Air Transit, Inc.

National Labor Relations Board - Board Decisions

Apr 21, 1980

248 N.L.R.B. 1302 (N.L.R.B. 1980)

1302 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Air Transit, Inc. and Communication Workers of
America, AFL-CIO, Petitioner. Case 5-RC-
10557
April 21, 1980
DECISION ON REVIEW AND
DIRECTION OF ELECTION
BY CHAIRMAN FANNING AND MEMBERS
JENKINS, PENELLO, AND TRUESDALE
On October 25, 1978, the Regional Director for
Region 5 issued his Decision and Order in the
above-entitled proceeding in which he dismissed a
petition for an election in a unit of all taxicab driv-
ers at the Employer's Dulles International Airport
location (hereafter called Dulles) because he found
the petitioned-for drivers to be independent con-
tractors within the meaning of Section 2(3) of the
Act and that therefore no employment relationship
existed. Thereafter, in accordance with Section
102.67 of the National Labor Relations Board
Rules and Regulations, Series 8, as amended, the
Petitioner filed a timely request for review of the
Regional Director's decision on the grounds, inter
alia, that he made erroneous findings of fact and
departed from officially reported Board precedent.
The Employer filed an opposition thereto.
By telegraphic order dated December 12, 1978,
the Board granted Petitioner's request for review.
Thereafter, the Employer and Petitioner filed briefs
on review.
The Board has considered the entire record in
this case with respect to the issues under review,
including the briefs on review, and finds that a
question affecting commerce exists concerning the
representation of certain employees of the Employ-
er within the meaning of Section 9(c)(1) and Sec-
tion 2(6) and (7) of the Act, for the following rea-
sons: 1
The Employer is a Virginia corporation engaged
in the operation of a taxicab service at Dulles air-
port, which is located in Loudon County, Virginia.
The Federal Aviation Administration (hereafter
called FAA), which operates Dulles, has awarded
to the Employer by contract the exclusive right to
operate a taxicab service from Dulles Airport to
points outside the airport in the Standard Washing-
ton Metropolitan Statistical Area. In return, the
Employer pays to FAA a fee based on the total
number of passengers using the airport. The Em-
ployer and FAA initially signed a 3-year contract
' Petitioner also filed a notion requesting a further hearing to adduce
additional idence: the Imnipll er filed an opposition thereto. Inasmuch
as ":e find the present record sufficient to estahlish the employee status if
Ihte taxicab drivers, P'itiollner' moltion is herehby denied
248 NLRB No. 140
in August 1975. In February 1977, FAA extended
the Employer's contract until July 1980.
The FAA contract requires that the Employer,
either through lease or purchase, provide a mini-
mum of 60 air-conditioned and heated taxicabs
which are no more than 24 months old. All of the
taxicabs must be identically marked and equipped
with meters set to rates established by the Wash-
ington Metropolitan Area Transit Commission, and
all fares must be based on the metered rate. The
contract requires that the Employer establish a dis-
patching system in order to provide an effective
and efficient utilization of taxicabs and personnel,
and all of the dispatchers and drivers must wear
easily identifiable name tags and uniforms approved
by the Government. The Employer is required to
maintain all of the taxicabs in a safe, clean, and sat-
isfactory working condition, and the Employer
must comply with all of the rules and regulations
established by the airport. The contract prohibits
the Employer from subleasing, transferring, or as-
signing any part of the contract unless prior ap-
proval is received from the Government. Finally,
the Government retains the right to terminate the
contract if, after a written warning, the Employer
fails to comply with any portion of the contract.
The Employer owns no taxicabs. Instead, it pro-
vides taxicab service at Dulles by utilizing the ser-
vices of 100 to 105 drivers who provide their own
vehicles. Of these drivers, 60 to 70 own their own
taxicabs and pay the Employer a weekly stand fee
for the right to pick up passengers at Dulles. An-
other 30 to 35 drivers sublease their taxicabs from
one of the above owner-drivers. In addition, there
are several other individuals who do no driving
themselves but instead sublease their vehicles for
the entire week. The Employer charges a subleas-
ing fee if during the week more than one individual
drives a taxicab utilizing the Employer's taxistand,
and the Employer prohibits the drivers from
owning an interest in more than one vehicle using
its taxicab stand.
The Employer requires all of the taxicabs to be
marked and painted in identical fashion; all of the
taxicabs must bear the Employer's trade name,
"Airport Cab," and all of the taxicabs must display
the Employer's telephone number. In addition, on
the rear window of every taxicab there is a sticker
setting forth the fare schedule established by the
Washington Metropolitan Area Transit Commis-
sion and a notice informing the public that all com-
plaints should be filed with the Employer. The
Employer's telephone number is again set forth on
the sticker. Although the Employer does not own
any of the taxicabs, the identically marked vehicles
bearing the Employer's name and telephone
AIR TRANSIT. INC. 1303
number give the appearance to the public that the
taxicabs are operated by the Employer.
The relationship between the Employer and its
drivers is based on individual oral understandings
between the Employer and each of the drivers
whereby the drivers are permitted to pick up pas-
sengers at Dulles in return for the payment of a
weekly taxicab stand fee and/or a subleasing fee.
The Employer's president, Neal Nichols, testified
that these arrangements amount to oral contracts
between the Employer and independent business-
men and that by these oral agreements with each
of its drivers it has "franchised" its exclusive right
to pick up passengers at Dulles to the taxicab
owners.2 In support of this contention, the Em-
ployer cites a portion of its contract with FAA
which permits the Employer to franchise its exclu-
sive right to pick up passengers at Dulles. In fact,
the FAA contract contains language explicitly pro-
hibiting the Employer from subleasing, transfer-
ring, or assigning any of its rights under the con-
tract unless first approved by the Government. The
record contains no evidence of any such written
approval from the Government. 3 Furthermore, a
number of drivers testified that prior to the hearing
the Employer had never referred to their relation-
ship as a "franchise."
The record also establishes that the Employer
sets all of the terms and conditions of its relation-
ship with the drivers, and on a number of occa-
sions it has unilaterally changed those terms and
conditions without consulting the drivers. Al-
though in a limited number of situations, the Em-
ployer has responded to suggestions made by the
drivers, it is clear that the Employer has not relin-
quished any of its rights to control the relationship
with the drivers or the terms and conditions under
which those drivers work. The drivers have
formed a voluntary association, and on one occa-
sion several drivers on the behalf of the association
spoke directly with Airport authorities about pro-
posed changes that would affect taxicab traffic at
2 Nichols testified extensively as to the Employer's policy and his
knowledge of the day-to-day operations. Nichols, however, conceded
that he was only present at the Dulles taxistand several hours a month
and that General Manager Jack Shinberg was primarily responsible for
the Employer's operations. On a number of occasions Nichols' testimony
was contradicted by drivers' testimony regarding Shinberg's written and
stated policies and the actual day-to-day operations of the taxistand Al-
though Shinberg was present throughout the hearing, he was not called
by the Employer to present evidence in response thereto.
a Nichols testified that the Government was aware that the Employer
was franchising its right to pick up passengers at Dulles. Nichols, howev-
er, did not refer to any specific conversation or written communications
whereby the Employer informed the Government or the Government ac-
knowledged the Employer's alleged franchising. There also is no record
evidence explaining why the Government "understood" that the Employ-
er was franchising its right to pick up passengers, an activity specifically
prohibited by the contract, particularly when, as noted above, the FAA
contract explicitly permits the Employer to obtain its vehicles by leasing
the airport. There is, however, no evidence that
the drivers have any contractual right to challenge
any unilateral change made by the Employer in
their working conditions.4
In support of its assertion that the drivers are in-
dependent contractors, the Employer contends that
the drivers possess a proprietary interest in their
right to provide taxicab service at Dulles and that
such a proprietary interest is indicative of an inde-
pendent-contractor status. In support thereof, the
Employer introduced evidence of three situations
wherein drivers sold their taxicabs for amounts in
excess of the value of the vehicle. The Employer
contends that the sale price in excess of the value
of the vehicles represents the sale of the drivers'
operating rights at Dulles. 5 Regardless of the
market value or sale price of a taxicab, however,
the record establishes that it is the Employer that
retains sole and exclusive control over the right of
a driver or a vehicle to continue to use its taxicab
stand. 6 In all instances, a prospective buyer or a
new driver must obtain the Employer's approval to
use the taxicab stand. The sale of a vehicle does
not transfer such a right. In fact, the Employer's
refusal to approve of a sale can result in the cancel-
lation of the sale or the refusal to permit the buyer
to operate at the Dulles taxicab stand. In at least
one instance, the Employer's refusal to approve a
sale canceled the sale.7 The Employer's unilateral
control of the use of its taxicab stand exerts there-
fore an indirect control over the sale of its drivers'
vehicles. Thus, there is insufficient evidence to es-
tablish that the owner-drivers have any proprietary
right in taxicab service at Dulles.
