyholders to reinstate lapsed insurance. The agents are not
required by the Respondent to perform any function with regard to claims for
insurance benefits, except that in claims arising under health and accident insurance
the agent notes on the claim form the status of the policy regarding the payment
of premiums. However, as a matter of convenience to the policyholders, and in
14 The Pacific Telephone and Telegraph Company, et at., 113 NLRB 478, 501. See also
The Standard Transformer Company, 97 NLRB 669, 686-687, enfd. 202 F. 2d 846 (C.A. 6).
zr Borro Product8 Company, 117 NLRB 313, 314.
16 Industrial life insurance is written in amounts less than $1,000, and the premiums
are payable weekly. It can be purchased for weekly premiums of 5, 10, 15, or 20 cents.
Generally, the agents collect the premiums at the home or place of work of the policy-
holder. See Mobray and Blanchard, "Insurance, Its Theory and Practice in the United
States" (4th ed. 1955), p. 245.
11 The manuals contain the following statement : "Notice. This rate book is the property
of the United Insurance Company of America, Chicago 5, Illinois, and is placed in the
hands of its Agents and Superintendents and accepted by them with the express under-
standing that it will be promptly returned to the Company upon termination of service."
918: DECISIONS OF -NATIONAL LABOR RELATIONS BOARD
order to create goodwill, agents normally supply policyholders, on request, with
blank forms for filing claims, and frequently transmit the payments personally
to the policyholders after the Respondent has approved the claims. In some in-
stances 'where the agent is convinced that the claim will eventually be approved'
by the Respondent, he may voluntarily pay the claim prior to approval, and charge
the amount paid to the Respondent on his accounts. In such situations the agent
acts at his own risk; should the claim ultimately be disapproved, the corresponding
charge against the Respondent on the agent's account would be disallowed.
The licensing requirements of Pennsylvania, the termination of the license, and
the payment of fees therefor by the agent remain the same today as they were
at the time of the 1954 decision. The contracts between the Respondent and the
agents now in force, discussed in more detail below, do not mention the require-
ment that the agents be bonded. However, agents when first engaged must pay
$20 to the Respondent "for the initial expense of investigations, issuing and
handling of [the] bonds." Thereafter each agent must pay the Respondent an
annual fee of $5 for renewal of his bond. In 1956, the Respondent adopted. a
policy of eliminating the renewal fee, after the first such renewal, of any agent
who applies for participation in the Savings and Profit Sharing Pension Fund Plan
described hereafter.
5. Compensation of licensed debit agents
In the 1954 decision the Board found that, at that time:
Agents are recruited by the district managers or supervisors as vacancies
occur. They are paid a commission on collections and a bonus on sales.
They have no signed contracts with the Employer, but perform their services
under an agreement or commission schedule drawn up by the Employer, a
copy of which is posted in each district office. This agreement, which is
revised once a year, sets forth the commission and bonus rates, which are
uniform throughout the Employer's operations. After a new schedule is
promulgated, an agent may choose, at the beginning of any quarter, to go
under it or to remain under the old agreement. If he chooses to change,
he cannot later change back. The agents have no minimum guarantee or
drawing account.
On the same subject, the record in the instant case shows that, at present:
Each of the Respondent's offices is in charge of a manager, who engages debit
agents; hence each agent works out of a particular office. Under the manager. are
clerical employees and several superintendents, described in the record as "ac-
tually an assistant manager." 18 Each superintendent has a number of debit agents
assigned to him. In one instance in 1956, in the Braddock, Pennsylvania, office,
Martin Rosenstein, an agent, requested the manager to transfer him from the staff
of one superintendent to the staff of another, and the manager did so.
With regard to the method of compensating debit agents, there has been a
change. After the issuance of the 1954 decision, Almore H. Teschke, the Re-
spondent's general counsel, directed that a new written contract for debit agents
be drafted "in such manner to bring out the true state of the manner in which
the agents are compensated for services, for the results obtained by them, and
also to overcome the specific technical objections that were raised against the
previous contract by the National Labor Relations Board decision." Accordingly
a "Revised 1956 Agent's Commission Plan," herein called the 1956 contract, was
drawn up and submitted to the agents for acceptance. Those unwilling to come
under its terms remained governed by their previous agreements; the others sig-
nified their acceptance of the 1956 contract by returning a signed copy of the
last page of it to the Respondent. A large number of agents accepted it. All
new agents engaged by the Respondent since the 1956 contract was put into
effect have been required to come under it.
The 1956 contract sets forth a schedule of collection commissions which will
be paid weekly to a new agent during his first 15 weeks of service, based upon
the amount of premiums collected. For the agent's second quarter-year of serv-
ice, and each quarter thereafter, he is entitled to a collection commission of
20 percent of his total collections for the previous quarter, paid at the rate of
one-thirteenth of this amount each week. In addition, he receives an increase
18 There does not seem to be any dispute that the managers, clerical help, and super-
intendents are employees of the Respondent , and that they are excluded from the unit for
which the Union was certified.
. UNITED INSURANCE COMPANY 919
commission of 20 times the increase obtained during the previous quarter19 up to
a stated maximum, paid at the rate of one-thirteenth of this amount each week.
The 20 times provided for increases as the length of the agent's service increases,
up to a maximum of 25 times in the sixth year of service. Excess over the
stated maximum is placed in the agent's reserve account. After a year of service,
an agent may withdraw this reserve in cash, not to exceed $500 within any
6-month period, if he has attained average collections of 96 percent or better.
