Oklahoma Trailer Convoy, Inc.

National Labor Relations Board - Board Decisions

Jun 27, 1952

99 N.L.R.B. 1019 (N.L.R.B. 1952)

OKLAHOMA TRAILER CONVOY, INC. '1019
OKLAHOMA TRAILER CONVOY, INC., PETITIONER and TULSA GENERAL
DRIVERS, WAREHOUSEMEN AND HELX'ERS, LOCAL UNION 523, AFL.
Case No. 16 RM--45. June 27, 1952
Decision and Order
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, a hearing was held before Charles Y. Latimer, hearing
officer. The hearing officer's rulings made at the hearing are free from
prejudicial error and are hereby affirmed.
Upon the entire record in this case, the Board finds:
1. The. Employer is engaged in commerce within the meaning of
the Act.
2. The labor organization involved claims to represent certain em-
ployees of the Employer.
3. No question affecting commerce exists concerning the representa-
tion of employees of the Employer within the meaning of Section 9
(c) (1) and Section 2 (6) and (7) of the Act, for the following
reasons:
The Union seeks to represent the assistant dispatcher and the drivers
of trucks either owned or leased by the Company, Oklahoma Trailer
Convoy, Inc. The Company, although agreeing that the unit should
include the assistant dispatcher and the drivers of its own trucks, con-
tends that drivers of leased trucks are not in its employ, but are inde-
pendent contractors, employees of independent contractors, or super-
visors, who should be excluded from any unit found appropriate.
The Company, operating under an Interstate Commerce Commis-
sion certificate of convenience and necessity, is engaged in the delivery
of house trailers from Tulsa, Oklahoma, to various parts of the coun-
try. In these operations it utilizes about 94 trucks, of which it owns
4 and leases the rest. The trucks it owns are driven by individuals
who are concededly employees of the Company. With respect to the
leased trucks, the relations between the Company and the owners of
those trucks are governed by a standard lease. Such leases have been
used by the Company virtually since the inception of its operations in
1947.
The lease provides substantially as follows : The owner will provide
such vehicles as the Company requires, with competent drivers, to per-
form such carriage as is required; the owner will be responsible for
setting and paying the wages of any drivers supplied, who are under-
' On May 19 , 1952, the Board permitted International Brotherhood of Teamsters , Chauf-
feurs, Warehousemen and Helpers of America , AFL, herein called Teamsters , with which
the Union is affiliated , to intervene in this proceeding and to file a brief. The Employer
was permitted to file a reply brief.
The Teamsters and the Union also filed requests for oral argument which were heretofore
denied by the Board.
99 NLRB No. 150.
1020 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
stood to remain employees of the owner and not of the Company; the
owner will be responsible for keeping the vehicles in good operating
condition as required by the rules and regulations of the Interstate
Commerce Commission, and will furnish all materials necessary for
that purpose; the owner will
comply with all pertinent rules and regulations whenever said
transportation may occur or be required, and shall further com-
ply with the instructions given by the Carrier [i. e., the Company]
with relation to the manner and method of caring for and han-
dling the traffic transported for the Carrier under this agreement.
It is understood that as between the operator [i. e., the owner]
and the Carrier, the Carrier shall have the entire suuervisiou
concerning direction and control over the transportation of traffic
under this agreement, such as the designation of points of origin
and destination, and issuance of general instructions to be ob-
served and carried out by operators for the proper handling of
the Carrier traffic in compliance with the rules and regulations of
the Interstate Commerce Commission;
the owner shall also indemnify the Company up to a certain amount
(left blank in the contract) for any damage to traffic under the owner's
control; the owner shall comply with all applicable employer's lia-
bility, workmen's compensation, and workmen's insurance provisions,
shall submit proof of such compliance to the Company when required
to do so, and shall indemnify the Company for any losses resulting
from failure to comply. Despite any agreement to the contrary, the
Company remains liable to the public for the performance of the obli-
gations of a motor carrier as prescribed by the Interstate Commerce
Commission. If workmen's compensation is required, the Company
may insure for the benefit of the owners, but this shall not be construed
to make the drivers or owners employees of the Company. Payment
is on a sliding scale based upon the mileage covered, as determined by
a standard guide, and size of the trailer hauled. The leases are all for
a 1-year period, but may be terminated by either party upon a 30-day
written notice.