The Employer also controls the right of its driv-
ers to sublease their vehicles, and the Employer
unilaterally determines the subleasing fee. The Em-
4 As for the dissent's contention that the Employer's "operational
rules" were decided on in "consultations" with the drivers, in our view
such "consultations" merely indicate that this Employer, like many em-
ployers, has responded to suggestions by its employees; however, there is
no record evidence that the Employer has ever relinquished its right to
control the terms and conditions of its drivers' employment
I The Employer asserts that the market value of a taxicab is compara-
ble to the assessed tax value. In Virginia, regardless of operating condi-
tions, the State Department of Revenue arbitrarily assesses the value of
all taxicabs at one-half of the value assigned by the National Auto Deal-
ers Association for a similar vehicle not used as a taxicab. The three taxi-
cabs referred to above all sold for substantially more than the assessed
tax value. There is, however, insufficient evidence in the record to deter-
mine if the value assessed for tax purposes represents a fair market value.
We note that the value of a vehicle already equipped, marked, identified,
and approved by the Employer to pick up passengers at Dulles may be
substantially higher than its assessed tax value. Accordingly, there is in-
sufficient record evidence to determine the actual market value of the
above three vehicles.
n We do not agree with the dissent's claim that drivers have sold their
operating rights at Dulles. To the contrary, the record establishes that
the Employer retains sole control over the right to utilize its taxistand.
' The record reveals that the Employer refused to approve of the sale
of one of its driver's taxicabs because it had a vehicle which it wished to
sell to the prospective buyer
AIR TRANSIT, INC.
1
303
1304 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ployer has promulgated the following rule regard-
ing subleasing: "Under no circumstances will
anyone other than the owner be permitted to drive
the cab without the expressed approval of the Air
Transit management."s In practice, the Employer
interviews each sublessee driver prior to the start
of work. The Employer contends that the inter-
view is limited to determine if the sublessee driver
has a current chauffeur's license and is properly in-
sured. Drivers testified, however, that on a number
of occasions the Employer has refused to approve,
or has canceled, the right of the sublessee driver to
use its taxicab stand because of the driver's dress,
appearance, attitude, or failure to comply with the
Employer's rules, or passenger complaints. 9
When the Employer first obtained the FAA con-
tract in 1975, the Employer arranged financing for
the purchase of most of its drivers' taxicabs. How-
ever, more recently, the Employer has permitted
its drivers to purchase their vehicles themselves
and to arrange their own financing.10 The drivers
who own their own vehicles pick the model and
style of the taxicab. The Employer, however, re-
quires that the vehicle be no more than 36 months
old,"' be equipped with air-conditioning and heat-
ing, and be capable of carrying six passengers and
their luggage. The Employer does not have a me-
chanic inspect the vehicle, but all vehicles must be
inspected by the Employer's management and meet
its subjective standards of being safe, clean, and in
good working order. For example, the Employer
will deny the use of its taxistand to a vehicle with
worn tires or improper lights. 2 In fact, drivers tes-
tified that the Employer often visually examined
their vehicles and if the vehicles did not pass the
Employer's visual inspection, the drivers were
denied access to the taxistand.
If the Employer approves a vehicle, it must be
painted and marked with the Employer's colors
and identification. Although the vehicle owner
pays for the painting, those arrangements are usual-
ly made by the Employer. The Employer also re-
quires that the taxicab be equipped with a meter set
8 Contrary to the dissent's assertion that the drivers "have the option
of subleting or not subleting their vehicles," in our view the record estab-
lishes that drivers have such an option only if they obtain the Employer's
prior approval.
9 There is evidence that shortly before the hearing the Employer uni-
laterally modified its policy and began conducting interviews limited to a
determination of the prospective driver's insurance coverage and posses-
sion of a chauffeur's license.
'o The Employer is still actively engaged in the selling and financing
of vehicles to its drivers. The record, however, is unclear as to the per-
centage of drivers who buy and finance their vehicles through the Em-
ployer.
I I The FAA contract requires all vehicles older than 24 months to be
replaced. The Employer, however, only requires its drivers to replace e-
hicles older than 36 months
12 Thus, we do not agree with the contention by the dissent that the
Employer does not make safety inspections.
to rates established by the Washington Metropoli-
tan Area Transit Commission. The meters can be
leased from the Employer or obtained elsewhere.
In addition, the Employer requires that all vehicles
be insured for amounts well in excess of minimum
insurance required by the State; the vehicle
owners, however, pay for the insurance. The driv-
ers are responsible for all repairs and maintenance
of the vehicle, but, if the vehicle is not maintained
to the subjective standards of the Employer's man-
agement, the driver can be disciplined and/or ter-
minated. On a number of occasions, the Employer
has required drivers to repair dents and replace
minor equipment such as missing hubcaps.
The Employer does not receive a percentage of
the driver's earnings; the Employer's sole source of
revenue is derived from the weekly stand and sub-
leasing fees. The drivers do not receive any fringe
benefits such as sick leave, holidays, life insurance,
health insurance, or vacations, and the Employer
makes no workmen's compensation, unemploy-
ment, or social security payments on behalf of the
drivers. The Employer has established no set work-
ing hours for the drivers and, if there are not
enough taxicabs at the stand to meet passenger de-
mands, the Employer's dispatcher will call other
cab companies to supply the needed taxis. Nichols
testified that at the present time he is satisfied that,
in order for the drivers to meet their stand and sub-
leasing fees, economic necessity will result in ade-
quate coverage of its taxistand. On the other hand,
the Employer has prohibited drivers from working
a double shift and has indicated that coverage of all
flights is mandatory and that if necessary the Em-
ployer will require some drivers to alter their
shifts. Thus, if it becomes dissatisfied with its pre-
sent system, the Employer retains the right to set
or establish, i.e., control, the drivers' working
hours.
The Employer requires the drivers to follow the
directions and orders of its dispatchers and to
comply with all of its rules and promulgations reg-
ulating the drivers' operation of their taxicabs. Fail-
ure to follow these rules or the dispatcher's direc-
tions can and has resulted in discipline and dis-
charge. Thus, the Employer requires that its driv-
ers report to its office and sign a register before
starting work. When arriving at the airport, drivers
must take the last position in the feed line, stay in
line while moving up, and remain within 5 feet of
their vehicles at all times. In addition, while the
taxicab is in the feed line, the Employer prohibits
any person other than a driver from occupying a
seat in the vehicle. Drivers are prohibited from so-
cializing with "out-law" drivers (drivers not paying
stand fees), and drivers have been warned that
AIR TRANSIT, INC. 1305
their right to pick up passengers will be canceled if
they are caught socializing with such drivers.
When the Employer first obtained the FAA con-
tract, it enforced a grooming and dress code and
required its drivers to wear name tags. A number
of drivers have been disciplined for failing to
comply with these rules. Shortly before the hear-
ing, however, the Employer unilaterally ceased en-
forcing these rules. Since the Employer unilaterally
changed these rules, it appears clear that the Em-
ployer still retains the right to reinstitute and en-
force such rules.