In order to qualify for this, the agent's accounts "must be inspected to enable
the manager to certify to the accuracy of the increase reserve." There is also a
schedule. of commissions for selling ordinary insurance, and a commission for
ordinary increase where policies are issued on a monthly basis, computed at
20 times, or up to 25 times, depending on the agent's length of service, paid
during the following quarter at the rate of one-thirteenth each week. In addition
there are provisions for a "quarterly new business increase bonus" and for a
"semi-annual incentive collection commission bonus." Finally, the contract con-
tains a warrant by the agent that his accounts are accurate, a reservation by the
Respondent of "the right to conform commission payments to the agent in ac-
cordance with the true condition of his account and records," a provision for
termination at any time by either party, a provision for the Respondent to conduct
an audit of the agent's account within 90 days after termination and for settlement
promptly thereafter,20 a commitment by the agent not to solicit until he has
received his State license, and to deposit with the Respondent promptly all moneys
collected and due the Respondent, and a statement that the agent fully understands
that his remuneration "is solely by way of commission."
This contract has been unilaterally supplemented by the Respondent from time
to time in various respects. Thus, although the contract is silent as to the annual
payment of a $5 bond fee by the agents, that is required except under the cir-
cumstances outlined above. Also, while the contract does not mention reimburse-
ment of expenses, the Respondent does in some instances provide certain agents:
with a limited transportation allowance, as more fully described hereafter. And
in 1957 the Respondent unilaterally promulgated an additional "Continuous.
Service Bonus," which will be discussed in greater detail below. Finally, although
the contract is silent about the matter, it appears (as more fully described below)
that the Respondent does not permit its agents to sell competing policies for other
companies.
In practice, when two agents collaborate in selling a new policy, the Respondent
permits them to work out between themselves the allocation of the commission
earned. The agents are forbidden by State law to rebate any part of the premiums
to a policyholder. If a policyholder remits his premiums directly to the Respond-
ent, instead of having them collected by the agent, the agent nevertheless receives
a collection commission thereon. There is no limit to the amount of compensation
an agent may earn.
It, is still true at present, as it was at the time of the 1954 decision, that agents
have no salary, minimum guarantee, or drawing account.21
6. The debit; relationship between the agents and their managers
In the 1954 decision the Board found that, at that time:
When an agent is appointed, he is given a debit or list of policy holders
from whom he is to collect weekly premiums, and the district manager or
supervisor explains the compensation arrangement to him. The original debit
is confined to a definite area, but the agent is free to sell insurance anywhere
in the State. A supervisor usually accompanies a new agent on his rounds
to acquaint him with his debit and show him how to sell insurance and make
collections. Thereafter, the agent is free to follow these methods or to adopt
"The increase is computed by totaling the weekly premiums due on new policies sold
and old policies reinstated, and subtracting therefrom the weekly premiums due on
lapsed policies.
The Respondent's 1954 and 1955 Plans of Compensation contain the following provi-
sion, not found in the 1956 contract : "It is understood that when an agent's service
terminates . . . he has been paid in full to date and there is no further commission or
equity in any bonus due that particular agent."
a The record contains evidence that the debit agents were at one time on an "advance
draw" system of compensation. Thus, in the 1954 Plan of Compensation, a schedule sets
forth the specified "weekly advance draw" to be allowed an agent, depending on the size
of his debit. Nevertheless, I am bound by the finding of the Board in its 1954 decision
that, at that time, "agents [had ] no minimum guarantee or drawing account."
920 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
his own. If he wishes further advice or help, his supervisor will give it to
him; and the record shows that supervisors devote approximately 75 percent
of their time to rendering such assistance. The district managers occasionally
hold meetings for the agents, but the agents are not required to attend.
On the same subject, the instant record shows that, at present:
a. The debit
At the time an agent is appointed, he is supplied by the Respondent with a
looseleaf book, each page of which contains the name and address of a policy-
holder from whom he is to collect premiums.22 When a new policy is written,
the agent adds a new page in the book; when an old policy lapses the correspond-
ing page is removed. This book, referred to in the testimony as a "debit," 23
remains the property of the Respondent and must be surrendered by the agent
to the Respondent at termination. The Respondent does not make a calculated
effort to concentrate each debit in a particular limited area, nor does the Respond-
ent have any policy against debits overlapping as to territory. Indeed, the agents
are free to sell insurance anywhere in Pennsylvania. However, in practice the
agents find it more efficient to confine the bulk of their activities to a given
geographical area. To what extent does the Respondent concern itself with this
problem? In one instance in Philadelphia in 1957, two or three agents sometimes
were collecting premiums in the same house. A meeting was held, attended by
the agents, the superintendents, the managers, and Mr. Shea, described as "the city
manager." Each agent submitted to Shea a list of the amount of business he was
doing in each block. Shea then "reapportioned the debt" (e.g., transferred some
policyholders from one agent's debit to another) of about 12 of the agents in such
a way that each agent wound up with a debit of approximately the same amount
of weekly premiums to collect, but each debit became concentrated in a particular
geographical area. Although Percy Brown, one of the affected agents, testified
that he "was moved two blocks west ... from Eighteenth [Street] to Twentieth,"
and that "they will say 'Mr. A stops at Twentieth'. . . . The manager of the
district ... breaks his debits up into the size that he wants them," it is clear that
the "lines" thus established did not interfere with the right of the agents to sell
insurance anywhere in the State.