The Company has such leases with- about 73 truck owners, 6 of whom
lease from 2 to 7 trucks to it.2 The trucks, which are required to bear
the Company's name and ICC certificate number, are not of any special
design. The owners supply most license plates,' and are required to.
post a bond of $100 per vehicle. Although the Company suggests to
owners that they carry insurance, they are not required to do so. How-
' The record indicates that when the Company instituted its lease system it sold about
20 of the 30 trucks it then owned to its employees There is no evidence that any such sales
have occurred since that time.
8 The Company, in addition to ICC plates, supplies certain unidentified State plates and
permits.
OKLAHOMA TRAILER CONVOY, INC. 1021
ever, the Company does carry a fleet policy which protects vehicles
while engaged in its business.
Approximately two-thirds of the leased trucks are driven by the
owners themselves; in the remaining instances, the owner generally
furnishes the driver. All prospective drivers must fill out an appli-
cation for employment, take a physical examination,' and be approved
by supervisory personnel of thV, Company. This is true for both
owner-drivers and those who are going to drive for owners who have
already, approved them. Any owner can discharge his drivers with-
out company approval, and, in certain isolated instances, the Com-
pany has exerted pressure to effect the termination of drivers of whom
it did not approve.
Drivers of leased trucks are assigned trailer deliveries in the order
of the drivers' availability! They need not stay on'company premises
while awaiting such assignment. Nor need they accept any assign-
ment offered. The penalty for refusal, not always. enforced, is drop-
ping to the bottom of the availability list, although in one instance a
driver who refused an assignment was asked to resign. In assigning
trailers for delivery, the Company does not specify times of departure
or arrival, nor does it give the driver any instructions other than his
destination and the general admonition to get there safely., It does,
however, attempt to make a safety inspection of every truck going out.'
Drivers are not given routings unless they request them, although they
will be told, when necessary, that State regulations may require them
to go through certain points. Owners of leased trucks engage in haul-
ing for the Company substantially to the exclusion of any other work.
However, they are not required to do so, and occasionally make side
trips for their own purposes in returning from deliveries. They are
also permitted to do hauling on their own account, although where the
Company has heard of "wildcatting," i. e., unauthorized interstate
trucking, it has reprimanded the driver involved.
All drivers, admitted company employees as well as those here in
issue, are paid on a mileage basis, generally after each trip. As to
leased truck owners, the rates paid were originally those fixed in the
leases. However, because the trailers currently manufactured are
larger than those made when the lease was drawn up, a higher rate,
unilaterally determined by the Company, is now being paid without
formal amendment of the lease. The base rate of drivers of company
trucks is 1 cent per mile less than that paid others, because no truck
* The Company supplies the form for this examination , but it can be given by any
physician of the applicant's choice.
6 Company employees and drivers of leased trucks are included in one list.
6 However , the Company maintains a road patrol which can take a driver off the road if
his driving is not satisfactory . It also contemplates the establishment of a class for
student drivers.
° One of the owners testified that he tried to do the same thing with respect to his trucks ;
this is in addition to the company inspection.
1022 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
maintenance is involved. In the case of owner-drivers, the above gross
payment is their compensation. In the case of drivers of leased trucks
who do not own trucks, the cost of gas and oil is deducted, and the re-
mainder is divided equally between the owner and the driver. The
latter method applies also between the Company and its admitted
employees, so that to this extent payment is similar for all nonowner
drivers. The Company grants advances against earnings to drivers
of its own trucks without charge. Owners and drivers of leased trucks
are charged $1 per-$25 advanced.
Payments with respect to drivers of leased trucks are made to the
owner unless an arrangement for direct payment to the driver has been
made. The Company does not deduct any social security, withhold-
ing taxes, etc., from the earnings of the owners and their drivers,8
nor, it appears, do most of the operators. However, Bland, who leases.
seven trucks to the Company, gets directly from the Company the pay,
due his drivers, and then settles with them, withholding any taxes, and
paying social security and workmen's compensation, for them.