The drivers must follow all of the dispatcher's
loading instructions and are required to accept all
passenger assignments. On a number of occasions
drivers have been disciplined or discharged for fail-
ing to move to a directed loading area, failing to
take a particular passenger, leaving their vehicles
unattended, arguing with management personnel,
violating the Employer's dress and grooming code,
and fighting. Since the drivers spend up to 2 hours
waiting in line at the stand for every 1 hour on the
road, it is clear that they spend a substantial por-
tion of their working day under the direct control
of the Employer's management personnel.The Em-
ployer also investigates all complaints from the
public regarding driver activity away from the
stand. All passenger complaints about fare over-
charges, driver discourtesy, and reckless driving 3
are investigated by the Employer, and, during the
investigation, drivers are prohibited from contact-
ing passengers who have made such complaints. 14
A file is maintained on all such complaints and on
driver misconduct at the taxistand, and the Em-
ployer takes appropriate disciplinary action when it
is necessary. 5
Nichols testified that the Employer's policy per-
mits the drivers to exercise a great deal of discre-
tion with regard to fares charged to passengers. Ni-
chols claimed that the Employer's policy permits
the drivers to negotiate fares with passengers and
that the Employer does not require the drivers to
use their meters at all times. 6 The FAA contract,
however, requires that all passengers be charged
" The Employer also investigates complaints concerning drivers from
the nonpassenger public.
'' In one instance, the Employer directed an owner-driver to apolo-
gize to a passenger for a remark made by a sublessee driver The passen-
ger contact, however, was made at the Employer's direction
1
'Nichols testified that the Employer does not keep employee records
A number of drivers testified, however, that they have seen such records
and that discipline is often based on such records. The Employer's gener-
al manager, Shinberg, who was present at the hearing, did not contradict
this testimony Thus, the finding in the dissent that the Employer does
not maintain personnel files on drivers is based on controverted testimony
and is suspect
'" Several drivers testified that on occasion they have, on their own,
charged passengers flat fares instead of using the taxicab meter These
drivers, however. did not testify} that the Employer was aware of or ap-
proved of their charging passengers a flat rate
metered rates, and each taxicab displays a sticker
which sets forth the required metered fare rate and
informs passengers that all fare disputes should be
reported to the Employer. In addition, a number of
drivers testified that the Employer has issued warn-
ings about the failure to use the taxicab meter and
that drivers have been disciplined for negotiating
nonmetered fares with passengers.17 The record
also indicates that the Employer prohibits the driv-
ers from attempting to arrange shared situations' 8
or from swapping passengers. 9 Finally, as men-
tioned above, the Employer requires the drivers to
accept all passenger assignments. Since the drivers
spend a substantial portion of their time at the tax-
istand awaiting passenger assignments, there is a
great deal of reluctance to accept economically un-
desirable short-haul passengers. The Employer,
however, has explicitly prohibited the drivers from
refusing to accept short-haul passengers, and on a
number of occasions it has disciplined and dis-
charged drivers who have refused to accept such
passengers. On one occasion, the Employer posted
a notice threatening a 7-day suspension for drivers
who refused to accept short-haul passengers.
On the other hand, the Employer has contracted
to provide certain nonmetered flat-fare rates for
passengers of a number of business entities and
other institutions. These flat-fare rates are negotiat-
ed by the Employer and the other party; the driv-
ers do not participate in the establishment of the
flat-fare rate. 20 Although the flat fares are usually
less than the metered rate, the drivers are required
to charge the flat fare and are paid by either cash
or script redeemable at the Employer's office. In
addition, the Employer has promulgated rules re-
garding the manner and means by which the driv-
ers are to service these special-fare passengers.
Thus, with certain special-fare passengers, the Em-
ployer specifies the exact location where passen-
gers and luggage are to be delivered; i.e., a specific
gate or the side of the road where the taxi is to be
' The record does not support the contention by the dissent that driv-
ers "can" deviate from the fare structure dictated by the Employer As
indicated above, any such deviation results in discipline
as When there is a severe shortage of taxicabs, the Employer permits
its drivers to attempt iti arrange passenger groups, however, such ar-
rangements can only he made with the permission of the first passenger.
19 Several drivers testified that on occasion they have swapped passen-
gers. These drivers, however, did not testify that the Employer was
aware of such swapping. Other drivers testified that when the Employer
has discovered drivers swapping passengers, the drivers were disciplined.
20 The Employer contends that on one occasion the drivers themselves
negotiated a flat-fare rate The record indicates, however, that the drivers
complained in one instance about a low flat-fare rate to the Employer
and that subsequently that fare was raised There is no evidence that the
Employer relinquished any of its right to control the flat-fare rate In
fact, a number of drivers testified that the Employer negotiates all of the
flat-fare rates The dissent's assertion that drivers can give customers flat'
fares rate is not borne out by the records Only the Employer can set a
flat-fare rate; and any attempt by a driver to set such a fare results in
discipline
AIR TRANSIT, INC. 5
1306 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
parked. With regard to other special-fare passen-
gers, the Employer specifies the length of time the
drivers must wait for the passengers, or that the
drivers, not the passengers, must obtain the flat-fare
vouchers. On a number of occasions the Employer
has warned the drivers that a failure to comply
strictly with its flat-fare rules will result in disci-
pline and that the drivers must accept all assign-
ments of flat-fare passengers. Finally, the Employer
has negotiated flat-fare rates for certain accounts
for taxicab service beyond the Washington metro-
politan area. The drivers are required to accept
these special fares even though the FAA contract
only covers taxicab service from Dulles to points
within the Washington Metropolitan Statistical
Area.
Although the Employer contends that it exerts
no control over the drivers beyond the purview of
the FAA contract, the Employer prohibits the
drivers on penalty of discharge from picking up
passengers at National Airport, the other major air-
port in the Washington metropolitan area. The Em-
ployer claims that National Airport rules prohibit
taxicabs licensed in Loudon County (the county
where Dulles is located) from picking up passen-
gers at National. The record indicates, however,
that there is no municipal ordinance or airport rule
preventing drivers from being co-licensed in a
county approved by National Airport and that the
Employer's drivers could be eligible to pick up
such passengers. A number of the Employer's driv-
ers have indicated an interest in picking up passen-
gers at National, but they have been dissuaded by
the Employer's threats of discipline. Similarly, the
Employer also prohibits the drivers from picking
up and discharging passengers outside Loudon
County unless that passenger has been picked up or
discharged inside Loudon County.2 1 In other
words, the Employer prohibits the drivers from ac-
cepting a passenger unless the destination or point
of departure is in Loudon County.2 2 Nothing in
the FAA contract dictates that passengers must be
either picked up or delivered in Loudon County,
and thus it is the exercise of control by the Em-
ployer which limits the drivers' entrepreneurial
prerogative.
Analysis and Conclusion
Since Congress amended the National Labor Re-
lations Act in 1947 to exclude specifically from the
definition of "employee" any individual having the
status of independent contractor, this Board has
21 Virtually all of the fares collected by the drivers are derived from
passengers picked up at the Dulles taxistand.
22 One driver testified that he was disciplined when the Employer dis-
covered that he had both picked up and discharged a passenger in adja-
cent Fairfax County
considered countless cases wherein we have had to
determine whether an individual was an employee
or an independent contractor.2 3 In N.L.R.B. v.
United Insurance Company, 390 U.S. 254, 256
(1968), the Supreme Court, in agreement with the
position taken by the Board, observed that the
Board "should apply the common-law agency test
. .. in distinguishing an employee from an inde-
pendent contractor." Accordingly, in determining
whether an individual is an employee or an inde-
pendent contractor under the Act, the Board has
consistently applied the common-law test of "right
to control."2 4 Under this test, where the one for
whom the services are performed retains the right
to control the manner and means by which the
result is to be accomplished, the relationship is one
of employment. On the other hand, where control
is reserved only as to the result sought, the rela-
tionship is that of an independent contractor. The
application of this test, however, is easier stated
than applied; it requires an analysis and balancing
of all of the facts in each case. Working within this
framework, we have carefully considered the entire
record in this case, and we find that the Employer
retains a sufficient degree of control over the ac-
tivities of its taxicab drivers to establish the exis-
tence of an employer-employee relationship.
Our finding of employee status here is similar to
the finding in United Insurance Company, supra,
wherein the Supreme Court affirmed the Board's
finding that certain insurance debit agents em-
ployed by the employer therein were employees
and not independent contractors. A comparison of
the factors considered decisive by the Court in that
case with the facts involved herein reveals:
(1) The insurance agents performed functions es-
sential to the company's normal operations. In the
instant case, it is clear that the drivers' taxicab ser-
vice is essential to the Employer's operations.
(2) The insurance agents did not need any prior
training or experience. The Employer here con-
cedes that it does not require its drivers to have
any prior experience or training.