So long as a particular policy is listed in an agent's debit, he must continue to
keep the record of that policy and to service it until the policy is either lapsed
or transferred to another agent's debit. There are occasions when a policyholder
moves out of his former neighborhood, thus making it more difficult for the
agent to continue to collect premiums. Under such circumstances the agent may
elect to continue to collect the premiums through the mails or otherwise, even if
the policyholder has moved out of the State. On the other hand, the agent may
decide to transfer the policy to another agent willing to accept it, either because
the policyholder has moved or in order to concentrate the agent's debit geo-
graphically. In such a transfer, a form must be filled out and submitted to the
manager; if the transfer is out of the State a copy is submitted to the manager in
the area to which the policyholder has moved. After the agent is informed by
his manager that the transfer has been effected, he removes the corresponding
page from his debit. For convenience, the transferring agent sometimes transmits
the page to the agent who is accepting the transfer, but this is not required.
b. Relationship between the agents and their managers
Let us now examine the relationship between the agent and his superintendent
and manager. It is still true today, as it was at the time of the 1954 decision,
that the superintendent usually accompanies a new agent on his rounds to acquaint
him with his debit and show him how to sell insurance and make collections.
There is, however, no formal school for new agents. The amount of time the
superintendent spends on "breaking in" a new agent depends in large measure
on the agent's aptitude and previous experience in the insurance field. It is also
21 There are a few licensed debit agents, known as "builders," to whom blank books
are issued. Builders, of whom there are two in Pennsylvania, then build up the debit
from scratch. They are not under the 1956 contract, but operate under an entirely
different compensation agreement. After 6 months, they either turn in the book, which is
reissued to another agent, or retain the book under the terms of the 1956 contract.
23 The term "debit," in insurance parlance, would seem to have an additional meaning,
namely, a specified territorial area assigned to a particular agent in which his activities
are carried out. Davis, "Industrial Life Insurance in the United States" (1st ed . 1944),
pp. 7, 54-55.
UNITED INSURANCE COMPANY 921
still true that the agent is free to follow the superintendent's suggestions or to
devise his own methods, and that thereafter the superintendent will, upon request,
extend further advice or help to the agent. Some of the superintendents' and
managers' functions are to explain new policies, to explain the compensation sys-
tem, to suggest sales and collection techniques, and to instill enthusiasm in the
agents. To this end, managers arrange meetings from time to time. Attendance
of the agents at these meetings is optional. The Respondent also stimulates
interest by such devices as distributing lapel buttons to the agents free of charge
and holding sales contests among the agents with cash or watches awarded to the
winners as prizes. The superintendents and managers have other functions re-
garding the agents, such as helping an agent to transfer a policy to another agent,
servicing an agent's debit in his absence, checking the agent's weekly reports, and
investigating complaints by policyholders with respect to his servicing the policy-
holder. A superintendent is required to report to the Respondent the name of
any agent whom he assists, or whose debit he services in the agent's absence.
The manager can terminate the agent's relationship with the Respondent at any
time. In exercising the right to terminate an agent, the manager would probably
take into consideration the recommendation of the agent's superintendent.
7. Hours of work and quotas
In the 1954 decision the Board found that, at that time:
The agents set their own hours of work, are not required to make any
fixed number of calls, and have no quotas to meet. The 1953 commission
schedule provides, however, that the payment of any bonus is based on the
condition of the agent's account.
On the same subject, the instant record shows:
a. Hours of work and quotas
The agents determine how many days they will work each week, what hours
they will work, what calls they will make, and how frequently they will canvass.
The Respondent does not require its agents to report on these matters, nor does
the Respondent impose a quota on the agents or furnish them with the names of
likely prospects. As pointed out above, the 1956 contract provides that, in order
to draw out reserve, an agent's accounts "must be inspected to enable the manager
to certify to the accuracy of the increase reserve." This provision is carried out
in practice.
b. The Sunshine Club
In one of the Respondent's Philadelphia offices a voluntary unincorporated
association has been formed known as the Sunshine Club. Membership is op-
tional and is limited to licensed debit agents, and the members pay periodic dues.
In the last few years, at the request of the Club's president (one of the agents),
some of the members have noted their dues as withheld on their weekly accounts
submitted to the Respondent. The Respondent's cashier then deposits these dues
in the Club's bank account and renders an accounting to the Club's president,
showing which members have paid their dues in this manner. The record does
not show whether or not the Club holds meetings on the Respondent's premises.
8. Reporting by agents
The Board found in the 1954 decision that, at that time:
The agents are required to report to their district offices once a week to
settle their accounts.5 They compute their own commissions, deduct this
amount from their collections, and remit the balance to the Employer. Usu-
ally they also remit to the Employer money to cover their withholding and
social-security taxes. The Employer contends, however, that these tax pay-
ments are entirely voluntary on the part of the agents. If the agent makes
a social-security payment, the Employer pays its share. The Employer also
has voluntary pension and group insurance plans for the agents, to which
the agents make payments in the same way. Forms for the agents' accounts
are supplied by the Employer, but the agents are not required to use them.
The accounts are audited, and corrections in them are made, by the Em-
ployer. The Employer also has the right to inspect the agents' debit books
at any time.
5 The agents are apparently supposed to report on Thursdays, and usually do so.
The Employer does not object, however, if they are a day or two early or late.
922 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
a. The accounts
Agents are required to file weekly accounts with the Respondent, and simul-
taneously to turn over any funds due the Respondent. The agents need not
necessarily do so in person. While Thursday is the day of the week designated for
submitting accounts, no objection is made if they are turned in a few days early
or late. However, if an agent were as much as a week late in submitting his
accounts, the manager would investigate.