As the Board has frequently held, the determination of whether an
individual is an independent contractor or an employee under the
amended Act requires the application of the common law "right of
control" test. Under this test, an employer-employee relationship
exists where the person for whom the services are performed reserves
the right to control not only the end to be achieved but also the means
to be used in reaching such end.° The resolution of this question
depends on the facts of each case and no one factor is determinative.10
On the entire record in this case, we are of the opinion that the
owners of leased trucks are independent contractors, rather than em-
ployees, and the nonowner drivers of leased trucks are employees of
independent contractors, not of the Company.
8 One owner of more than one truck testified that the Company paid social security and
withholding taxes on his drivers. However, the Oklahoma Employment Security Commis-
sion has held, in effect, that the drivers and owners here involved are not employees of the
Company, in a proceeding that arose as a protest by th, Company against assessment for
nonpayment of withholding taxes and social security. It would therefore appear unlikely
that the Company made such payments after having successfully contested that very issue.
9 Contrary to the implication of our dissenting colleague, the application of this test does
not in any manner disregard the congressional intent. Rather, as the Board has frequently
held, this test conforms to the mandate of Congress that the Board give to the terms
"employee" and "independent contractor" their conventional meanings, and that the
Board, in determining coverage under the Act, follow the usual tests of the law of agency.
See e. g., Steinberg & Company, 78 NLRB 211, set aside on grounds not here material at
182 F. 2d 850 (C. A. 5) ; J. Howard Smith, 95 NLRB 21; Spickelmier Company, 83 NLRB
452.
10 Southern Shellfish Co., Inc., 95 NLRB 957.
The Union contends that, under the Interstate Commerce Act, 49 U. S. C. $• 301 at seq.,
and the Company's certificate of convenience and necessity as a carrier, the relation of
employer and employee between the Company and the drivers of leased trucks is established
as a matter of law. We find this contention to be without merit. Greyvan Lines, Inc., V.
Harrison, 156 F. 2d 412 (C. A. 7), affirmed sub nomine U. S. v. Silk, 331 U. S. 704; U. S.
v. Mutual Trucking Co., 141 F. 2d 655 (C. A. 6).
OKLAHOMA TRAILER CONVOY, INC. 1023
We note particularly the bona fide and absolute ownership of the
trucks by the owners. Such ownership of the facilities to be used
gives rise to an inference of that control over the manner of perform-
ance which is associated with the status of an independent contractor.,,'
Also significant in demonstrating the entrepreneurial nature of the
owners is the fact that the owners determine whether to drive the
trucks themselves or to employ others to do so. Indeed, some owners
lease up to seven trucks to the Company. Moreover, the owners can
control in part their profit or loss not only by determining whether
or not to drive themselves, but also by such matters as their diligence
and efficiency in the repair and maintenance of trucks, which are solely
their responsibility and which can be performed by persons of their
own choosing.
While the Company has reserved and exercised certain control over
the work of the owners and their drivers, such reservation and exercise
of control have been directed essentially to the end to be accomplished,
namely the delivery of trailers in conformity with the rules and regu-
lations of the Interstate Commerce Commission, and are not incon-
sistent with the independent contractual relationship 12 That the
owners retain substantial independence in their operations is clearly
revealed by their virtual freedom in deciding when or whether they
will take an assignment, in selecting routes, and in fixing the time
of delivery and time of return, as well as their determination as to
whether they or others will drive and their selection of maintenance
facilities, discussed above. Furthermore, they are. free to haul for
others and their trucks are not specially designed for the Company's
operations.
The expressed intent of the parties as to the nature of the relation-
ship has also been considered of some significance by the Board and
the courts in determining the existence of an independent contractual
status 13 Here the parties, in their agreement, specifically indicated
that the owners and drivers of leased trucks are not employees of the
Company; the owners are required to post bonds and supply most of
their own license plates ; and the Company does not withhold the taxes,
not pay the social security taxes, of the drivers of leased trucks.
The total circumstances surrounding the relationship of the drivers
of leased trucks to the Company, set forth above, are closely analogous
to those considered by the Supreme Court in the Greyvan case.14
"See Nelson-Ricks Creamery Company, 89 NLRB 240; American Factors Company, 98
NLRB 447. Cf. N. L. R. B. V. Nu-Car Carriers, Inc., 189 F. 2d 856`(C. A. 3), cert. den. 342
U. S. 919 , where the Court, although finding certain drivers to be "employees" on facts
manifestly different from those in the present case, recognized that ownership of equipment
raises "the inference of right of control. .
