Yellow Cab Co.

National Labor Relations Board - Board Decisions

Feb 12, 1974

208 N.L.R.B. 1020 (N.L.R.B. 1974)

1020 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Greater Houston Transportation Company and All
Other Employers d/b/a Yellow Cab Company and
Allied Services Division , Brotherhood of Railway,
Airline and Steamship Clerks, Freight Handlers,
Express and Station Employees , AFL-CIO, Peti-
tioner. Case 23-RC-3930
February 12, 1974
DECISION AND ORDER
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a
hearing was held before Hearing Officer John C.
Crawford of the National Labor Relations Board.
Following the close of the hearing, the Regional
Director for Region 23 transferred this case to the
Board for decision. Thereafter, Greater Houston
Transportation Company d/b/a Yellow Cab Com-
pany and Petitioner filed briefs with the Board.
The Board has reviewed the Hearing Officer's
rulings made at the hearing and finds that they are
free from prejudicial error. They are hereby affirmed.
Upon the entire record in this proceeding, the
Board finds:
Greater Houston Transportation Company d/b/a
Yellow Cab Company, hereinafter called Greater
Houston Transportation, operates a centralized and
integrated radio dispatch service for certain taxicab
owners and franchisees who in turn pay it certain
fees. This system is known as the Yellow Cab system
and Petitioner seeks a unit of all the full-time and
regular part-time drivers, including lease-franchise
drivers who do not hire other drivers, of the
employers in this system doing business as Yellow
Cab Company, together with the dispatchers, sorters,
receivers, maintenance men, helpers, and garage
employees of Greater Houston Transportation.
Although the parties stipulated that Greater Houston
Transportation itself is engaged in commerce within
the meaning of the Act, Greater Houston Transpor-
tation argues that it employs no drivers and further
argues that no joint employer relationship exists
either between it and any others who use its cab
dispatch services or among the various employers
who use its services.
Greater Houston Transportation holds approxi-
mately 481 medallions (permits) issued by the city of
Houston. All of these medallions have been leased
under franchise agreements. Each medallion repre-
sents one taxicab and a medallion is necessary to
i Multiple owners are those who operate more than one vehicle
2 These are the Cotton Cab Company, Dixie Cab Company, Plaza Cab
Company, Port City Cab Company, Rice Cab Company, Inc., Whitley Cab
Company, and Brantley Cab Company These companies were served with
the formal exhibits in this proceeding but did not appear and were not
represented at the hearing.
3 Independents do not have a written agreement with Greater Houston
operate a cab in the city of Houston. Of the
approximately 481 medallions held by Greater
Houston Transportation, about 55 medallions are
leased to Houston Cab Company, which is both a
franchisee and a subsidiary of Greater Houston
Transportation; about 85 medallions are leased to
some 30 individuals who are multiple owners 1 and to
the Harris Cab Company; and the balance of the
medallions, some 341 in number, are leased to
individuals who operate only one vehicle. In addi-
tion, there are seven independent companies 2 who
utilize the dispatching and telephone service provid-
ed by Greater Houston Transportation, but who
have their own medallions, some 14 in number.
All cabs dispatched by Greater Houston Transpor-
tation are painted a distinctive yellow color and all
bear the phone number of Greater Houston Trans-
portation. In addition, the independents have their
own names on the cabs.
All franchisees, whether single-car owners or
multiple owners, execute an agreement with Greater
Houston Transportation which agreement applies
equally to all franchisees.3 Greater Houston Trans-
portation then charges the franchisees a weekly fee
and the independents are also charged a fee for
Greater Houston Transportation 's services . In return
the franchisees and independents have the privilege
of using numerous benefits which enure from
membership in the Yellow Cab system. Among these
are the Yellow Cab dispatch system with its 60
incoming telephone lines, including direct lines to all
of Houston's major hotels, motels, and medical
centers ; cabstands reserved exclusively for cabs in
the Yellow Cab system, including the exclusive
concession at Houston Intercontinental Airport; use
of the nationally advertised Yellow Cab name and
the widely promoted local telephone number; vari-
ous charge account customers of the Yellow Cab
system and a bookkeeping system for these charge
account customers; representation by Greater Hous-
ton Transportation of the franchisees' and independ-
ents' interests before municipal agencies ; and in-
structions on the use of the dispatch system and list
of the cabstands. Additionally, Greater Houston
Transportation offers its franchisees liability insur-
ance,4 taxicab financing for those who desire it, and
such services as gas pumps, mechanical maintenance
facilities , and training facilities .-5 However, it is clear
that the franchisees and independents are not
Transportation.
