86 Lab.Cas. P 11,372
LOCAL 777, DEMOCRATIC UNION ORGANIZING COMMITTEE, SEAFARERS
INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO, Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent.
YELLOW CAB COMPANY аnd Checker Taxi Company, Inc., Petitioners,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent,
Local 777, Democratic Union, etc., Intervenor.
Nos. 77-1512, 77-1673.
United States Court of Appeals,
District of Columbia Circuit.
Argued June 13, 1978.
Decided Oct. 20, 1978.
Rehearing Denied June 20, 1979.
As Amended July 5 and 27, 1979.
Joel H. Kaplan, Chicago, Ill., for petitioners in No. 77-1673.
Robert E. Haythorne and D. Lawrence Gunnels, Chicago, Ill., were on the brief, for petitioners in No. 77-1673.
Irving M. Friedman, Chicago, Ill., with whom David Jaffe was on the brief, for petitioner in No. 77-1512 and intervenor in No. 77-1673.
Candace M. Carroll, Atty., N. L. R. B., Washington, D.C., with whom John S. Irving, Gen. Counsel, Carl L. Taylor, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and John D. Burgoyne, Asst. Gen. Counsel, Washington, D.C., were on the brief, for respondent.
George D. Webster and Arthur L. Herold, Washington, D.C., were on the brief, Amicus Curiae, urging denial of enforcement of the Board's order.
Also Ronald Rosenberg, Washington, D.C., entered an appearance for petitioners in No. 77-1512 and intervenor in No. 77-1673.
Before TAMM and MacKINNON, Circuit Judges, and MARKEY,* Chief Judge, United States Court of Customs and Patent Appeals.
Opinion for the court filed by MacKINNON, Circuit Judge.
MacKINNON, Circuit Judge:
The Yellow Cab Company and the Checker Taxi Company (hereinafter "Yellow" and "Checker" and "the Companies")1 in Chicago, petition pursuant to Section 10(f) of the National Labor Relations Act (the "Act"), as amended (61 Stat. 136, 73 Stat. 519, 88 Stat. 395, 29 U.S.C. § 151 Et seq.) for review of a decision and order of the National Labor Relations Board (the "Board")2 requiring the Companies to recognize Local 777, Democratic Union Organizing Committee, Seafarers International Union of North America, AFL-CIO (the "Union") as the representative of their lessee cab drivers.3 The Board, pursuant to section 10(e) of the Act, has filed a cross-application for enforcement and the Union has itself filed a petition for review insofar as the Board's order failed to grant certain remedies.4
I. FACTS
A.) Background of the Leasing Decision
The dispute which precipitated this litigation arose as a result of the decision by Checker and Yellow to inaugurate a cab-leasing program as an alternative to the commission arrangement they had used exclusively until 1975.5 Under the leasing system all the cab companies receive is a flat rate for the use of a cab and a "medallion." Under the commission system the sole compensation to the Companies is a certain percentage (approximately 50%) of the total fares paid to the cab drivers.
In 1974, the Companies, suffering a decline in earnings, based in part on the increasing scarcity of full-time commission drivers, decided to embark on a leasing program.6
By December of 1974, the companies had developed detailed plans concerning the use of subsidiaries to begin leasing operations, and they sent the Internal Revenue Service a summary of their proposed operation requesting a ruling that the lessees were independent contractors and not employees for federal tax purposes. A favorable ruling was granted some three months later in March of 1975.
Immediately upon receipt of the favorable IRS ruling, Yellow applied to the Commissioner of Consumer Sales, Weights, and Measures for the transfer of 50 of its 2,166 licenses to its subsidiary, Bell Cabs, in order that leasing operations might begin. Meanwhile, the Union had begun a virulent campaign against the leasing plan, denouncing it as a "union-busting tactic" and threatening a retaliatory cab strike. In late May, the Commissioner announced that he would not approve the transfer of licenses to Bell. At this point, Yellow and Checker abandoned their plans to establish subsidiaries to run their leasing operation and decided instead to lease their cabs directly to the drivers.
Accordingly, they requested a supplemental ruling from the IRS that if they did so the lessee drivers would still not be considered employees for tax purposes. This ruling was eventually rendered in October 1975, sometime after actual leasing operations had begun.
After the companies decided to utilize direct leasing rather than forming subsidiaries, they informed the Union of their intentions and invited discussion before they arrived at a final decision. Two meetings were held between the parties, on Junе 5 and 17, 1975. At these meetings the Union manifested its categorical opposition to the idea of leasing7 and its "pattern of conduct prior to and during the June meetings indicates that it was resigned to the belief that negotiations would be futile, and that its opposition to leasing would have to be sustained in the arenas of political and legal combat."8 The Union also considered the leasing program simply to be a modification of the current collective bargaining agreement and insisted that it be recognized as the representative of the lessee drivers, since it had been certified to represent all drivers employed by the Company. The Union left no doubt that, even were the companies willing to bargain about a modification of the leasing program, it would not do so until it was recognized as the representative of the lessee drivers.9
After the second meeting had ended in impasse, the Company declined the Union's request to meet further, stating their belief that any future discussion would, given the Union's attitude, be futile. Two weeks after the final meeting with the Union, on July 1, 1975, Checker and Yellow both commenced their leasing operations.