12 See Creyvan Lines, Inc. v. Harrison, footnote 10, supra.
18 Nelson-Ricks Creamery Company, footnote 11, supra ; U. S. v. Mutual Trucking Co.,
footnote 10, supra.-
14- reyvan Lines, Inc. v. Harrison, footnote 10, supra.
1024 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
There, as here, the issue was whether truckmen, who drove trucks
for a company which was a common carrier by motor truck operating
under an ICC certificate, were employees or independent contractors.
The truckmen in that case, who were covered by a union contract,
hauled exclusively for the company under contracts terminable at will
by either party, and were not permitted to do any hauling on their
own account. They furnished their own trucks, which bore the Grey-
van name, and all equipment and labor needed to pick up, handle, and
deliver shipments, and were paid on a sliding percentage basis. They
also furnished all insurance the company required, although the com-
pany carried cargo insurance; paid all losses or damage to shipments;
indemnified the company for any losses caused by themselves or their
servants; made collections; and had to post bonds. The company
prescribed that the truckmen drive their trucks at all times or be
present when a competent relief driver was driving "except in emer-
gencies, when a substitute might be employed with the approval of the
company." With respect to the manner in which the work was to be
done, the company directed the truckmen when and where they were to
load freight, and had a staff of dispatchers who issued orders, and to
whom the truckmen were required to report their position at intervals.
In addition, truckmen were required to take a course in the company's
manner of operating, and to "follow all rules, regulations, and instruc-
tions of the company." The company had some trucks driven by
truckmen who were admittedly company employees and operations
under the two systems were carried out in the same manner.
The Supreme Court, applying a broader test of the meaning of
"employee" based on the purposes of the Social Security Act, found
that the truckmen in Greyvan were independent contractors. In our
opinion, that decision is clearly controlling in the present case.16.
Indeed, the present case more strongly indicates an independent con-
tractual relationship because, for example, the drivers of leased trucks
here, unlike those in Greyvan, are not required to haul exclusively for
the Company, or to report their position to the Company; no course
is presently conducted in the method of the Company's operations;
there are some differences in the working conditions of admitted em-
ployees ; and the owners are not limited in selecting substitutes to
times of emergency or relief's
11 See also the Mutual Trucking case, footnote 10, supra.
16 The Teamsters , in attempting to distinguish the GYreyvan case, alleges that the cost of
equipment supplied by the truckmen there was substantially larger than that furnished by
the owners here. Even assuming the validity of such allegation , which is not supported
by the record and fails to account for owners supplying more than one truck , it is clearly
not controlling.
The dissent also seeks to distinguish the Greyvan case on grounds such as the present
Company's restriction of the transportation of passengers by drivers , and the absence in
GYreyvan of a road patrol and of company control over the selection of helpers and drivers.
However, the Company 's requirement as to passengers merely conforms with ICC regain.
OKLAHOMA TRAILER CONVOY, INC. 1025
We therefore find that the owners of these leased trucks are inde-
pendent contractors and that the nonowner drivers are their
employees.
Having found that the owners and drivers of leased trucks are not
employees of the Company, we would, ordinarily, exclude them froln
any unit found appropriate. If we did this here, however, the unit
which would remain would be so much smaller and so substantially
di fterent from that sought by the Union, that, on this record, we believe
it would serve no useful purpose to direct an election therein 17 We
shall therefore dismiss the petition, without prejudice to the right
of the Union to seek an election in the small unit if it so desires.
Order
Upon the basis of the entire record in this case, the National Labor
Relations Board hereby orders that the petition filed herein be, and
it hereby is, dismissed without prejudice.
MEMBER STYLES, dissenting :
Contrary to the majority, I would find the unit sought by the Union
too-be appropriate and would direct an immediate election therein.
The Union seeks a unit consisting of the following categories :
(1) The drivers of trucks owned by the Employer, and the assistant
dispatcher. (It is not disputed that these individuals are employees
of the Employer.)