4 Since Greater Houston Transportation is a self-insurer, it is required by
state law to have more than 50 percent of the vehicles in the system in its
name . For this purpose . it retains legal title to the cab and gives the
franchisee a letter of beneficial title to the cab
s The independents have their own auto insurance and cabs and do their
own meter and radio repair work.
208 NLRB No. 121
YELLOW CAB COMPANY
required to utilize any of Greater Houston Transpor-
tation's services.
The Greater Houston Transportation system does
have some general rules of operation to maintain an
orderly operation. Included in these rules is the
"Code 5," a signal, which is addressed to the cab unit
and not to an individual driver, which informs the
unit that one of Greater Houston Transportation's
service representatives desires to speak with the unit.
The "Code 5" could involve an emergency phone
call, a customer's or another driver's complaint, a
lost article , or the nonpayment of the lease fee. When
a unit is placed on a "Code 5," the driver is allowed
to complete his trip but then must report in to the
main office .6
A majority of the franchisees have hired other
drivers to operate their cabs. When a franchisee
wishes to hire a driver for his cab, he has the driver
fill out a driver information form which includes
information on the driver's name , address, phone
number, city cab license, and state chauffeur's
license,7 which form is given to Greater Houston
Transportation's service representative department.
The driver's name is checked only to see if the driver
owed Greater Houston Transportation any money
from prior dealings but the franchisee may still hire
the driver. even if Greater Houston disapproves. It is
clear that each franchisee bargains individually with
any driver he may employ regarding wages and
hours of employment, and maintains his own payroll
records and withholds social security and Federal tax
payments from his drivers. It is clear, too, however,
that all drivers in the system may use the dispatch
system. In order to alleviate disharmony among the
drivers, Greater Houston Transportation's service
representatives may investigate any complaint filed
against any driver. In such circumstances, he will
then submit his findings to a board of franchisees.
The franchisees then review the investigation and
determine if any fine should be levied. If a fine is
levied by the franchisees, the moneys collected from
the fines are put into a fund for the franchise drivers
and Greater Houston receives no share of such
moneys.
Houston Cab Company, which is both a subsidiary
and a franchisee of Greater Houston Transportation,
employs drivers on a commission basis and its
employees receive different benefits than do Greater
Houston Transportation's nondriver employees.
Houston Cab Company's general manager, who is
responsible for its day-to-day operations and general
8 In the case of nonpayment of the lease fee, however, the driver must
report in immediately . If the driver fails to contact the office , the dispatcher
may cut off the unit's radio service, and such might result in the cancellation
of a lease.
7 Greater Houston Transportation 's present driver information form was
1021
labor policies, is not an officer of Greater Houston
Transportation, although Greater Houston Trans-
portation's vice president of marketing is Houston
Cab Company's president. Houston Cab Company is
located at Greater Houston Transportation's Hays
Street facilities and Houston Cab is considered a
"training ground" for potential franchisees of Greater
Houston Transportation. Houston Cab's drivers
are subject to the same operating procedures that the
franchisees are subject to.
Upon all of the foregoing, we conclude that the
facts in this case are wholly insufficient to establish
that Greater Houston Transportation Company is an
"employer" of any of the personnel employed by any
of the "independents" or franchisees of that Compa-
ny. We, therefore, find that Greater Houston
Transportation Company is not a "joint employer"
of the employees covered by the instant petition.
Absent a joint-employer relationship finding, the unit
petitioned for herein necessarily becomes inappropri-
ate in the absence of a consensual agreement among
the various taxicab company "independents" and
franchisees to join together in a multiemployer unit.
There being no evidence of any such agreement, the
petition herein must be dismissed.