The weekly accounts are rendered on forms provided by the Respondent 24
They show such matters as total collections, claims paid, various commissions and
bonuses due the agent, increase record, reserve record, amounts to be withheld,
miscellaneous credits, and the resulting balance due the Respondent. The me-
chanics of submitting the weekly accounts is as follows: The agent turns in the
accounts to his superintendent, who reviews them for completeness and accuracy,
and checks them against the life register.25 If the accounts are complete, the
superintendent signs the accounts and returns them to the agent, who then de-
posits them and the funds due the Respondent with the cashier in the particular
office out of which he works. Presumably, the amount submitted must agree
with the balance due the Respondent shown in the accounts.
In addition to the weekly accounts, agents report at least once every 3 months
on the percentage of collections and the status of each policy in his debit,
e.g. whether premiums are in arrears, up-to-date, or paid in advance. This in-
formation is submitted on the reverse of one of the forms used for the weekly
accounts.
b. Withholding
Beginning on January 1, 1955, the Respondent refused to make further with-
holding of any part of its agents' earnings for the purpose of Federal income taxes;
the agents prepared their own estimated returns and remitted their quarterly pay-
ments directly to the Internal Revenue Service. But beginning on July 1, 1955,
the Respondent again agreed to withhold Federal income taxes from the earnings
of those agents who requested it to do so, in amounts set by the agents. The
Respondent has adopted a similar policy with respect to the city wage taxes in
Philadelphia and Pittsburgh.
Prior to 1955, the Respondent withheld social-security payments from the earn-
ings of those agents who desired it for purposes of old age and survivorship cov-
erage, and in those cases the Respondent contributed its share. In 1955 the vol-
untary nature of this withholding was dropped; since then the Respondent has
withheld funds for old age and survivorship coverage, and contributed its share,
for all debit agents, regardless of the agents' desires in the matter. This change
of policy was due to Teschke's interpretation, as the Respondent's general counsel,
of an amendment to the Federal statute blanketing all "full-time life insurance
salesmen" under old age and survivorship coverage.26 The Respondent does not
require its Pennsylvania agents to contribute with respect to unemployment com-
pensation, nor does the Respondent contribute toward the unemployment com-
pensation tax of these agents. The Respondent does not consider that it comes
under the Pennsylvania workmen's compensation law with regard to its licensed
debit agents in that State.
Since well before the 1954 decision, the Respondent had had a voluntary Sav-
ings and Profit Sharing Pension Fund. Any employee or agent of the Respond-
ent with a year of service may elect to join, providing he applies within 2 months
after becoming eligible. The employee or agent thereafter contributes 5 percent
of his compensation to the fund, up to a stated annual maximum. The Respond-
ent makes annual contributions to the fund, based on its net earnings and the
percentage of eligible employees and agents who have joined. The Respondent's
contributions are apportioned among the individual depositors' accounts according
to a schedule based on the amount of their deposits and their length of service
with the Respondent. The Respondent also offers group life insurance, group hos-
pital and surgical insurance, and group accident and sickness insurance to those
of its employees and agents who desire such coverage and who have attained the
required minimum service with the Respondent.
24 Union's Exhibit No. 4 and the face of Union's Exhibit No. 5. The reverse of Union's
Exhibit No. 5 is used for the quarterly report.
25 The life register is a list of policyholders. One copy is in the agent's possession and
another in the possession of the Respondent's home office.
10 26 U.S.C.A. Sec. 3121(d)(3)(B).
UNITED INSURANCE COMPANY 923
c. Inspection of the agents' debit books
In about 1955, the Respondent discontinued making inspections of the agents'
debit books, except when it suspected that a shortage existed in the accounts of a
particular agent, and perhaps also when an agent desired to draw out his reserve.
In cases where a shortage is suspected, the manager requests the agent in ques-
tion to bring his debit book to the office. The manager or superintendent then
accompanies the agent to the homes of his policyholders, where the entries in the
agent's debit book are compared with the entries in the policyholders' premium
receipt books.27 Failure of the agent to bring in his debit book upon request
would result in his termination. In short, the Respondent still retains the right
to inspect the agents' debit books at any time, but in recent years has exercised
that right less frequently.
9. Holidays, vacations , and illness
The Board found in the 1954 decision that, at that time:
When an agent is on vacation,6 his supervisor will service his debit for him
if the agent so desires, and the agent is given credit for the collections made.
The agent may, however, make other arrangements for taking care of the
debit. When an agent is sick, the supervisor makes the collections, and the
agent is paid on the basis of his average earnings for the preceding 13 weeks.
E Agents arrange their own vacations, notifying their supervisors when they will
be away. It is apparently understood, however, that the length of the vacation
depends on the length of the agent's service with the Employer.
On the same subject, the instant record shows:
The agents are free to take holidays whenever they desire, without notice to
the Respondent. When they do so, they do not receive a paid holiday, as such,
from the Respondent. What happens to their earnings as a result is this: Their
compensation for the particular week is not immediately affected, as it is based
on their earnings in the previous quarter. But if the holiday should result in any
less commissions earned that week, the drop would be reflected in a lower weekly
compensation the following quarter. To avoid any drop in earnings occurring
because of a holiday, the agents, as expressed by Martin Rosenstein, "have to
work harder when [they] come back." Michael R. Sohaski, the Respondent's re-
gional agency director for the eastern region, testified that there has been no
change in the Respondent's holiday policy since the 1954 decision.