B.) The Leasing Programs
In the course of establishing its leasing operation the Companies transferred no driver from a commission to a lease system other than at his own request, and there is no evidence that they even solicited drivers to become lessees.10 The terms of the lease itself are straightforward. Leases are given on a day, night or twenty-four hour basis and the driver must post a bond to cover any damage that he may do to the car during its operation.11 The terms of the lease agreement state that the Company is not required to renew or extend any lease and that it can terminate a lease and repossess the car involved for any violation of a government ordinance or regulation. It also provides explicitly that the driver is a lessee and not an employee, is not required to report his location, complete a trip sheet recording his rides and fares, account for his collections, or maintain his cab in any specific place. The lease contains a prohibition on subleasing and imposes a total mileage limit calculated to ensure that subleasing does not take place of 250 miles in any twenty-four hour period.
There is no question that even though the lease agreements by their explicit terms do not directly regulate the lessee-drivers, they do require compliance with the provisions of all applicable laws and regulations and lessees may be terminated for violation thereof. The drivers' conduct is in fact fairly closely controlled by the local ordinances. The municipal regulations are multitudinous. They not only require the cab driver to pass a series of medical, geographical and driving tests, but also to run his meter properly, to present a neat appearance, and to use cab stands and the large ranks at O'Hare Airport in a certain prescribed manner. In sum, "the regulations . . . cover numerous aspects of the drivers' work which, in a different context, might normally be dealt with by the drivers' employer."12 The fundamental difference between commission and lessee drivers, both of whom are subject to the same municipal regulations, is that the former work for the companies and are accountable to them for all sums collected as fares, from which they receive a stated portion as their earnings, while the latter lease their cabs, pay only a single flat rate and work for themselves.
The Union charged that the Companies were guilty of unfair labor practices by instituting the leasing program without consulting the Union and by refusing to recognize it as the bargaining representative for the lessee drivers. The Administrative Law Judge found that on the basis of reсent NLRB decisions the lessees were not employees and that the Union itself had made bargaining impossible by adopting an adamant opposition to leasing and by refusing to negotiate unless it was first recognized as the bargaining representative for the lessee drivers. The Union was not entitled to assume this position unless it was so selected by the drivers in an election.13
The NLRB reversed the Administrative Law Judge on both these issues.14 The Board held that the cab companies exercised sufficient control over the lessee drivers that an employer/employee relationship existed15 and that the Union's refusal to bargain before it was recognized was immaterial in light of the Companies' firm resolution to begin leasing operations regardless of the union's position.16 We find ourselves in agreement with the Administrative Law Judge, and accordingly deny enforcement of the Board's order insofar as it is inconsistent with that examiner's conclusions.
II. STANDARD OF REVIEW
Before reaching an analysis of the merits of the petitions before us it is appropriate to point out why in this particular case little deference is due to the Board's decision.17 The Board's treatment throughout the years of the distinction between "employees" and "independent contractors" in the area of vehicular, and especially cab, leasing has been marked by an unusual degree of confusion and vacillation. The Act covers "employees" but not "independent contractors" by virtue of an express statutory provision: "The term 'employee' . . . shall not include . . . any individual having the status of an independent contractor . . . " 29 U.S.C. § 152(3). As discussed below,18 the criteria for distinguishing between these two types of workers is based on an "all of the circumstances" test. Given such a standard, one would expect a somewhat irregular, case-by-case approach to elaborating the controlling distinctions. The Board, however, has surpassed itself in clouding what need not have been an unusually confusing development of the law. Not only has the NLRB repeatedly reached diametrically opposite conclusions on the basis of virtually identical fact situations, Compare Checker Cab Company and its Members,
This process of ad hoc and inconsistent judgments in which the only determinative elements seems to be the composition of the NLRB panel which happens to hear the case20 has descended in the instant case almost to the point of absurdity. Yellow and Checker Cabs not only took into account their own legal analysis of the most recent NLRB opinion on the subject, Columbus Green Cabs, supra, but also in formulating their leasing plan actually consulted with other cab companies whose leasing programs had been held by the Board to create independent contractors rather than employee drivers. Nevertheless, the Board has now determined, seeking to dismiss Columbus Green Cabs as an aberration,21 that the Companies' drivers are in fact employees because "in regard to Columbus Green Cabs, Inc. suffice it to say that it and similar cases must be narrowly construed in order that employees not be denied the protection of the Act through an undue extension of independent contractor status."22
The vacillation of the NLRB in regard to the question of the status of cab leasing makes an attitude of judicial deference to its decision especially inappropriate. The Board cannot, despite its broad discretion, arbitrarily treat similar situations dissimilarly, E. g., Carnation Company v. NLRB,
The issues here are not peculiarly confined to labor matters. While the Board does have a great many cases that involve this same question so do the state and federal courts generally and a number of other agencies. Basically the issue involved calls for applying general principles of the law of agency the distinction between employees and independent contractors to undisputed facts. On such an issue we must affirm the administrative decision only if it is supported by the record considered as a whole, Universal Camera Corp. v. NLRB,
In sum, because of the Board's history of vacillation and the basically legal nature of the question before us, it is inappropriate for this court to extend any great amount of deference to the Board's disposition of the problem of whether or not Yellow and Checker's lessee-drivers are employees or independent contractors.