Furthermore, even if we were to find that Greater
Houston Transportation is a joint employer with the
independents and franchisees within the meaning of
Section 2(2). of the Act, we would nevertheless
dismiss the instant petition, since we find the
independents and franchisees to be independent
contractors rather than employees within the mean-
ing of Section 2(3) of the Act.
We reach our twofold conclusion on the basis of
the present record which shows that Greater Hous-
ton Transportation has no voice or control over
wages, hours, and working conditions established by
the franchisees and independents. There is no
common management. Each franchisee maintains his
own books and records. No profit and loss state-
ments are submitted to Greater Houston Transporta-
tion. Optional services, such as radio dispatching, use
of the airport, or carrying advertising may be shared
equally, but all such services are purely optional; in
any event, none of these factors pertains to the
conduct of labor relations. We conclude that a joint-
employer relationship among Greater Houston
Transportation, the franchisees, and the independ-
ents does not exist.
Furthermore, the record shows that the franchisees
own their own cabs, are granted the express right and
revised after the petition was riled in this case since Greater Houston
Transportation stated the old form contained more information than was
necessary. The old form contained provisions for the approval or
disapproval of the claims department and the supervisor department.
1022 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
power to hire the persons to drive their cabs, and
frequently do so. They also have the express right to
fire or discipline the drivers of their cabs. Greater
Houston Transportation maintains no pool of
available drivers. for the franchisees. The franchisees
can work in any geographic area, have the right to
select their own hours and days of work, and have
the. absolute right to utilize their vehicles for personal
pursuit. They do not have to purchase gasoline,
insurance, or supplies from Greater Houston Trans-
portation, nor is there any withholding of state or
Federal taxes.
Thus we find that Greater Houston Transportation
exercises no control whatever over what drivers are
employed by, any of the independents or franchisees,
nor over their terms and conditions of employment,
nor over the drivers' compensation.8 All of the
independents and some 70 to 80 percent of the
franchisees employ or have employed drivers, includ-
ing 260 to 275 of the 340 single-car owners. They hire
and discharge employees without control by Greater
Houston Transportation and in fact without even
consultation with it. The franchisees set the number
of hours to be worked by the drivers they employ, the
basis and amount of compensation to be paid to
them; they determine where the employee is to
report, in what areas the employee is to work, when
the employee is to work, and whether or not
insurance coverage will be provided to the employee.
Greater Houston Transportation exercises no power
whatever in connection with these terms and condi-
tions of employment set by the franchisee for his
employees.
The only requirement imposed by Greater Houston
Transportation is that any driver employed by the
franchisee must be registered with it. Such registra-
tion cannot be construed as an application for
employment but rather is shown by this record to be
only a recordkeeping device.
In our opinion, these facts conclusively show that
neither the independents nor franchisees are employ-
ees of Greater Houston Transportation Company,
but rather that they are independent contractors.
Our dissenting colleagues, in concluding that
Greater Houston Transportation is a joint employer,
premise their conclusion upon three factors. In our
view, two out of the three are irrelevant, and the third
is not supported by the facts in evidence.
The two which we believe to be irrelevant are (1)
that the Yellow Cab system represents itself to the
public as a single integrated enterprise and (2) that
there are numerous services offered by Greater
6 Although the franchisees are contractually obligated to obey all state
and local laws, the record shows that their manner of operation is totally
within their discretion , subject only to those laws, and that no regular
Houston Transportation which are available only to
"drivers in the system."
Whatever represenations are made to the public
with respect to a "single integrated enterprise" can in
no way affect the mixed law-and-fact issue of
whether the alleged employer so conducts itself with
respect to the persons here involved as to have
created an employei employee relationship. Mem-
bers of the public may regard a mechanic who works
in a Chevrolet dealership as being a part of the
General Motors complex, but whatever perceptions
the public may have in that regard cannot make that
mechanic an "employee" of General Motors Corpo-
ration. To answer the "employee" question, we must
look not to such appearances, but to who, in reality,
hires the employee, pays the employee, and on a day-
to-day basis controls the means of performance of
work by the employee.