Agents may take vacations whenever they desire. In at least one office, in
Braddock, Pennsylvania, the agents work out a vacation schedule among them-
selves, on the basis of convenience. An agent may arrange to have someone else
make his collections for him while he is on vacation, or he may request his super-
intendent to do so. If the superintendent is available, he will service the debit
during the agent's vacation. There is no paid vacation as such, but the agent
receives commissions on collections made by the superintendent, and also gets
credit for any new policies sold by the superintendent while servicing his debit.
It is therefore to the agent's advantage to time his vacation so that his super-
intendent will be available to collect for him. The superintendent who services
a debit for an agent on vacation reports that fact to the Respondent. In this
way, the Respondent's records reflect which agents have taken vacations, and the
duration of the vacations taken.
In 1957 the Respondent promulgated a "Continuous Service Bonus plan" whereby
an agent with more than a year's service "who has remained on his collection
route" for a year "without missing any week except for illness or accident" re-
ceives a bonus based on the amount of his collections during a given period and
the length of his service. Agents with more than 2 years' service, who have
missed only I week during a year, are also entitled to a bonus based on their
collections during a specified period; but this bonus is only half as large as the
one they would have received had they taken no vacation at all. The size of
these bonuses is further enlarged for those qualifying agents who produce a
specified increase in a stated period of time. Sohaski testified that the Continuous
Service Bonus replaced the Respondent's prior vacation policy. It was designed
v Apparently, when a policy is issued , the policyholder is provided with a premium
receipt book ; each time a premium is paid that fact is recorded by the agent in the
policyholder' s book. See Davis, "Industrial Life Insurance in the United States" (1st ed.
1954), pp. 282-285.
924 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to encourage the agent to remain on his debit, because, according to Sohaski,
"he is always able to obtain better results than a stranger" and if the agent takes
no time off during the year "it saves the Company considerable expense of placing
a man to collect the debit."
The Respondent provides no paid sick leave, as such, for its agents. If an agent
is ill, and the superintendent can do so, the superintendent will service the debit
and the agent will be credited with commission on the collections made. Sohaski
testified that the Respondent's policy regarding sickness has not been changed
since the Board's 1954 decision.
10. Sale of insurance for other companies
In the 1954 decision the Board found that, at that time:
There is no rule prohibiting the agents from selling insurance for other
companies, and a few of them have done so. It is clear, however, that they
ordinarily devote full time to the Employer's business.
On the same subject, the record in the instant case shows:
Sohaski testified that the Respondent would not knowingly engage as a debit
agent anyone licensed to sell for another insurance company policies identical to
these sold by the Respondent. However, the Respondent does not object if its
debit agents sell noncompeting policies for other insurance companies. Hence,
some of them are licensed to sell personal liability, automobile casualty, and
burglary insurance for other companies. A number, in addition to selling the
Respondent's policies, also sell industrial fire insurance for United Fire Insurance
Company, herein called the Fire Company. This is a separate New York cor-
poration some of whose officers are also officers of the Respondent. In order to
sell policies of the Fire Company, an agent must be separately licensed by Penn-
sylvania to do so. Such agents make reports and remittances to the Fire Company
on forms it provides. The compensation received by the agents from the Fire
Company is governed by a separate agreement between the agents and the Fire
Company.
A few agents, in addition to selling insurance for the Respondent and the Fire
Company, engage in other occupations. For example, agent Maury E. Arbiter
testified that his insurance activities generally require about 4 days and 4 evenings
of each week, and that in his remaining time "I fix a television here and there
for a customer, and I have a few affiliations with organizations that I do social
service work, public relations, and things of that sort."
11. Expenses incurred by agents
The Board determined in its 1954 decision that, at that time:
Agents pay their own expenses for postage, telephone calls, entertaining,
and whatever advertising they may do.7 They may hire assistants to help
with collections, but apparently seldom do so. The Employer pays all ex-
penses of the district offices which the agents use, and furnishes them with
a rate book, forms of various kinds, and some promotional material.
7 Such advertising appears to be confined to the distribution of cards and such
articles as pencils or ash trays imprinted with the agent's name.
On the same subject, the instant record shows:
The Respondent supplies to each agent without charge the necessary forms,
ratebooks, policies and advertising materials necessary to carry out his functions,
and also furnishes him with a desk in the office out of which he works. The
agent, however, pays the cost of the original license plus his travel expenses,
salary of assistants, if any, rent, if any,28 postage, stationery, telephone, robbery
insurance, bond, business cards, gifts or prizes to policyholders or prospects, enter-
taining, and advertising, other than the promotional material furnished by the Re-
spondent. Except as noted below, the Respondent does not contribute any part
of these expenses. The agent's business cards, some of which are in evidence,
generally contain the Respondent's name, the agent's name and telephone number,
and the address and telephone number of the office out of which the agent works.
28 One agent, Vernon Presley, has a room set aside in his home exclusively for his
insurance activities, and by reason of this fact deducts $10 per month on his Federal
income tax return as a business expense. The record reveals no other instance of an
agent paying rent for office space.
UNITED INSURANCE COMPANY 925
The advertisements may consist of such things as pencils, calendars, or ads in
church papers. Because of the policies adopted by the Federal Trade Commission.
regarding advertisements by insurance companies, the Respondent recently re-
quested any agent who contemplated advertising to submit it to his manager for
approval. The record contains one such instance of an agent receiving advance.
approval for a calendar. Moreover, there have been occasions when agents.
have purchased business cards or gifts through the Respondent, the agent paying.
the entire expense.
There are two exceptions to the above statement that the Respondent makes,
no contribution toward the agent's expenses. The first is the annual renewal fee
of the bond; as mentioned above this may be eliminated under certain circum-
stances. The other is travel expense. In exceptional cases, where the distance to
be covered by the agent in making his rounds is great, the Respondent may extend
to him a stated travel allowance. Thus, since 1956 agent Vernon Presley has,
received an automobile allowance of $5 per week. The amount of this allowance
was determined by the manager, after consultation with Presley.