(3) The insurance agents did business in the com-
pany's name with assistance from the company's
managerial personnel and ordinarily only sold the
company's insurance policies. Here, the drivers do
business in the Employer's name, virtually all of
their fares are derived from the Employer's Dulles
taxistand, and the Employer's managerial personnel
at the taxistand are there to assist and control the
drivers' activities in providing taxi service.
23 Sec. 2(3) of the Act. See 93 Cong. Rec. 6441-42 11 Leg. Hist. of
the Labor Management Relations Act, 1947 (GPO 1948), p. 1537
24 See, generally. Restatement of Agency 2d, §220 (1958).
AIR TRANSIT. INC. 1307
(4) The insurance agents had a permanent work-
ing arrangement with the insurance company and
their employment continued as long as their perfor-
mance was satisfactory to the company. Here, the
drivers' employment appears permanent and con-
tinues as long as their performance is satisfactory
to the Employer, and the Employer retains an ab-
solute and unilateral control over the determination
of satisfactory performance. 25
(5) The insurance agents received the benefits of
the company's vacation plan, group insurance, and
pension fund. The Employer here makes none of
these benefits available to its drivers nor does it
make social security, unemployment, or workmen's
compensation payments on behalf of its drivers. Al-
though these factors are indicative of an indepen-
dent contractor status, the failure to provide these
benefits is not dispositive of the issue. 2 6
(6) The Supreme Court also found that the insur-
ance agents were required to account to the com-
pany for the funds that they collected. Much of the
agents' worktime, however, was spent beyond the
physical control of the company's management,
and the agents' collections were for the most part
made away from the company's offices. By requir-
ing a close accounting of funds, the company was
thereby able to exert considerable control over the
agent's activity while the agent was away from the
office. The company required the agent to turn in
his collections once a week and the agent received
a percentage of those collections. In the instant
case, the Employer does not require its drivers to
account for the fares they collect. Instead, the Em-
ployer is able to exercise financial control because
it controls its revenue by its unilateral determina-
tion of stand and subleasing fees; in addition, it
controls the drivers' revenue by its control of the
fare structure27 and the assignment of virtually all
passengers. 2 8 Most importantly, the Employer col-
2s See, generally, Restatement of Agency 2d, §220, 2(f) at 485 and
comment (j) at 490. See also the court of appeals' discussion of this point
in denying the petition for rehearing in Local 777, Democratic Union Or-
ganizing Committee, Seafarers International Union of North America
[Yellow Cab Company and Checker Taxi Company v NL.R.B., 603 F.2d
862, 899-900 (D.C. Cir. 1978). To the extent that any prior Board deci-
sions may be read as implying that the permanency of the relationship is
not a factor indicative of employee status, then to that extent such deci-
sions are erroneous.
2s Checker Cab Association, Inc., 185 NLRB 182, 184 (1970).
27We disagree with the dissent that the fares are not set by the Em-
ployer. The FAA contract requires all fares to be based on metered rates
determined by the Washington Metropolitan Area Transit Commission
The Employer, however, requires its drivers to charge certain specified
passengers a flat fare. Thus, the Employer retains control over the fare
structure by unilaterally determining when it will require its drivers to
comply with the FAA contract.
28 The dissent misconstrues the import of our finding that the Employ-
er exerts financial control over its drivers. Such a finding is indicative of
employee status not because it indicates the Employer is in a superior
economic bargaining position, but because it establishes the Employer's
right to control the essential economic terms and conditions of its drivers'
employment
the start of the workweek. Further, unlike the in-
surance agents in United Insurance Company, the
drivers spend a substantial portion of their working
day (up to 2 hours at the stand for every I hour on
the road) under the direct control of the Employ-
er's managerial personnel. 2 9 Thus, the Employer's
exercise of absolute control over the Dulles taxis-
tand, which is the source of virtually all of its driv-
ers' revenue and the locus of the majority of their
time, enables it to retain control over the manner
and means by which the drivers provide taxi ser-
vice. Moreover, it is clear that the Employer re-
tains the right to unilaterally impose any term or
condition on its drivers and that therefore the Em-
ployer retains the right to require its drivers to ac-
count for their fares.
(7) The Supreme Court found that the terms and
conditions under which the insurance agents
worked were promulgated and changed unilateral-
ly by the company. As set forth previously, the re-
lationship here between the Employer and its driv-
ers is such that the Employer retains the right to
impose and/or change unilaterally any or all of its
drivers' working conditions.
In Yellow Cab Company, supra, the court of ap-
peals denied enforcement to a Board Order finding
certain taxicab drivers to be employees. At foot-
note 22 of that decision, the court observed that
the unilateral revision of terms and conditions is
evidence of superior bargaining power but not of a
company's power to establish contract terms con-
trolling the manner and means in which drivers go
about providing taxi service. We respectfully dis-
agree. As noted above, United Insurance Company,
supra at 259, the Supreme Court did not merely
point out that the terms and conditions under
which the insurance agents worked evidenced em-
ployee status, but also stated that the "terms and
conditions under which they operate is promulgat-
ed and changed unilaterally by the company." We
agree with the Supreme Court that the right unilat-
erally to promulgate and change terms and condi-
tions of employment is itself evidence of an em-
ployee-employer relationship. We are of the view
29 In United Insurance Company, supra at 259, the Court pointed out
that the fact that the insurance agents performed their work primarily
away from the company's offices did not establish an independent con-
tractor status in the context of the entire record In addition, we have
observed that a taxicab driver's freedom from direct managerial control
while in route with a passenger or while seeking a passenger is "inherent
in the character of the work, much as the choice of a route to cover sev-
eral delivery destinations lies with a truckdriver or the choice between a
saw, chisel, and plane lies with a carpenter" Checker Cab A.sociation.
Inc., 185 NLRB 182, 184 (1970). Thus, freedom from direct supervisory
control is not necessarily probative of independent contractor status in
cases involving taxicab drivers. The somewhat unique situation in the in-
stant case, wherein the drivers spend a substantial percentage of their
work hours at the Dulles taxistand awaiting passengers and under the
Employer's direct physical control, is an additional factor that we find
establishes employee status
AIR TRANSIT. INC
1308 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
that the right to promulgate and make unilateral
changes in terms and conditions evidence a right to
control the manner and means in which services are
to be provided as well as the absence of an arm's-
length relationship between two contracting par-
ties.30 For example, in the instant case, the Em-
ployer has not imposed any set working hours on
its drivers; the Employer, however, has indicated
that, if it deems it necessary, it will impose such
hours.31 The lack of set hours is not indicative of
an independent-contractor status where the Em-
ployer retains the right to unilaterally impose such
hours; i.e., the right to control the work sched-
ule.3 2 Another example of the Employer's right to
change the working conditions of the drivers is
demonstrated by the Employer's abrogation of its
dress and grooming code shortly before the hear-
ing. The unilateral nature of that change evidences
the retention by the Employer of the right to rein-
stitute the dress and grooming codes. Other than
quitting, the drivers retain no right to oppose any
unilateral change of their working conditions by
the Employer. It is also clear that by controlling
stand and subleasing fees, the fare structure, the as-
signment of passengers, and, as discussed, infra, dis-
cipline, the ownership and subleasing of its taxi-
cabs, drivers' conduct away from and at the Dulles
taxistand, drivers' right to pick up and deliver pas-
sengers outside of Loudon County, investigation of
driver misconduct away from and at the Dulles
taxistand, and ultimately controlling the drivers
and vehicles using its Dulles taxistand, the Employ-
er has utilized its right unilaterally to establish
terms and conditions that clearly control the
30 We note that it is the right to control, not the actual exercise of
control, which is the determinative factor in evaluating whether a worker
is an employee or an independent contractor. Cf. Air Terminal Cab. Inc.
v. United States, 478 F.2d 575, 580 (1973), cert. denied 414 U.S. 909. And
Joint Council of Teamsters No. 42 [J K. Barker Trucking Co.] v. N.L.R.B.,
450 F.2d 1322, 1327 (D.C. Cir. 1971).
1 On July 5, 1974, the Employer distributed a memorandum to its
drivers. The memorandum informed the drivers that: "Dulles is more
active in the afternoon from 2:00 PM through midnight than during earli-
er hours. However, coverage of all flights is mandatory. Each driver is to
report to the office when he comes on duty. We may ask for some volun-
teers to alter shifts if deemed necessary. At the present time we will not
allow anyone to double-shift a cab." In addition, the memorandum unilat-
erally set forth other work rules that control the drivers' terms and con-
ditions of employment. In the context of the declaratory language used
elsewhere in the memorandum and the Employer's unilateral conduct in
setting and changing the drivers' terms and conditions of employment,
we find the memorandum language indicating the Employer will seek
"volunteers to alter shifts" to be little more than a euphemism. Thus, we
are unable to understand our dissenting colleague's failure to find that the
Employer retains the right to control the drivers' working hours. In addi-
tion, as pointed out elsewhere, the Employer has unilaterally changed a
number of the drivers' terms and conditions of employment.