The second irrelevant factor relied upon by the
dissent is that there are numerous services offered by
Greater Houston Transportation which are available
only to "drivers in the system." A franchisor, wishing
to attract franchisees and thus profit from his
franchise system, may offer certain exclusive services
of one kind or another to his franchisees. But,
whatever business advantages -may be offered to
franchisees by franchisors in terms of services
rendered to or on behalf of its franchisees, they
cannot create the legal relationship of employer-
employee as between employees of the franchisees
and the management of the franchisor.
The third factor mentioned by the dissent is
relevant, but, in our view, the evidence does not
support the assertion made by the dissent. That
factor presents the issue as to whether Greater
Houston Transportation "exercises a substantial
degree of control over the drivers in the system."
That "control" must, of course, relate to the terms
and conditions under which the drivers perform their
services.
Our dissenting colleagues, ignoring the factors
which clearly indicate that the franchisees are
independent contractors, rely upon two principal
evidentiary terms to buttress their conclusion that the
franchisees are employees-(1) the "Code 5" system
and (2) what the dissent calls its (presumably Greater
Houston's) handling of complaints against drivers.
As described in the dissenting opinion, "Code 5"
refers to a signal addressed to a cab unit, and not, as
the dissent concedes, to an individual driver, which is
a signal for the unit to call in to one of the
franchisor's service representatives. It is utilized for
communicating emergency phone calls, a customer's
pattern of discipline exists for franchisees acting contrary to any
governmental proscriptions.
M
YELLOW CAB COMPANY 1023
or another driver's complaint , a lost article, or the
nonpayment of a lease fee . The understanding
between Greater Houston and its independents and
franchisees is that when a unit is placed on a "Code
5" the then driver of the unit is to contact the office
of the franchisor. If such contact is not made, the
radio service to that unit will be discontinued.
In one respect the "Code 5" is thus utilized as a
service to the franchisee . It provides a central point
of information at which a customer of the franchisee
may report a lost item or a complaint about service,
thus not requiring each individual franchisee to
maintain such a central communications point. The
rendering of such a service by the franchisor to the
franchisee does not establish an employee relation-
ship, as we have pointed out above.
Secondly, the most common use of "Code 5" is an
agreed-upon means by which the franchisor can
attempt to collect unpaid lease fees, because if the
lease remains unpaid the franchisor will not provide
radio service . That, in our view, is a purely
commercial arrangement which cannot be' said to
establish an employee relationship. A provision in
the lease of real estate which permits the lessor to cut
off the heat if the lessee failed to pay the rent does
not make the lessee an employee of the lessor. None
of us, as customers of telephone companies, become
employees of those companies because our telephone
service can be cut off if we fail to pay our monthly
telephone bills.
There is no showing in the record that any
employee of, a franchisee or of an independent can
be in any way reprimanded, suspended, discharged,
or otherwise disciplined by Greater Houston Trans-
portation Company for failure to heed the "Code 5"
signal. Thus, the dissent's view of the evidence that
Greater Houston exercises control as an employer
over the drivers employed by the franchisees, or by
the independents, simply does not withstand scruti-
ny.
A second control factor relied on by the dissent
relates to what the dissent calls "its [presumably
Greater Houston 's] handling of complaints against
drivers."
However, the record shows that Greater Houston
does not in any way discipline a franchisee who
violates some governmental proscription or has
offended some customer. While any customer com-
plaint is recorded by the dispatcher, as part of its
dispatching service, and Greater Houston will look
into the matter, there is no evidence that Greater
9 While Greater Houston had , prior to its current system which was
instituted before the petition in this case was filed, its supervisors review any
customer complaints against a driver and levied any possible fines, that
system was abandoned and does not affect our determination of the
franchisees' current status.
10 The above factors which the majority deems "irrelevant" have long
Houston has disciplined a franchisee pursuant to a
customer complaint .9
In view of the foregoing, we find that Greater
Houston Transportation is not a joint employer with
subscribing companies, or with franchisees and
independents, and, further, that the franchisees and
independents are independent contractors who may
not, in any eveIt, be included in the unit sought by
the Petitioner . Accordingly, we shall dismiss the
petition herein.