12. Termination of the relationship
In the 1954 decision the Board found that, at that time:
The Employer does not transfer agents from one office to another, except
at their own request. It has the right to terminate their services at any time,
but does not do so except for serious cause. Complaints from policy holders
are investigated by the supervisors, who may recommend termination of the
agency. Final action, however, is taken only by the Employer's home office.
On the same subject the instant record shows:
As at the time of the 1954 decision, the manager investigates complaints by
policyholders and may terminate the relationship at any time. So may the agent.
Upon termination, the agent surrenders his debit book and rate manuals, and
the Respondent notifies the State officials to cancel the agent's license. Within
90 days, the Respondent conducts an audit of the agent's accounts and a settlement
is made. Sometimes the agent owes money to the Respondent; sometimes the
reverse is true.
As Sohaski expressed it, the only thing that an agent takes with him at ter-
mination is "the friendship of his policyholders." This may, however, prove to be
valuable. Thus, according to Sohaski, there have been instances where terminated
agents, thereafter licensed to sell policies for other insurance companies, "have
carried off as much as fifty percent of the business" from their former debits.
13. Conclusions
In its 1954 decision, the Board pointed out that the test to determine whether
particular individuals are independent contractors or employees in the "right of
control," and that an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the result
to be achieved, but also the manner and means used. Applying that test to the
facts which it found existing at that time, the Board said:
In this case it appears that the Employer's debit agents are permitted con-
siderable latitude with respect to the manner and means of performing their
services. Thus, they arrange their own working hours, decide what calls they
will make, adopted their own methods of approach, are free to solicit business
anywhere in the State, and may hire assistants to make collections for them.
The Employer, however, suggests the methods to be used by having a super-
visor show new agents how to make collections and sales, insures the regular
servicing of the debits by conditioning the payment of any bonus on the
condition of the agent's account, and keeps a check on the activities of the
agents by requiring weekly reports and by investigating complaints. It also
has the right to inspect the agents' debit books at any time. We believe that
these circumstances show that the Employer has reserved to itself the right
to control the manner and means by which the agents perform their services
as well as the end to be achieved; that it does not exercise the right to the
fullest extent possible is immaterial to a determination of the nature of the
relationship.9
O As the courts have held, the determining element is the right of control and not
the exercise thereof. N.L.R.B. v. Phoenix Mutual Life Insurance Company, supra
[167 F. 2d 983 (C.A. 7), cert. denied 335 U.S. 845].
926 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The employer-employee relationship is further indicated by the right of the
Employer unilaterally to determine the agents' compensation and to terminate
the relationship without subjecting itself to liability. Moreover, the Employer
furnishes the original debits, employs supervisors to train and assist the agents,
provides for the servicing of their debits when they are sick or on vacation,
pays them when they are sick, provides pension and hospitalization plans for
their benefit, and handles withholding and social-security tax payments for
them. All these practices are normally associated with an employer-employee
relationship. Finally, it is clear that the agents generally devote full time
to their duties for the Employer, and that their activities constitute an in-
tegral part of the Employer's business.
Then, rejecting the contention there made by the Respondent that the agents were
independent contractors, the Board found them to. be employees within the meaning
of Section 2(3) of the Act.
The parties agree that the "right of control" test applied by the Board in the
1954 decision is the proper test to be applied here. They differ, however, on the
result which should be reached. The General Counsel and the Union urge that
the relationship between. the Respondent and its debit agents has not so changed
since the 1954 decision as to justify a different result here. Conversely, the Re-
spondent vigorously insists that such substantial changes have taken place in that
relationship since the 1954 decision that a result contrary to that then reached by
the Board is now called for. Pointing out that "insurance agents are not per se
and automatically employees," the Respondent in its brief maintains "that the
present record contains not a scintilla of evidence that Respondent exercises, or
even has indicated the reservation of the slightest right to. exercise, any control
whatsoever over `the manner and means to be used' by the agents in achieving
the end of collecting insurance premiums and selling new policies." The Respond-
ent in its brief further contends: "it is difficult to see how Respondent and its
agents could be more independent of each other and still have the agents able
to collect premiums and sell policies for Respondent at all. Unless the Board is
prepared to rule that all insurance agents necessarily operate as employees, the
present debit agents must be held not to be employees within the Act." (Emphasis
in original.)
The Respondent lists a number of changes which it contends have occurred in
the relationship between the Respondent and its agents since the 1954 decision.
Let us examine them seriatim.
1. The 1956 contract was "the first time there has been a written agreement
executed by both parties." Undoubtedly this is factually correct. However, as
pointed out above, this written contract has been modified in certain instances,
both unilaterally (as in the case of the waiver of bond-renewal premiums under
certain circumstances, and the establishment of the Continuous Service Bonus
plan) and as the result of negotiation with the particular agent affected (as in the
case of the granting of a $5-per-week travel allowance to agent Presley).
2. Under the 1956 contract "agents no longer receive any advance draw, but are
paid only commissions based on earnings for the previous quarter." An advance
draw, if one had existed in 1954, would have been indicative of an employer-
employee relationship. Yet the Board found such a relationship to have existed
in the 1954 decision, despite its finding there that at that time agents did not
receive an advance draw. Hence the alleged elimination of advance draws, if it
occurred, would not dictate a result here different from the one reached in the
Board's 1954 decision.
