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National Labor Relations Board v. A. Duie Pyle Inc.

decided: September 14, 1979.



Before Adams, Rosenn and Higginbotham, Circuit Judges.

Author: Rosenn


In this case the National Labor Relations Board ("Board" or "NLRB") seeks enforcement of its order directing a common carrier to bargain with truck owner-operators who lease their vehicles to the company. The critical issue is whether these truckers are "employees," or are "independent contractors" who are expressly exempted from the coverage of the National Labor Relations Act, as amended, 29 U.S.C. § 152(3) (1976). Because the Board's ruling that the truckers are employees does not have a reasonable basis in law and is not fairly supported by substantial evidence, we decline to enforce the Board's bargaining order.



A. Duie Pyle, Inc. ("Pyle" or the "company"), is an interstate common carrier. This case concerns operations at its terminal located in Morrisville, Pennsylvania. To make deliveries, Pyle engages a group of "owner-operators," who own their trucks and operate them under lease to the company. These owner-operators, and other drivers selected by them to run their vehicles, have designated as their bargaining representative the Fraternal Association of Special Haulers (the "Union").*fn1 When the Union demanded that Pyle bargain with it, the company refused, contending that the owner-operators are not the company's employees but are instead independent contractors and that the other drivers are employees of the owner-operators who hire them.

If the owner-operators are independent contractors, they do not fall within the protection of the labor laws, and the company has no duty to bargain with their designated representative: "The term "employee' . . . shall not include . . . any individual having the status of an independent contractor . . . ." 29 U.S.C. § 152(3) (1976). The NLRB has concluded, however, that the owner-operators and other drivers are employees of Pyle and that its refusal to bargain violated sections 8(a)(5) and 8(a)(1) of the National Labor Relations Act. The Board has issued an order directing Pyle to bargain with the Union and has brought this application to enforce its order.

Whether the drivers are employees or independent contractors is a question of agency law. NLRB v. United Insurance Co., 390 U.S. 254, 256, 88 S. Ct. 988, 19 L. Ed. 2d 1083 (1968). The law of agency looks to " "the degree to which the principal may intervene to control the details of the agent's performance . . . .' " NLRB v. Keystone Floors, Inc., 306 F.2d 560, 562 (3d Cir. 1962), Quoting Radio City Music Hall Corp. v. United States, 135 F.2d 715, 717 (2d Cir. 1943) (L. Hand, J.). We have interpreted the common law test of this "right to control" to require an examination of "the type of services rendered, the possibility of realizing additional profits through the exercise of entrepreneurial skill and the ownership and maintenance" of equipment. This inquiry canvasses both "the language of the contract" and "the practice of the parties, the skill required . . ., the mode of compensation for additional duties, and the methods of applying corrective and disciplinary measures." News-Journal Co. v. NLRB, 447 F.2d 65, 68 (3d Cir. 1971), Cert. denied, 404 U.S. 1016, 92 S. Ct. 676, 30 L. Ed. 2d 664 (1972). We are admonished that "all of the incidents of the relationship must be assessed and weighed with no one factor being decisive." NLRB v. United Insurance Co., supra, 390 U.S. at 258, 88 S. Ct. at 991. We, therefore, turn to the facts of this case, giving particular attention to the degree of Pyle's control over the drivers and the other factors to be considered. The facts emerge from three sources: the agreements between Pyle and the owner-operators, the federal laws and regulations governing interstate carriage of goods, and the actual practice of the company and the owner-operators.


The owner-operators, rather than Pyle, own the vehicles and all other equipment used for shipment of goods. These approximately forty owner-operators lease the equipment to Pyle under written agreements that are for a minimum of thirty days, are terminable by either party for any reason upon ten days notice, and may be cancelled immediately for breach of the contractual terms. Some of the owner-operators do business as corporations or partnerships.

This lease defines much of the relationship between the company and the owner-operators. As the Board's Regional Director concluded in a decision affirmed by the Board, under the lease the "owner directs the operation of its vehicles in all respects . . . ." The owner-operator decides whether to accept any particular load from Pyle and is free to reject a load for any reason. If the owner-operator accepts a load, he chooses the days and times of operation and selects the routes to be traveled.*fn2 The owner-operator may engage in "trip-leases," which are contracts to haul for companies other than Pyle. (The owner-operators often enter into trip-leases when they are returning after having made deliveries for Pyle.) In all of their work for Pyle, the owner-operators must repair their own vehicles and, as the Regional Director observed, must "pay for all costs of operation such as maintenance, fuels, lubricants, tires, licenses, registration fees, toll charges, decals, and fines and penalties arising out of the use of the equipment . . . ." (The State of New York, however, requires the company to pay taxes for the owner-operators' use of the roads.) The owner-operators bear the risk of loss from damage to the vehicles, and any insurance against such loss would be at the owner-operators' expense. The compensation to the owner-operators for their work is set at 75% Of the total revenue for the shipments. The lease also records the parties' intention to create the relationship between a "carrier" and an "independent contractor."

To comply with regulations of the Interstate Commerce Commission ("ICC"), the company is said in the lease to assume "exclusive possession, control and use" of the Vehicle, but only to the extent demanded by obedience to ICC regulations. The lease discharges Pyle of responsibility for the vehicles when operated in the service of the owner-operators, and the owner-operators agree to hold Pyle harmless for any liability that may be asserted against the company. Although the owner-operators may choose their own drivers, they are required to furnish persons who satisfy the safety regulations of the Department of Transportation ("DOT"), and who obey all other federal, state, and local laws.

Other federal regulations also shape the relationship between the company and the owner-operators. They require that the company obtain from a prospective driver a written application and proof that he has passed a physical examination, 49 C.F.R. §§ 391.21, 391.41, 391.51 (1978), and administer to him road tests and written examinations, 49 C.F.R. §§ 391.31, 391.35. Pyle must compile records concerning violations of the drivers and must annually review each driver's record to determine if he meets federal safety standards. 49 C.F.R. §§ 391.25, 391.27, 394.9, 394.13. As to all of these requirements, Pyle must keep certain records, 49 C.F.R. §§ 391.51, 1020.1, and the company must require a daily log from every driver, 49 C.F.R. § 395.8. Pyle must also affix to a leased truck markings that identify the company and its ICC number. 49 C.F.R. §§ 1058.2, 1058.3. For the time that the vehicles are in its service, Pyle maintains public liability and cargo insurance on the equipment, but as noted Supra, does not otherwise insure against loss due to accidents. 49 C.F.R. § 1043.1.

To the terms of the lease and the provisions of the regulations may be added the policies, practices, and particular occurrences that have arisen in the course of dealings between Pyle and the owner-operators. Through a commission agent, Pyle dispatches the owner-operators on a first-in first-out basis. Pyle extends no assistance to the owner-operators in the purchase or maintenance of their equipment. It does not provide the owner-operators with life or health insurance, holiday pay, vacation, or Christmas bonuses, and it does not pay for workmen's compensation insurance or social security. Neither does Pyle withhold income taxes for the owner-operators. Pyle handles relations with customers. It solicits from customers contracts for freight, bills the customers, ...

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