32 In United Insurance Company, supra at 259, the Court pointed out
that the fact that the insurance agents set their own hours was insufficient
to establish independent-contractor status in the context of the entire
record.
manner and means by which the drivers provide
taxicab service.33
The exercise of discipline by the Employer over
its drivers is another important factor indicative of
employee status. Although a contractor can inform
an independent contractor of its general business
standards or of its customers requirements, it
cannot discipline an independent contractor for a
failure to comply. In such a situation, if the inde-
pendent contractor fails to meet established stan-
dards, the contractor can of course discontinue
contracting with the independent contractor. In the
instant case, however, the Employer has set forth
detailed rules regulating its drivers' conduct, and it
has disciplined its drivers when they have failed to
comply with these rules. Thus, the Employer has
verbally warned, suspended, and/or discharged
drivers for violating its dress code, grooming code,
failing to wear a name tag, refusing to take an as-
signed passenger, fighting with other drivers, devi-
ating from the fare rates established by the Em-
ployer, overcharging passengers, failing to file acci-
dent reports, driving unsafely, parking improperly,
failing to comply with stand rules, socializing with
outlaw drivers, and arguing with management per-
sonnel. We find that this exercise of discipline of
the drivers by the Employer clearly establishes the
Employer's right to control its drivers.3 4
Another indication of the drivers' employee
status is the control exercised by the Employer
over its drivers entrepreneurial opportunities. Thus,
the Employer establishes the fare structure; re-
quires the drivers to take all passengers assigned by
its dispatchers; sets the taxistand and subleasing
fees; prohibits drivers who own more than one ve-
hicle to utilize more than one vehicle at its taxis-
tand; and restricts the geographical locations where
it will permit its drivers to prospect for passengers.
If the drivers were true independent contractors,
the Employer would have no control over or con-
cern with these factors. Accordingly, the exercise
33 Our dissenting colleague finds that the relationship between the
drivers and Air Transit is governed by individual oral agreements and
that these oral agreements constitute oral contracts that prevent the Em-
ployer from unilaterally imposing terms and conditions of employment
upon its drivers. The record, however, does not support this finding. In
the first place, there is no record evidence that any driver has ever at-
tempted to oppose any change or imposition of a term or condition of
employment instituted by the Employer or that any driver has ever
claimed that the oral agreements prevent the Employer from making any
change. On the contrary, as shown above, the Employer's unilateral
changes concerning stand fees, subleasing fees, fare structure, dress and
grooming codes, control over the ownership and subleasing of taxicabs,
and control over the drivers' right to service passengers away form the
Dulles taxistand indicate that the Employer retains the right to set forth
any and all terms and conditions of employment.
34 For example, on one occasion, the Employer posted a notice warn-
ing drivers that they would draw a 7-day suspension if they continued
arguing with passengers and/or refusing to accept short-haul passengers.
Such a threat of suspension evidences an employer-employee relationship,
not a contractor-to-contractor relationship.
AIR TRANSIT, INC. 1309
of such control over the drivers indicates an em-
ployee-employer relationship and not an arm's-
length relationship between two business entities.
The Employer also requires its drivers to carry
liability insurance in excess of the minimum stan-
dards required by the State, 3 5 and it requires its
drivers to report all accidents in which they
become involved. Restatement of Agency 2d,
points out: "An agent who is not subject to control
as to the manner in which he performs the acts
that constitute the execution of his agency is in a
similar relation to the principal as to such conduct
as one who agrees only to accomplish mere phys-
ical results. For the purpose of determining liabil-
ity, they are both 'independent contractors' and do
not cause the person for whom the enterprise is un-
dertaken to be responsible .... "36 Thus, if the
drivers were independent contractors, neither the
excess amount of liability insurance they carried
nor their involvement in accidents would be of
concern to the Employer. Accordingly, we find
the Employer's concern with these matters is indic-
ative of an employer-employee relationship and not
of an independent contractor status.
The control exercised by the Employer over its
drivers' subleasing and the sale of their taxicabs is
another factor indicative of an employer-employee
relationship. The drivers' unfettered right to sub-
lease or to sell their vehicles would be evidence of
an independent-contractor status. The record indi-
cates, however, that the drivers do not have such
unfettered rights. As pointed out previously, the
Employer retains the absolute right to cancel or
refuse to permit a driver to use its taxistand, and
the exercise of that right has affected the sale of its
drivers' taxicabs. The Employer's absolute control
over its taxistand gives the Employer effective con-
trol over the right of its drivers to sublease and to
sell their taxicabs. 3 7
Finally, the Employer's contract with the FAA
evidences an employee-employer relationship be-
tween the drivers and the Employer. As indicated
previously, the FAA contract explicitly prohibited
the Employer from assigning its exclusive right to
pick up passengers at Dulles, and a number of driv-
ers testified that the Employer never told them that
their relationship was based on a franchise or that
35 We do not agree with our dissenting colleague that the drivers "are
entirely responsible for buying insurance." Although the drivers pay
the premiums, the Employer unilaterally sets the minimum amounts of in-
surance that it requires the drivers to carry.
"3 Restatement of Agency 2d. §220 at 488 (1958)
3 As we noted earlier, the drivers retain title to their vehicles. and the
Employer has no direct control over the sale of the vehicles The Em-
ployer's control over the taxistand, however, restricts the drivers' right
to sublease or sell their vehicles as one of the Employer's taxicabs
they were independent contractors.3 " Furthermore,
the Employer requires the drivers to comply only
with the portions of the FAA contract that it
deems should be enforced. Thus, the FAA contract
requires all fares to be based on metered rates. The
Employer, however, requires its drivers to charge
flat fares that it has previously negotiated for cer-
tain passengers, but it requires the drivers to use
meters for all other passengers. The FAA contract
requires drivers to wear name tags, uniforms, and
present a neat appearance. The Employer, howev-
er, has required its drivers to wear name tags and
comply with a dress and grooming code, on and
off, based on its own internal business determina-
tions.39 The FAA contract requires all taxicabs to
be replaced every 24 months. The Employer, how-
ever, has unilaterally determined that taxicabs
should be replaced every 36 months. Clearly, the
Employer determines which portions of the FAA
contract it will enforce.4 0
We would be remiss if we did not point out that,
in arriving at our finding of employee status, we
have carefully considered factors that in isolation
would otherwise indicate an independent-contrac-
tor status. Thus, we have considered that the Em-
ployer makes none of the normal employee payroll
deductions and provides no fringe benefits to its
drivers,4 1 that the drivers provide and maintain
their own vehicles either through lease or owner-
ship,4 2 and that the drivers are not accountable to
", Belief as to the existence of the relationship, although not determi-
native, is probative of employee status. Restatement of Agency 2d, §220.
(2)(i) at 486, and comment (h) at 489.
33 Our dissenting colleague finds that the Employer does not maintain
a dress and grooming code, and does not require its drivers to carry iden-
tification cards. The record establishes, however, that in the past the Em-
ployer has maintained such rules. and it maintains the right to reinstate
such rules.