3. "Respondent is now contractually obligated to settling an agent's account
within 90 days after the termination of an agency."
4. "It is now made clear that Respondent does not reserve the right to inspect
agents' books except when a shortage is suspected." In my opinion, this contention
does not accurately reflect the instant record. The right to inspect the agents'
accounts at any time is still reserved to the Respondent; all that the present record
demonstrates is that there has been a change since 1954 in the circumstances under
which that right is exercised.
5. "Agents now receive no paid sick leave, whereas previously an agent who
had served the company for some time received an advance draw while he was
sick, and was not required to make it up." It is still true today, as it was at the
time of the 1954 decision, that a superintendent, if he is able to do so, will make
collections for an ill agent. Although Sohaski testified that there has been no
change regarding illness, it appears that the method of compensating the agent
under such circumstances has changed: formerly he was paid `on the basis of his
UNITED INSURANCE COMPANY 927
average earnings for the preceding 13 weeks"; now he is credited with commissions
on the collections actually made by the superintendent.
6. "In addition to selling life and health and accident insurance these agents
also sell fire insurance for United Fire Insurance Company, a distinct company
unaffiliated with Respondent." But the Board in its 1954 decision found that, at
that time , there existed "no rule prohibiting the agents from selling insurance for
other companies." Hence the fact that some agents now sell fire insurance for the
Fire Company does not constitute a change. Moreover, the instant record reveals
that there is now'a virtual prohibition against the agents selling competing policies
for other insurance 'companies.
` 7. "Agents now receive no paid vacations whereas at the time of the earlier
Board proceeding they received vacations of one or two weeks,, depending on their
length of service, and were paid the amount their debits would earn at 100%
collections, plus their advance draws. If an agent takes time off now, during that
period he is paid only commissions based on his previous quarter's earnings."
There is no basis in the record for the statement that, at the time of the 1954
decision, agents on vacation "were paid the amount their debits would earn at
100% collections, plus their advance draws." The Board made no such finding
of fact in its 1954 decision.29 It is still true today, as it was at the time of the
1954 decision, that agents arrange their own vacations, that superintendents if avail-
able and requested to do so will service the debit of an agent on vacation and
credit the agent with commissions on the collections made, and that the agent
may if he desires make other arrangements for taking care of the debit. More-
over, it should be borne in mind that since 1954 the Respondent has put into
effect a Continuous Service Bonus plan under which agents who forego vacations
receive a bonus. It is significant that eligibility for the bonus and the size of the
bonus depend, in part, on the agent 's" length of service with the Respondent.
8. "Agents now submit reports less frequently and less regularly than they
formerly did." This is apparently based upon the fact that, at present, in addition
to'the weekly accounts, agents report at least once every 3 months (using the
reverse side of one of the weekly account forms) on the status of each policy
in their debits. The implication is that in 1954 it was either, customary or required
to report this type of information weekly. But the testimony of agent Vernon
Presley shows that, while formerly agents normally compiled this data weekly
on a form known as a "work sheet," the agents retained this form and were not
required to submit it to the Respondent.
9. "After the Board's prior decision, Respondent discontinued accepting and
handling money for Federal withholding tax payments. However, at the insistent
requests of the agents, and solely for their convenience, Respondent has resumed
accepting such withholding tax payments as the agents voluntarily present."
But the changes made since the 1954 decision do not tell the entire story. We
must also consider those elements of the relationship between the Respondent
and its agents which have been retained. The most important of these are:
1. The manager assigns each agent to the staff of a particular superintendent
and may transfer agents, on request, from the staff of one superintendent to that
of another.
2. The Respondent does not merely let the agents shift for themselves, but
actively assists them in their functions. New agents are supplied with debits
listing their policyholders; superintendents accompany new agents on their rounds,
and do so for other agents on request; the Respondent conducts voluntary sales
meetings and contests for its agents; the Respondent supplies them with promo-
tional materials and desks in its offices; superintendents if available service the
debt in the agent's absence; the Respondent furnishes a pension plan and various
group insurance plans for those of its agents who desire to participate, and in
some instances contributes toward their transportation expenses and bond renewal
premiums.
3. The Respondent encourages agents to remain associated with it by making
length of service a factor in computing increase commission, the continuous service
bonus , and the credits to an agent's account in the pension plan.
4. The Respondent retains ownership of the debit books and the rate manuals,
which are the tools of the agents' trade.
29 There was testimony in the instant proceeding that. at the time of the 1954 decision,
agents received paid vacations. Paid 'vacations, had they existed in 1954 , would have
pointed to the existence of an employer-employee relationship at that time. Yet the
Board in its 1954 decision found such a relationship, without relying upon paid vacations.
Hence the alleged abolition of paid vacations, if it occurred, need not require a result here
different from that reached by the Board in its 1954 decision.
928 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
5. The Respondent requires its agents to file weekly reports, which are ap-
proved by the superintendent.
6. The Respondent retains the right to inspect the agents' books at any time.
7. The Respondent does not permit its agents to sell competing policies for
other companies.
8. Managers and superintendents investigate complaints by policyholders against
agents, and approve the transfer of policies from one agent's debit to another's.
9. The Respondent may terminate the relationship at any time. Upon termina-
tion, the agents take with them nothing except the goodwill of their policyholders.