ORDER
It is hereby ordered that the petition herein be, and
it hereby is, dismissed.
MEMBERS FANNING AND JENIUNS, dissenting:
Consistent with Board precedent, we would find
that the unit sought by Petitioner is an appropriate
one and would direct an election therein since it is
clear that (1) a joint-employer relationship exists
between Greater Houston Transportation and those
employers who subscribe to its services in the Yellow
Cab system, and (2) the franchisees sought by
Petitioner are employees of Greater Houston Trans-
portation within the meaning of Section 2(3) of the
Act.
With respect to the joint-employer relationship
here, we note that all cabs dispatched by Greater
Houston Transportation are painted a distinctive
yellow color and all bear the phone number of
Greater Houston Transportation. Thus to the public
at large, Yellow Cab Company appears to operate as
a single-integrated enterprise and it is natural that it
is Yellow Cab Company, and not any individual,
upon whom the public relies to meet its transporta-
tion needs. Considering the volume of business and
the number of cabs involved, the effect upon
commerce of a work stoppage by the drivers in the
system would be substantial. Further, there are
numerous services offered by Greater Houston
Transportation which are available, and which are
vigorously advertised as available, only to drivers in
the Yellow Cab system. Though many of these
services are optional, what is paramount is that the
services do exist, are provided by Greater Houston
Transportation, and are utilized by drivers in the
system.10
We note too that all cabdrivers in the Yellow Cab
system are subject to numerous rules and regulations
concerning the operation of their cabs including
been considered indicators of a joint -employer relationship in the cab
industry. See Assn. of Independent Taxicab Operators, Inc., 164 NLRB 859;
Miami Beach Yellow Cab, 173 NLRB 831 . Unlike the majority which now
overrules this precedent sub sientio, we would adhere to these considera-
tions.
1024 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
regulations as to : (1) the amount drivers can charge
for various customers; (2) the physical appearance
and mechanical condition of the cabs; (3) the
number of cabs that can be parked at any one
cabstand at any one time and the locations where
cabs can be parked when used as cabs; and (4) the
amount drivers must pay to Greater Houston
Transportation if they wish to use the airport.
Also, any driver violations of the dispatch system
must be written up by the dispatcher, an employee of
Greater Houston Transportation, and any drivers so
written up or those whose conduct is reported to
Greater Houston Transportation either by one of its
own representatives who patrol the system or from
outside sources as requested by Greater Houston
Transportation may then be subject to a fine.11
Greater Houston Transportation also controls the
drivers' activities through the use of its "Code 5"
signal which obligates a driver to contact Greater
Houston Transportation's offices or face the possibil-
ity of being cut off from the radio dispatch services.
In any event, a driver is obligated to refrain from
continued operation one a "Code 5" signal is sent
out to his unit and he must have the "Code 5"
removed before operations are resumed.
It is obvious that in order to satisfy the public
demand for adequate cab service and to assure the
continuance of a common public image, those
employers who utilize. Greater Houston Transporta-
tion's services in the Yellow Cab system have yielded
to Greater Houston Transportation a substantial
degree of control over the working conditions of their
drivers and, consistent with this pattern of opera-
tions, all the employers in the Yellow Cab system
constitute a joint employer.
It is just as obvious that the franchisees sought by
Petitioner are employees rather than independent
contractors. The key consideration here is whether
the person for whom the services are performed
retains the right to control the manner and means by
which the result is to be accomplished or only the
result itself. If it is the former, the relationship is one
of employment and if it is the latter, the relationship
is that of an independent contractor. Here the
situation is clearly one of employment.12
We note first that the terms of the lease agreement
which all the franchisees execute are unilaterally set
by Greater Houston Transportation and these terms
are almost never negotiable. This "take-it-or leave-it"
approach is carried through in the retail installment
11 There are a multitude of possible violations and investigation of these
possible violations is undertaken by Greater Houston Transportation's own
supervisory department.