40 The record does not support our dissenting colleague's conclusion
that the Employer's relationship with its drivers is "concerned only with
the end of fulfilling its FAA contract" with the Employer. As indicated
by our discussion above, the Employer retains the right to control the
manner and means by which it provides taxicab service. Thus, for exam-
ple, the FAA contract only indicates that drivers shall carry the mini-
mum amount of insurance as required by law. The Employer, however.
requires its drivers to carry higher amounts of insurance. The FAA con-
tract does not even mention taxistand fees; the Employer, however, uni-
laterally sets the amount of stand fees. The FAA contract does not men-
tion subleasing, sale of vehicles, or the right of a driver to own more
than one vehicle; the Employer, however, unilaterally controls such con-
duct by the drivers. The FAA contract is not concerned with a drivers'
contact with "outlaw drivers." or the right of drivers to pick up passen-
gers at National Airport or at other areas away from Dulles; the Employ-
er, however, exerts such controls over the drivers. The FAA contract
requires all passenger fares to be based on a metered rate; the Employer,
however, requires its drivers to charge certain passengers a flat fare The
FAA contract sets forth a dress and grooming code, requires the use of
name tags, and sets forth a 24-month age limit on taxicabs; the Employer,
howesver, determines when and if it will enforce these and other portions
of the FAA contract.
4I Checker Cab Associatrion, Inc., 185 NLRB 182, 184 (1970).
42 Restatement of Agency 2d, §220 at 490-491, points out that the
ownership of the instrumentality of work is a fact of only "evidential
value." In circumstances similar to the instant case. we have found driv-
Continued
A I R ~~ ~ T.NS T .N C A _0.9
. HA
1310 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the Employer for a percentage of their fares.4 3
The factors demonstrating the independent-con-
tractor status, however, are on balance outweighed
by factors demonstrating employee status.4 4
In reaching our decision, we have carefully con-
sidered the entire record herein. In addition, we
have carefully considered the opinions of the
United States Court of Appeals for the District of
Columbia in Yellow Cab Company, supra,4 5 wherein
the court criticized our treatment of the employee
versus independent contractor issue.4 6 Although
the court did not, of course, take issue without uti-
lization of the common-law agency test in making
the distinction between employee and independent
contractor, the court did assert that we have been
inconsistent in the application of the common-law
agency test. With all due respect for the court, we
disagree with its analysis of our approach to this
difficult area of the law.4 7 We are of the view that
ers owning their own vehicles to be employees within the meaning of the
Act. See for example Sida of Hawaii, Inc., 191 NLRB 194 (1971), enforce-
ment denied 512 F.2d 354 (9th Cir. 1975); Checker Cab Company. Inc., d/
b/a Checker Cab, 180 NLRB 737 (1970); Deaton Truck Lines, Inc., 143
NLRB 1372 (1963), enfd. 307 F.2d 748 (5th Cir. 1962); Association of In-
dependent Taxicab Operators, Inc., /a Diamond Cab, and Its Members, 164
NLRB 859 (1967) In addition, as pointed out previously, the taxicabs
must be maintained to meet the Employer's subjective standards, and a
failure to meet such standards can result in discipline. Thus, driver main-
tenance is subject to considerable influence by the Employer.
4a As we pointed out earlier, the degree of actual control exercised by
the Employer over its drivers greatly diminishes the evidentiary value of
this factor.
44 See also The Standard Oil Co. (of Ohio), 241 No. 190 (1979), where
our dissenting colleague found owner/drivers to be employees.
45 See also Associated General Contractors of California, Inc. v.
N.L.R.B., 564 F.2d 271 (9th Cir. 1977).
4" In its decision denying the Board's petition for rehearing, 603 F.2d
at 908, the court criticized the Board's reliance on factors that it charac-
terized as not indicative of an employee-employer relationship. We re-
spectfully disagree with that analysis. Of the six factors listed by the
court, (1) goodwill, (2) the relationship of the worker's work to the em-
ployer's business, (3) the length of the worker's employment, (4) the uni-
lateral right of the employer to set terms and conditions of employment,
(5) the employer's right to check a prospective worker's references, and
(6) the payment of workmen's compensation, we have relied on three of
those factors, (2), (3), and (4) above, in making our determination of em-
ployee status in the instant case. The Supreme Court in United Insurance
Company, supra at 259, also found all three of these factors to be determi-
native of employee status See also Restatement of Agency 2d, §220: the
relationship of the worker's work to the employer's business, 2(h) at 486,
and comment (h) at 489; the length of the worker's employment, 2(f) at
485, and comment ) at 490; and the unilateral right of the employer to
set terms and conditions of employment, 2(a) at 485. Since we have not
relied on the other three factors in making our determination of employ-
ee status, we find it inappropriate and unnecessary to respond to the
court's criticism regarding these factors
'7 In declining to enforce the Board's Order in Yellow Cab Company,
the court of appeals intimated that often the Board's resolution of the em-
ployee versus independent contractor issue turns on the composition of
the Board panel deciding the particular case. With all due respect to the
court of appeals, we disagree with any suggestion that a Board panel ap-
proaches a case with any preconceived notion of the result to be reached
therein. In the first place, it is typical of these cases that they are com-
plex and involve many facts some indicative of employee status, others
indicative of independent contractor status all of which must be careful-
ly considered and weighed Given the complexity of the issue presented,
and the sometimes differing perception as to the weight to be assigned
various factors gleaned from the record, it is hardly remarkable if "rea-
sonable men" might differ about the result reached in a particular case.
any apparent inconsistency stems from the fact
that: "There are innumerable situations which arise
in the common law where it is difficult to say
whether a particular individual is an employee or
an independent contractor, and these cases present
such a situation." 4 8
Finally, we are presented with the supervisory
status of drivers who sublease their vehicles to
other drivers. The record establishes that, in sub-
lessing their taxicabs, these drivers participate in
the hiring, firing, and the setting of wages and
other terms and conditions of employment for the
subleasee drivers. It is clear, therefore, that in sub-
leasing their vehicles these drivers are acting as su-
pervisors for the Employer and should be excluded
from the unit. 49
Accordingly, we find that the following employ-
ees of the Employer constitute a unit appropriate
for the purposes of collective bargaining within the
meaning of Section 9(b) of the Act:
All regular and part-time taxicab drivers at the
Dulles taxistand operated by Air Transit, Inc.,
including owner drivers and sublessee drivers;
but excluding all other employees, dispatchers,
office clerical employees, guards, drivers who
participate in the hiring of other drivers, and
other supervisors as defined in the Act.
[Direction of Election omitted from publica-
tion.] 5 0
MEMBER PENELLO, dissenting:
After the United States Court of Appeals for the
District of Columbia Circuit delivered its scholarly
opinions setting forth the law governing determina-
tion of independent-contractor status under the
Act, 5 I had hoped that my colleagues would re-
consider finding individuals to be employees in cir-
cumstances similar to those presented in Yellow
Cab. In this case, however, the Board has reversed
the Regional Director and declared that the taxicab
drivers involved herein are employees on substan-
T'his is not to say, however, that this Board does not seek in every case
that comes before it, regardless of the panel that passes on the case, to
apply fairly to the particular facts of the case the relevant principles of
law generally applicable to all cases presenting the same issue. In this
connection, we note that the Supreme Court itself recognized in United
Insurance Company, supra, the difficulty of resolving the employer versus
independent contractor question As the Court pointed out in reversing
the decision of the Court of Appeals for the Seventh Circuit and affirm-
ing the Board, each of these cases involves "innumerable situations" and
the Board's decision "should not be set aside just because a Court would,
as an original matter, decide the case the other way."
4 NVLR.B. v. United Insurance Company, supra at 258.
4' Checker Cab Company. Inc., d/b/a Checker Cab, 180 NLRB 737,
738 (1970), and cases cited therein.
,1 Excelsior footnote omitted from publication.
5 Local 777, Democratic Union Organizing Committee, Seafarers Inter-
national Union of .Vorth America, AFL-CIO [Yellow Cab Company v.
N.L.R.B.. 603 F.2d 862 (D.C. Cir. 1978), petition for rehearing denied
603 F.2d at 891 (1979).
AIR TRANSIT, INC. 1311
tially weaker facts than those on which the court
relied to find the drivers were independent con-
tractors in Yellow Cab. There is no need for me to
repeat the court's able and exhaustive analysis of
the relevant law. However, in the context of con-
trolling principles, I shall adduce the evidence
which shows conclusively that the persons whom
Petitioner seeks to represent are independent con-
tractors and not employees.