(2) The operators of trucks leased to the Employer, who may be
classified as follows :
(a) Those who own and drive one such truck. (This applies to
about two-thirds of the leased trucks.)
'(b) Those who own more than one truck, drive one, and procure
drivers for the others.
(c) Those who drive a truck without owning it.
As to all these classes of operators of leased trucks, the Employer
contends, and the majority finds, that they should be excluded from
the unit because they are independent contractors, or employees of
independent contractors. I do not agree. In my view of the case,
tions. The maintenance of a road patrol is not determinative . ( See, for example, Mutual
Trucking, footnote 10, supra ). Helpers are unnecessary here, the transportation of trailers
being essentially a one-man job . And, as to the selection of drivers , company approval of
a substitute driver was also required in areyvan, and such approval appears necessary to
insure compliance with ICC regulations as to driver qualifications . More important, as
already noted , the owners here are virtually free to determine whether they or others will
drive, and as the court of appeals stated in the Ureyvan case , in connection with the choice
of helpers : "We think it cannot be said that a truckman to whom is left the determination
of whether to do the work himself or to engage others to do it is a mere employee." Grey-
van Lines, Inc. v. Harrison , 156 F. 2d 412, 416.
11 Cf. American Broadcasting Company, Inc , 93 NLRB 1410; Wm. Wolf Bakery:. Inc..,
97, NLRB 122.
1026 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
all the operators of leased trucks, including the owner-drivers, are
employees of the Employer, and, together with its admitted employees,
constitute a unit appropriate for the purposes of collective bargaining.
In reaching this conclusion, I regard the following factors as more
persuasive than those relied upon by my colleagues:
(1) As recited in the-majority opinion, the "lease-contract" between
the Employer and the truck owners requires the owners "to comply
with the Employer's instructions with relation to the manner and
method of caring for and handling the traffic transported" for the
Employer. [Emphasis added.]
(2) The drivers who are not truck owners, while hired in the first
instance by the owners, must be approved by the Employer.
(3) While the drivers who are not owners may be discharged by the
owners, the Employer has, in fact, secured the discharge of drivers not
acceptable to it. Moreover, the lease agreements, themselves, are
terminable upon 30 days' notice by either party.
(4) Apart from occasional side trips and hauling jobs done for
others, the owners haul exclusively for the Employer.
(5) The Employer maintains a road patrol, which can take a driver
off the road if his driving is not satisfactory. (See footnote 6 of the
majority opinion.)
(6) No passengers are allowed on the trucks without the written
permission of the Employer.
It should not be forgotten that we are dealing here with the con-
struction of a provision excluding a particular category of individ-
uals-"independent contractors"-from the protection of the Act. It
is a well-settled rule that exceptions to the general provisions of a
statute are to be strictly construed, particularly where, as here, the
statute has a remedial purpose.
As the majority acknowledges, the critical test of the existence of an
employer-employee relation is the reservation of the right to control
not only the end result but also the means by which it is to be achieved.'
It seems to me to be beyond dispute that such a right to control is re-
served in the lease agreement, which expressly requires the owners
to comply with the Employer's instructions with respect "to the man-
ner and method of caring for and handling traffic."
If, then, the right to control exists here, it is immaterial whether
or not it is actually exercised Y9 However, as already stated, the
Employer does, in fact, exercise substantial control over the method
of operation of the owners by supervising their selection of drivers,
by requiring the termination of drivers not acceptable to it, by super-
is N. L . R. B. v. Nu -Car Carriers, 189 F. 2d 756 ( C. A. 3), enfg., 88 NLRB 75, cert. den.,
342 U. S 919 . In that case , the court affirmed the finding of the Board , on the basis of
facts analogous to those presented here, that owner-drivers were employees under the Act.
OKLAHOMA TRAILER CONVOY, INC. 1027
vising, through its road patrol, the conduct of drivers, including
owner-drivers, while on the road, and by regulating the transporta-
tion of passengers by the drivers. None of these elements of actual
control over the conduct of drivers was present in the cases cited by
the majority in support of its conclusion that the drivers of leased
trucks are not employees of the Employer.20 For that reason, as well
as the fact that those cases dealt with a different statute '21 1 do not
deem them controlling.