Is In addition to all the indicia of control set forth below, we rely for our
finding of an employment relationship here on those factors of control
which have been set forth above in connection with our joint employer
finding.
contract, the document through which a number of
the franchisees are financing .the purchase of their
cabs. This contract's terms are also set by Greater
Houston Transportation and are likewise not subject
to negotiation. Though the lease speaks of the
franchisees as independent contractors, the lease
imposes numerous requirements on the franchisees
including requirements that they will operate their
cabs in accord with the rules and regulations of all
governmental authorities;13 they will keep their cabs
in good repair; and they will not act in any way
detrimental to the public image and business
interests of Greater Houston Transportation. In line
with the terms of the lease, the failure of the
franchisee to keep and observe all its provisions gives
Greater Houston Transportation the right to cancel
the lease at any time.
It is true that a franchisee can hire a driver for his
cab and can bargain individually with any driver he
may employ regarding wages and hours of employ-
ment. The franchisee, however, is required to have
that driver fill out a driver information form and
present to Greater Houston Transportation a valid
chauffeur's license from the State and a city cab
license from the city of Houston before he can hire
the driver. The franchisees have been notified by
Greater Houston Transportation that the failure to
so register a driver will result in the automatic
cancellation of the lease.
And while the majority contends that the franchi-
sees are able to solicit fares when and where they
choose, we adhere to the language of a prior Board
decision on this point.14 There, the Board stated that
a cab driver's freedom to prospect for fares is
"inherent in the character of the work, much as the
choice of a route to cover several delivery destina-
tions lies with a truckdriver, or the choice between a
saw, chisel, and plane lies with a carpenter. Such
choices are largely routine, dictated rather closely by
circumstances and offer little scope for independent
judgment and initiative" is
We are constrained to note also certain changes in
the Yellow Cab system which were decided upon by
Greater Houston Transportation itself. Such deci-
sion-making by Greater Houston Transportation
belies any contention that it does not control the
franchisees' abilities to act within the system. Thus
we note that at one time drivers, including franchi-
sees, could have individuals personally ask for them
through the radio dispatch system but that Greater
13 The majority's comment that the record affirmatively shows that "no
regular pattern of discipline exists for franchisees acting contrary to any
governmental proscriptions" is misleading . Rather, the record is merely
silent on the actual practice of disciplining franchisees for violations of these
proscriptions.
14 Checker Cab Association, Inc., 185 NLRB 182.
15 Ibid at 184.
YELLOW CAB COMPANY 1025
Houston Transportation has decided to halt this
practice. We note that Greater Houston Transporta-
tion initially nade attendance at auto safety sessions
mandatory for franchisees and their drivers but in
the exercise of its business judgment has now deemed
such attendance voluntary. We note that it was
Greater Houston Transportation who decided to
revise the driver information form which franchisees
are obligated to have their drivers fill out. The prior
form, revised after the instant petition was filed,
contained provisions for the approval or disapproval
of Greater Houston Transportation's claims and
supervisor departments. Lastly, we note that it was
Greater Houston Transportation's decision to do
away with the prior system of fining franchisees.
We believe that the above factors clearly demon-
strate the strong degree of control exerted by Greater
Houston Transportation over the franchisees and
point inescapably to the conclusion that the franchi-
sees are employees of Greater Houston Transporta-
tion both in law and as a "matter of economic
reality." 16
Further, we deem the unit sought here to be
appreciably the same type of unit found appropriate
by the Board in numerous prior cases involving the
taxicab industry. Unlike the majority which appears
to have staked out a new direction in this area by its
decision, we would adhere to prior Board law and
grant the unit sought here.17
16 Trade Wind Transportation Company Ltd, 168 NLRB 860, 862, and
cases cited at In. 5 thereof.
17 In keeping with prior Board law, see, e g, Checker Cab Company, Inc.,
d/bla Checker Cab and Buckhead Cab, 180 NLRB 737, we would include in
the unit those franchisees who do not hire other drivers while excluding as
supervisors those who hire other drivers. We would also include those
dispatchers, sorters, receivers, maintenance men, helpers , and garage
employees that Petitioner seeks since their work duties are directly related to
those of the drivers and they serve in support functions to the drivers.
ikU S GOVERNMENT PRINTING OFFICE 1975 0-550-245