1. FACTS
In 1974, Air Transit (herein called the Company)
received the exclusive concession to operate taxi-
cab service from Dulles Airport in Loudon
County, Virginia, to the surrounding metropolitan
Washington, D.C., area, by the Federal Aviation
Administration (herein called FAA). In return, the
Company pays the FAA a fee calculated upon the
total number of passengers using the airport. The
Company's contract with the FAA requires, among
other things, that it provide at least 60 air-condi-
tioned and heated taxicabs, no more than 24
months old, which are identically marked and
equipped with meters set to rates established by the
Washington Metropolitan Area Transit Commis-
sion. Further, the contract requires that all passen-
gers be serviced on a first-come, first-serve basis,
no matter what their destination.
The Company neither owns nor leases taxicabs.
Rather, it satisfies the requirements of its contract
with the FAA by obtaining the services of drivers
who provide the vehicles themselves. The Air
Transit-driver relationship is based on individual
oral agreements of indefinite duration. Some 60-70
drivers own their own cabs, and another 30-35
sublease vehicles from one of the owner-drivers.
Air Transit charges an owner-driver $72 per week
for the right to pick up passengers at the Dulles
taxistand, and an additional $36 if the owner-driver
also subleases to another driver during the week.
This is the only income which Air Transit receives
from its Dulles taxi operation. Accordingly, the
drivers retain all the fares which they collect. They
are not compelled to keep "trip sheets," to make
reports of any kind to the Company, or to account
in any way for the revenues which they receive.
Air Transit demands that a driver have a vehicle,
properly marked and identified, and covered by
adequate insurance. Otherwise, the driver has total
freedom to select, purchase, finance, and equip his
cab as he sees fit. Buying a taxi is a substantial in-
vestment, as the general cost range is from $5,000
to $9,000. The driver determines how much he
wants to pay, considering the brand of car he de-
sires (Ford, Chevrolet, Oldsmobile, Chrysler), the
style (sedan, luxury sedan, station wagon), and the
equipment.5 2 Some drivers finance their vehicles
with the assistance of the Company, but many
others do not. The drivers are entirely responsible
for paying their own taxes, for buying insurance,
for repairing and maintaining their vehicles, and for
obtaining gasoline and other supplies. This adds up
to a major annual investment for the driver, above
and beyond the purchase price of the automobile,
as the following table of the items and their costs
illustrates:
Registration Fees $50.00
Gasoline 4,000.00
Maintenance 2,300.00
Insurance 400.00
Minimum Stand Fee ($72 per 3,744.00
week-multiplied by 52 weeks) $10,494.00
The drivers set their own hours. They are free to
work as much or as little as they please, since they
pay the same $72 per week no matter how much
they drive. One union witness at the hearing stated
that the amount he works "depends on my pocket
book." Contrary to the statement of the majority,
the Company has not indicated that it will require
drivers to alter their shifts if necessary to cover all
flights. Rather, in a memorandum to drivers dated
July 5, 1974, Air Transit stated, "We may ask for
some volunteers to alter shifts if deemed neces-
sary." in fact, when there has been a shortage of
cabs at Dulles in the past, the Company has hailed
cabs from other concerns to take up the slack.
There is a wide area for entrepreneurial initia-
tive. Although fares are controlled generally by the
Washington Metropolitan Area Transit Commis-
sion, drivers frequently can and do give customers
"flat rate fares." They also sometimes grant fare re-
ductions to favored passengers. In addition, owner-
drivers have the option of subleting or not sublet-
ing their vehicles.5 3 Some drivers have sold their
vehicles, along with their Dulles operating rights,
to others for as much as $4,000 above the tax as-
sessed value of the taxicabs.
The Company does not require the drivers to
submit personal information to it, nor does it main-
tain personnel files on drivers. It does not conduct
physical examinations or check drivers' police re-
cords. The drivers are not required to carry photo-
graphs or identification cards inside the taxicabs.
Nor does Air Transit have a dress or grooming
s2 The drivers decide what types of tires to use, as well as such items
as upholstery, music systems, safety equipment (e.g., rear window defog-
gers), etc Some drivers purchase a sturdier suspension system for an ad-
ditional 700 About 20 of the 70 cabs at Dulles have to-way radios,
which mas cost as much as $1.4(X) This, however, is optional equipment,
and drivers are not even required to respond to dispatch calls from the
Company if they have such a radio.
53 The only restriction placed by the Employer on subleasing is that
the siuhlessee possess a valid chauffeur's license and proper insurance.
AIR TRANSIT, INC. I
1312 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
code. It does not make safety inspections of the
cabs. 54
There is a sharp distinction between Air Tran-
sit's relationship with its employees and with the
taxicab drivers. The drivers, unlike the employees,
are not subject to payroll deductions, do not work
scheduled hours, and do not have paid vacations
and holidays. Also, in contrast to the employees,
they do not receive sick leave, funeral leave, sever-
ance pay, workmen's compensation, unemployment
compensation, or company life and health insur-
ance.
It is true that the drivers are required to sign a
register when they report for work. They must
also accept economically less attractive "short
haul" passengers, because such service is required
under Air Transit's contract with the FAA. Fur-
ther, the Company keeps order at the taxistand,
and sees to it that drivers follow the rules govern-
ing operation of the stand, such as the requirement
that each cab work its way through the "feed line"
from the rear to the front to obtain passengers.
Most of these operational rules were decided on in
consultation with prospective drivers when Air
Transit received its concession in 1974. Indeed, the
drivers voted by a show of hands at meetings on
the policies to be placed in effect. In addition, to
protect its own contract with the FAA, the Com-
pany investigates passenger complaints concerning
such matters as fare overcharges, driver rudeness,
and reckless driving. Occasionally, Air Transit has
issued verbal warnings to drivers and, very rarely,
has canceled its agreement with a driver for infrac-
tions of operating regulations or other misconduct.
II. CONCLUSIONS
The Act excludes from the definition of employ-
ee "any individual having the status of an indepen-
dent contractor." Congress enacted this exclusion
in 1947 for the purpose of overturning the Supreme
Court's decision in N.L.R.B. v. Hearst Publications,
322 U.S. 111 (1944), which upheld the Board's
early reliance on economic and policy consider-
ations in distinguishing between employees and in-
dependent contractors, rather than on common-law
principles of agency. In N.L.R.B. v. United Insur-
ance Company, 390 U.S. 254 (1968), the Court ac-
knowledged that normal agency principles must
govern determination of independent contractor or
employee status. The most important of these pre-
cepts is the "right to control" test, which the
'' In response to the question of whether Air Transit performs safety
checks on vehicles, the Employer's president replied, "No." Denial of
access to the taxistand of vehicles with obviously worn tires or improper
lights does not constitute a safety inspection.
Board described in News Syndicate Co. Inc., 164
NLRB 422, 423-424 (1967):55
Where the one for whom the services are per-
formed retains the right to control the manner
and means by which the result is to be accom-
plished, the relationship is one of employment;
while, on the other hand, where control is re-
served only as to the result sought, the rela-
tionship is that of an independent contractor.
The resolution of this question depends on the
facts of each case, and no one factor is deter-
minative.
The picture which emerges from the facts of this
case is clear and distinct in showing that Air Tran-
sit is concerned only with the end of fulfilling its
FAA contract at Dulles by providing sufficient
taxicabs to service the airport. The drivers them-
selves possess virtually unfettered discretion in de-
ciding on the manner and means by which they
conduct their businesses.
The independent, entrepreneurial character of
taxicab driving at Dulles is most clearly reflected
in the financial relationship between the drivers
and Air Transit. In essence, the drivers rent the
right to pick up passengers at Dulles for a flat fee
of $72 per week, and pay a further fee of $36
should they sublease the vehicle during the week.
They do not receive a salary or an hourly wage
rate from the Company, nor do they work for a
percentage or commission based on the total
amount of fares which they collect. Instead, the
drivers' income is derived from profit-the differ-
ence between their entire revenue from fares and
the expenses which they incur in operating a cab.
As previously noted, these expenses are substantial,
involving not only the large investment in the vehi-
cle itself, but also an average yearly cost of $10,494
representing registration fees, gasoline, vehicle
maintenance and insurance, and the stand fee. 56
Furthermore, an owner-operator decides, based on
his own economic interest, whether or not to
sublet his taxicab, and, indeed, whether to sell the
vehicle with his Dulles operating rights. The eco-
Sb Among other relevant agency factors are the skills required in the
occupation; whether the one employed is engaged in a distinct occupa-
tion or business, whether the employer or the one employed supplies the
instrumentalities, tools, and place of work for the job; the length of time
for which the individual is employed; the method of payment (by time or
by job); whether the work to be performed is part of the regular business
of the employer; whether or not the parties believe they are creating an
employer-employee relationship; and whether the employer is or is not in
business. See Restatement of Agency 2d, §220 at 485-486 (1958).
