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Steel City Transport Inc. v. National Labor Relations Board

decided: February 21, 1968.


Kalodner, Hastie and Seitz, Circuit Judges.

Author: Seitz


This is a petition for review and cross-petition for enforcement of an order of the National Labor Relations Board ("Board") directing petitioner corporation ("petitioner") to bargain collectively with General Teamsters, Chauffeurs and Helpers Local 249 ("Union"). The Board's order is based upon an examiner's finding, adopted by the Board, that petitioner violated Section 8(a)(1) and (5) of the National Labor Relations Act ("Act")*fn1 by refusing to bargain collectively with the Union.

Petitioner is a motor common carrier operating in the states of Pennsylvania and Ohio under a Certificate of Public Convenience and Necessity issued to it by the Interstate Commerce Commission ("I.C.C."). Under the bargaining unit found by the Board we are concerned only with " all single owner-operators and non-owner drivers of leased equipment, excluding multi -equipment owner-operators * * *."

Petitioner's primary contention is that the Board erred in determining that individuals in a bargaining unit consisting of truck owner-operators and non-owner drivers of leased equipment ("drivers") were its employees, and thus subject to the Act, and not excluded independent contractors. We turn first to the controlling law on this issue.

Whatever might have been the formulation of the governing legal principle before the 1947 amendment to the National Labor Relations Act (29 U.S.C. ยง 152(3)), it is now established, at least insofar as this Circuit is concerned, that the employee versus independent contractor issue under the Act is to be determined by the application of common law principles of agency. NLRB v. Keystone Floors, Inc., 306 F.2d 560 (3rd Cir. 1962). This renders the "right to control" test one of means for resolving such issue. NLRB v. Nu-Car Carriers, 189 F.2d 756 (3rd Cir. 1951); cert. denied 342 U.S. 919, 96 L. Ed. 687, 72 S. Ct. 367 (1952). We do not understand that petitioner quarrels with this statement of the controlling law. Rather, it argues that in applying such principles to the facts the Board over-emphasized the "right to control" test.

Considering the record as a whole we think the facts give substantial support to the Board's conclusion that the members of the bargaining unit are employees, and that it did not give undue weight to the right to control. Petitioner's relationship with its drivers is governed by identical lease provisions covering each piece of equipment leased to it. These leases are for an indefinite period until breached or, with 30 days notice, may be terminated by either party; and are exclusive, with a failure by the lessor to furnish equipment, or a use of equipment by the lessor for another carrier tantamount to a breach. Petitioner, pursuant to the terms of the lease, has exclusive possession, control, use and responsibility of the leased equipment. The lease also requires the equipment owners to provide their own drivers and the petitioner, as required by I.C.C. regulations, has all drivers, whether they drive their own equipment or are in the employment of others, complete a comprehensive employment application. The application notes that applicant, if hired, shall be subject to a 30 day probationary period, and that misrepresentation will constitute grounds for immediate discharge.

All drivers must pass a physical examination before they can haul for petitioner. Petitioner supplies the forms for the driver's physician to complete, and, in order to comply with I.C.C. regulations, the drivers must thereafter carry a doctor's certificate and pass subsequent physical examinations every 3 years. Petitioner's mechanic conducts an inspection of each driver's equipment at least every three months in order to comply with I.C.C. regulations. If any equipment is found to be defective, no new loads are assigned to the driver until the defect is corrected. Daily log sheets must be submitted by all drivers to the dispatcher at the end of every haul. If these sheets are not currently maintained, the dispatcher denies the drivers further loads and refuses to pay them for the past loads. All equipment leased to petitioner must bear petitioner's decal and I.C.C. and state certificate numbers. A "Markell Road Sticker" is placed on all equipment leased to petitioner. This sticker enables a safety inspection firm hired by petitioner to conduct on-the-road safety checks of petitioner's drivers and equipment.

Although not fixed in the lease, the drivers are paid a percentage of the gross receipts received by petitioner for each haul. This percentage is based on the type of equipment leased to petitioner. Although the drivers are told when engaged exactly what this percentage will be, it has been unilaterally cut by the petitioner. The rates charged customers are generally known by the driver before a haul, but these rates have also been cut after a haul without the knowledge of the driver until he seeks to collect his compensation for the haul. Drivers who meet a safety standard receive a cash bonus every six months. They also have received jackets with petitioner's name and other gifts at Christmas. Petitioner also gives cash advances and loans to its drivers to help pay their trip expenses.

In dispatching drivers, petitioner's dispatcher assigns loads on a first come, first served basis. If a driver is unable to haul on a specific day due to illness or mechanical failure he is required to notify the dispatcher. Although drivers can refuse hauls, at least one case was brought to the attention of the Board where a driver was told by the dispatcher regarding a haul that "it was either Columbus or nothing." Occasionally the dispatcher will specify the time for a pick -up or delivery of a load. The drivers generally choose their own routes. An exception to this is that all drivers must return through the Pittsburgh commercial zone following a pick-up or delivery at seven designated points outside the commercial zone. Upon completion of a run, the drivers are instructed to call petitioner collect for further assignments. Any use by the driver of equipment leased to petitioner for a load from another hauler must be approved in advance by petitioner. Petitioner will receive the check from the other hauler for the trip and endorse it over to the driver. A bunkroom facility is maintained by petitioner for the use of the drivers. Petitioner provides sheets and a janitress to maintain the facility.

We think the foregoing facts indicate the material nature of petitioner's continuing control over both the amount of compensation and the working conditions of the unit members, to say nothing of the equipment involved. Clearly as to non-owner drivers the factors strongly support the Board's conclusion. Considering the purpose of the Act in conjunction with their relationship to petitioner, we think the same is true of the owner-drivers. Certainly the fact that the leases recited that the parties intended to create an independent contractor relationship is not decisive. See NLRB v. Keystone Floors, Inc., above. The facts here point more strongly to an employer-employee relationship than those in NLRB v. Nu-Car Carriers, where a similar Board holding was enforced.

Petitioner places great reliance on United States v. Silk, 331 U.S. 704, 91 L. Ed. 1757, 67 S. Ct. 1463 (1947). However, the facts there pointed much more strongly toward an independent contractor status. Indeed, it was distinguished even from the facts in NLRB v. Nu-Car Carriers, above, which involved, in our opinion, a "closer" factual case than that now before the court.

Petitioner contends that many of the factors relied upon as showing its right of control were based on requirements of the Interstate Commerce Commission's regulations. Certainly this is so as to several such factors, but we think they were a relevant part of the totality of circumstances from which the "employee" determination was properly made. They were by no means "artificial" factors. Rather, they had direct and important consequences on the safety and efficiency of the petitioner's operation.

Petitioner contends that National Van Lines, Inc. v. NLRB, 273 F.2d 402 (7th Cir. 1960) is almost exactly in point and arrives at a result contrary to that reached by the Board here. Certain factual distinctions between this case and National Van Lines may be noted. There the contract was to provide services. There was no lease of equipment. For their services the contract drivers were compensated, as set forth in the agreement, at a specified percentage of the tariff revenue received by National Van Lines. Here we have a lease of equipment and the compensation is not fixed in the lease. We think these distinctions are material, particularly in view of the actual control here asserted by petitioner. In any event, ...

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