My colleagues, while not disputing that the right to control the
drivers is reserved to the Employer by the contract, rely principally
on the fact that (1) the trucks are not owned by the Employer but are
supplied by the drivers and others pursuant to lease agreements; (2)
the Employer does not in fact exercise control over all the details
of operation of the leased trucks; and (3) the earnings of the owner-
drivers depend on their diligence and efficiency. However, it is
difficult to see the relevance of these factors, if, as the Board and the
courts have frequently stated, the right to control the method of
operation is alone sufficient to establish an employer-employee rela-
tion.
Moreover, as to the matter of ownership of the trucks, it appears
that many State and Federal courts, applying common law tests, have
held that owner-drivers are employees of the persons for whom they
regularly render services under contract, so as to make such persons
liable in tort for the negligence of such drivers.22
The fact that the net compensation of the owner-drivers depends
on their diligence and efficiency places them in no different position
from employees who are paid on a piecework or incentive basis. My
colleagues would hardly contend that an hourly paid employee who is
assigned an incentive rate thereby ceases to be an employee and be-
comes an independent contractor because his earnings thereafter will
depend on his efficiency and diligence.
It is mere semantics to say, as the majority does, that the reserva-
tion and exercise of control by the Employer in this case is "directed
essentially to the end to be accomplished, namely, the delivery of
19 N. L. R. B. v. Nat-Car Carriers , supra.
10 Thus, neither in the Greyvan nor in the Mutual Trucking case, cited in the majority
opinion , was there any evidence that the carrier exercised any control over the hiring of
helpers or drivers by the "owner-operators ." The absence of such control was one of the
principal factors, relied upon by the court in the Nu - Car Carriers case, supra, in distin-
guishing those cases.
n Both Greyvan and Mutual arose under the Social Security Act and the related taxing
statute. In Creyvan the court stated that its finding that owner-operators were not
employees turned upon its view as to the purpose of the statues involved.
xt See cases collected in footnote 15 in the opinion •of:the Supreme Court in the Greyvan
case. Many cases to the same effect are cited in the Union 's brief filed in the case at bar.
1028 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
trailers in conformity with the rules acid regulations of the Inter-
state Commerce Commission. . . ." While this may be the ultimate
purpose of the Employer, the fact remains (and my colleagues do
not dispute this) that the Employer, in addition, retains the right
to control the means to be used in achieving this purpose, and-if it
be relevant-exercises that right to a significant degree. It is mean-
ingless to say that control over the means is directed to the-achieve-
ment of a particular end. This is true in every case, and cannot
negate the existence of an employer-employee relation.
Finally, no mention is made in the majority opinion of the language
in the Report of the House Committee on Education and Labor, de-
fining the term "independent contractor" as used in the Bill which be-
came the Taft-Hartley Act." In distinguishing "independent con-
tractors" from "employees," the Report stated :
"Independent contractors" undertake to do a job for a price,
decide how the work will be done, usually hire others to do the
work, and depend for their income not upon wages, but upon the
difference between what they pay for goods, materials, and labor,
and what they receive for the end result, that is upon profits.
The foregoing statement is the clearest indication in the legislative
history of the amended Act as to the intent of Congress in excluding
"independent contractors" from the definition of "employee" in Sec-
tion 2 (3) of the Act.24
As already stated, the owner-drivers do not have unfettered dis-
cretion to "decide how the work will be done." That discretion is re-
served to the Employer in the contract, and in actual practice the Em-
ployer exercises an important degree of control over how the job will
be done. Most of the owner-drivers do not "hire others to do the
work," but own only one truck, which they drive themselves. More-
over, the hiring of nonowner drivers of leased trucks is subject to the
approval of the Employer. The drivers of leased trucks do not pur-
chase any goods or materials for resale. Accordingly, there is no war-
rant in the legislative history of the amended Act for finding all the
owner-drivers to be independent contractors, or that the nonowner-
drivers of leased trucks are employees of independent contractors.
For all the foregoing reasons, I would find that the owner-drivers
and nonowner-drivers of leased trucks are employees, not independent
contractors. Accordingly, I would direct an election in the unit sought
by the Union.
23 Rouse Rep. No. 245, 80th Cong., 1st Sess ., at p. 18.
24 See S'pickelmier Company, 83 NLRB 452.