56 That the drivers supply the instrumentalities needed for their work
is an important factor favoring the conclusion that they are independent
contractors. See fn. 55, supra. This element was not present in Yellow Cab
Company, 229 NLRB 1329 (1977), enforcement denied sub nom. Local
777, Democratic Union Organizing Committee, Seafarers International
Union of North America, AFL-CIO, supra, where the Board found taxi
drivers to be employees relying heavily on their leasing of vehicles from
the Company.
AIR TRANSIT, INC. 1313
nomic self-reliance of the drivers is underlined by
their inability to receive any of the usual fringe
benefits associated with employment such as paid
vacations and holidays, sick leave, funeral leave,
severance pay, and life and health insurance. Nor
do they receive for workmen's compensation or
unemployment compensation. Finally, the drivers
alone determine what hours and how many hours
they will work.
The absence of control by Air Transit over the
taxicab drivers is further exemplified by the Com-
pany's failure to maintain personnel files on drivers,
to conduct physical examinations of drivers or
check their police records, to enforce a dress or
grooming code, to require the drivers to maintain
"trip sheets" or other records, or to inspect the
cabs for safety. Although Air Transit enforces gen-
eral operating regulations concerning use of the
taxistand and prohibits driver conduct which might
jeopardize its agreement with the FAA, this repre-
sents only the most nominal restriction on the driv-
ers.
My colleagues' reliance on United Insurance
Company, supra, to support their conclusion that
the drivers are employees does not withstand close
examination. In United, the Court found that "debit
agents" were employees. The District of Columbia
Circuit summed up the key facts of United Insur-
ance Co. in denying rehearing in Yellow Cab:57
Basically debit agents are collectors of insur-
ance premiums who go door to door in a pre-
scribed area on a regular basis under supervi-
sion by the company. They participate in
fringe benefits and are paid a percentage of the
premiums collected. Collected premiums are
turned in weekly.
In addition, the Court noted in United Insurance
Co. that agents must follow detailed written
instructions on how to perform many of their
duties, that they must file weekly reports, and
attend staff meetings concerning company sales
techniques and directives. Further, the district
manager reports weekly to the home office, stating
which agents have below-average records, the
amounts of their debits, collection percentages, ar-
rears, and production. Agents who do not perform
up to standard may be asked to "resign" or can be
fired "at any time."
The majority proceeds by emphasizing several
factual similarities of secondary significance be-
tween this case and United Insurance Co., and by
downplaying or disregarding the vital distinctions
separating the two situations. Thus, they state the
debit agents performed functions essential to the
57 603 F2d at 907.
company's operations, and that the cab drivers here
do likewise. The court of appeals answered such an
argument directly in the petition for rehearing in
Yellow Cab: "Any company can attempt to conduct
certain phases of its operations through indepen-
dent contractors and the fact that the operation is
'essential' does not stamp as employees those who
would otherwise be independent contractors." 58
Next, they contend that the insurance agents were
not, and the drivers are not, required to have prior
experience or training. This overlooks the obvious
fact that taxi driving is not a skilled occupation and
no training is necessary due to the nature of the
work, whereas United Insurance did have to under-
take the training of newly hired debit agents. Fur-
ther, my colleagues say the agents in United Insur-
ance Co. did business in the name of the company,
with assistance from its managerial personnel, and
sold only its insurance, and that here drivers do
business in the name of Air Transit, derive their
fares from the Dulles taxistand, and receive assis-
tance from company representatives at the stand.
However, the FAA contract requires that the cabs
be identically marked. When the Court noted that
the agents did business in United's name and sold
only its product, a reading of the opinion makes
evident that it was referring to the agents working
on behalf of the company to collect debts owed it
and to sell insurance primarily for the benefit of
United Insurance Co., in exchange for a commis-
sion. In this case, the drivers work exclusively for
themselves and have no financial connection with
Air Transit except for the weekly rental of the
right to use the Dulles taxistand. Nor does any seri-
ous comparison exist between the detailed supervi-
sion of the debit agents, including training, sales
meetings, and reports on their performance by
company personnel, in United Insurance Co. and
Air Transit's supervision of traffic at the Dulles
stand.
Also, the majority argues that the apparent per-
manent working relationship between the drivers
and Air Transit is similar to that between the
United agents and the company. Interestingly, the
Board made exactly the opposite argument in
Yellow Cab, supra, contending there that the short-
term nature of the taxi leases evidenced the em-
ployee status of the drivers. My colleagues shrug
off United's requirement that the agents closely ac-
count for funds collected, and its payment of the
agents based on a percentage of the total collec-
tions. They say that Air Transit exerts "financial
control" over the drivers by its setting of stand and
subleasing fees, and by controlling "the fare struc-
ture and the assignment of virtually all passengers."
" 6.03 F.2d at 898
AIR TRANSIT, INC.
1314 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
As carefully set forth by the court of appeals, the
relative economic power of the contracting parties
has nothing to do with the common-law test of
agency, and reliance on it is a reversion to the ap-
proach of N.L.R.B. v. Hearst Publications, supra,
which was repudiated by Congress. 5 9 The fares are
not set by the Company, but by the Washington
Metropolitan Area Transit Commission, and pas-
sengers are assigned on a nondiscriminatory basis
in accordance with FAA rules.
The tenuous nature of the majority position,
aptly characterized by the court of appeals in
Yellow Cab as "straining at gnats," is illustrated by
the argument that because the cab drivers spend 2
hours in the "feed line" waiting for passengers for
every hour on the road, they are under the "direct
control" of the Company for a substantial part of
the working day. It is even contended that this
makes for a stronger case than United Insurance
Co., because the debit agents were in the field,
going door to door, most of the time. In other
words, the majority concludes that Air Transit ex-
ercises pervasive control of the drivers' perfor-
mance of their jobs because they wait in line for 2
hours at a time at a location where company per-
sonnel simply facilitate the orderly flow of vehi-
cles. In contrast, although the insurance agents nec-
essarily worked outside much of the time by the
nature of their job, they were under close control
by the company through written instructions and
supervision by management personnel regarding
the way in which the job was done. That is not
true here.
I know of no record support for the majority's
statement that, "it is clear that the Employer re-
tains the right to unilaterally impose any term or
condition upon its drivers and that therefore the
Employer retains the right to require its drivers to
account for their fares." The relationship between
5" )3 F.2d at 904-905
Air Transit and each driver is governed by an indi-
vidual oral contract, and there is no evidence that
the Company retains any such rights as part of
those contracts. What is clear is that most regula-
tions controlling taxistand operations were arrived
at in consultation with the drivers, or are mandated
by the FAA. Finally, my colleagues illogically
assert that Air Transit's abandonment of any dress
or grooming requirement is evidence of control,
rather than relinquishment of control.
At the outset of this opinion, I noted that the
facts here are substantially weaker for finding em-
ployee status even than those in Yellow Cab, which
the court of appeals and myself found insufficient
to evidence an employment relationship. Even as-
suming the relevance of the 13 factors cited by the
Board in Yellow Cab, no less than 7 are not present
here: (1) the drivers own their cabs, rather than
leasing them from the Company; (2) the relation-
ship between each driver and the Company is
based on an indefinite oral contract, not on a short-
term lease; (3) Air Transit permits subleasing; (4)
the Company does not conduct reference checks of
drivers; (5) there is no 250-mile limitation during a
short-term lease period, because the drivers own
their own vehicles; (6) there are no dress restric-
tions; and (7) Air Transit does not provide work-
men's compensation. Although not absolutely clear,
it also appears that the Company does not unilater-
ally determine fault in case of accidents, since they
have no proprietary interest in the vehicles.
In brief, an objective appraisal of the record dis-
closes that Dulles taxi drivers have a major invest-
ment in their cabs, equipment, supplies, and in
stand fees, and earn their living by collecting as
much as possible in fares over these expenses. This
shows them to be classic small entrepreneurs, not
servants of another entity. I would therefore dis-
miss the petition.