It is still true, as it was at the time of the 1954 decision, that the Respondent
does not retain control over certain areas of the relationship. Thus agents have
no quotas, set their own hours of work, may hire assistants to help them, may
sell insurance anywhere in Pennsylvania, and are free to sell noncompeting policies
for other companies. But in 1954 the Board found, as indicated in the above
quotation from its decision, that these factors were outweighed by other elements
pointing to the existence of control by the Respondent over not only the end to
be achieved by the agents, but also the manner and means to be used in reaching
such end. I am convinced that the changes which have occurred in the interim
are not of such a substantial nature, when considered in the light of the more
fundamental elements which have remained constant, as to justify a different
result here. It is accordingly found that the Respondent's licensed debit agents
are now, as they were then, employees of the Respondent within the meaning of
Section 2(3) of the Act, rather than independent contractors 3° It follows, and
I find, that all the Respondent's licensed debit agents in the Commonwealth of
Pennsylvania, including licensed debit agents who work in Pennsylvania but are
attached to the Respondent's district offices in Wilmington, Delaware, Hagerstown,
Maryland, and Youngstown, Ohio, but excluding ordinary agents, special agents,
supervisors or superintendents, managers, office clerical employees, and all 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.
C. The Union's majority status and its request for bargaining
It will be recalled that following the rerun election conducted on March 12,
1957, the Regional Director certified the Union as the exclusive bargaining repre-
sentative of the employees in the above-described unit on May 7, 1957. It is
accordingly found that, on May 7, 1957, the Union was, and at all times since
has been, the exclusive representative for the purposes of collective bargaining
of the employees in the appropriate unit described above, by virtue of Section 9(a)
of the Act.
The complaint alleges, the answer admits, and it is found, that on or about
May 8, 1957, the Union requested the Respondent to meet with the Union, and
to bargain collectively with respect to rates of pay, wages, hours of employment,
or other conditions of employment with the Union as the exclusive representative
of the employees in the unit described above. It is further found that on or
about May 9, 1957, the Respondent refused, and at all times since has continued
to refuse, to meet with, negotiate with, or otherwise bargain collectively with
the Union as the exclusive representative of the employees in the unit described
above.
Upon the basis of the above findings of fact and upon the entire record in the
case, I make the following:
CONCLUSIONS OF LAW
1. United Insurance Company is , and at all material times has been , an employer
within the meaning of Section 2(2) of the Act.
2. Insurance Agents' International Union, AFL-CIO, and at all material times
has been , a labor organization within the meaning of Section 2(5) of the Act.
3. All licensed debit agents of the Respondent in the Commonwealth of
Pennsylvania , including licensed debit agents who work in Pennsylvania but are
attached to the Respondent 's district offices in Wilmington , Delaware, Hagerstown,
Maryland, and Youngstown , Ohio, but excluding ordinary agents , special agents,
supervisors or superintendents , managers , office clerical employees , and all 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.
80 See Golden State Agency, Inc., et al., 101 NLRB 1775; Allstate Insurance Company,
109 NLRB 578; and Provident Life and Accident Insurance Company, 118 NLRB 412.
1RBNFRO HOSIERY MILLS , INC. 9291
4. Insurance Agents ' International Union, AFL-CIO, was on May 7, 1957, and
at all times since has been, the exclusive representative of the employees in the
.above-described unit for the purposes of collective bargaining, within the meaning.
of Section 9(a) of the Act.
5. By refusing on May 9, 1957, and at all times since , to bargain collectively
with Insurance Agents' International Union , AFL-CIO, as the exclusive repre-
sentative of the employees in the above -described unit, the Respondent has engaged
in and is engaging in unfair labor practices within the meaning of Section 8(a)(5)
of the Act.
6. By the above conduct, thereby interfering with , restraining, and coercing its
employees • in the exercise of the rights guaranteed in Section 7 of the Act, the
..Respondent has .engaged In. and . is engaging in unfair labor practices within the
meaning of Section 8(aXl) of the Act.
7. The above-described unfair labor practices tend to lead to labor disputes
burdening and obstructin commerce and the free flow of commerce , and constitute
unfair labor practices affecting commerce within the meaning of Section 2(6) and
(7) of the Act.
[Recommendations omitted from publication.]
Renfro Hosiery Mills, Inc. and American Federation of Hosiery
Workers, AFL-CIO. Cage No. 11-CA-Z.17$. January 14, 1959'
DECISION AND ORDER
On May 19, 1958, Trial Examiner Charles W. Schneider isued his
Intermediate Report in the above-entitled proceeding, finding that
the Respondent had engaged in and was engaging in certain unfair
labor practices and recommending that it cease and desist therefrom
and take certain affirmative action, as set forth in the copy of the.
Intermediate Report attached hereto. Thereafter, the General Coun-
sel filed exceptions to the failure of the Trial Examiner to recom-
mend a back-pay award for Walter Hiatt, Jr., and a supporting brief.
Pursuant to the provisions of Section 3(b) of the Act, the Board
has delegated its powers in connection with this case to a three-
member panel [Members Rodgers, Jenkins, and Fanning].
The Board has reviewed the rulings made by the Trial Examiner
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the.
Intermediate Report, the exceptions and brief, and the record in the.
case, and hereby adopts the findings , conclusions , and recommenda-
tions of the Trial Examiner, with the following additions and modi-
fications.,
We agree with the Trial Examiner's conclusion that Walter Hiatt,,
Jr., should not be awarded back pay.
i The Trial Examiner found that the Respondent interfered with, restrained, and-
coerced employees in violation of Section 8(a) (1) of the Act; and further found that
the Respondent discriminatorily discharged employee Walter Hiatt , Jr., in violation of
Section 8(a) (3) of the Act. In the absence of any exceptions to these findings , we adopt
them.
122 NLRB No. 113.
505395--80=vol . 122-60