III. THE STATUS OF THE LESSEE DRIVERS
A.) The Board's Analysis
Under the right-of-control test which the NLRB and numerous courts have adopted for distinguishing between employees and independent contractors for purposes of the NLRB, the Board is instructed to apply the same general agency principles as would the courts in determining whether or not an individual is an employee or an independent contractor, Lodge 1858 v. Webb,
Where the person for whom the services are performed retains the right to control the manner and means by which the result is to be accomplished the relationship is one of employment; but where control is reserved only as to the final result the relationship is that of an independent contractor.
Checker Cab Co. and its Members,
The NLRB in this case, much as in previous decisions in which it has found cab lessees to be employees, E. g., Checker Cab Ass'n,
The Board, although it did not articulate any reason for doing so, laid particular emphasis on the facts that the drivers had no investment in their cabs; that the leases offered were of extremely short duration; that the Companies had complete discretion to refuse renewal of these leases; and that by requiring that their drivers comply with the host of applicable municipal regulations the Companies in fact were able to control a great deal of the drivers' behavior while in the cab.27 While conceding that the drivers when operating their cabs under lease were "on their own and are free to prospect for fares when and where they choose,"28 the Board dismissed this freedom as it had in Checker Cab Ass'n, Inc., supra, as being "inherent in the nature of the work" rather than indicative of independent contractor status.29 While acknowledging that a number of recent NLRB cases had found taxicab lessees to be independent contractors rather than employees, the Board remarked that it was significant that none of these cases had explicitly overruled previous Board authority to the contrary,30 and asserted that it was important to limit the holding of the more recent cases narrowly to their specific facts.
We share the Board's solicitude to avoid depriving Employees of the benefits of the Act by Unjustifiably expanding the concept of "independent contractor." We feel, however, that the Board in distinguishing between employees and independent contractors has failed to do so in any reasonable or consistent pattern and moreover has tended to rely on a variety of factors some of which are of only marginal relevance while glossing over the fundamental question of whether or not the putative employer has the right to control the driver during the course of his operation of the cab in the manner and means in which he earns his income and whether the drivers can be most aptly described as working for themselves or for a wage they receive from companies.
"( T)he employer-employee relationship exists only where the person, for whom the work is done, has the right to control and direct the work, not only as to the result to be accomplished by the work, but also as to the details and means by which that result is accomplished . . . (I)t is the right and not the exercise of control which is the determining element." Williams v. United States,
The Restatement (Second) of Agency in listing factors relevant to distinguishing between employees and independent contractors refers to "the extent of control which, by the agreement, the master may exercise over the Details of the work" Restatement (Second) of Agency § 220 at 485 (emphasis added).31 The reference to "details" indicates the extent to which the supervision typical in employment relationships regulates the actual activities undertaken by the employee in the course of his occupation rather than merely the general objective or context of this work. See Associate Independent Owners-Operators, Inc. v. NLRB, supra,
In the instant case, there is virtually no control imposed by Yellow or Checker over the lessee-drivers, independent of municipal regulations, which are themselves beyond the companies' control. Certainly such company regulation as does exist does not so "overshadow considerations of the worker's right to assert his own prerogatives" that an employment relationship can be said to exist, Kheel, Supra at 14-139. Once a driver leases a cab, Checker and Yellow not only do not assert, but have no interest in asserting, control over his conduct, except to ensure that the cab is not sub-leased and the companies' liability is not enlarged.
As for the Board's argument that the extensive regulation of taxi-drivers by municipal ordinance de facto gives the companies control over the drivers' conduct on the job, the NLRB's position is not only inconsistent with precedent, but also evinces a misunderstanding of the effect of state regulation on the nature of the employer-employee relationship. The Administrative Law Judge pointed out that not only is extensive municipal regulation typical of the cab business in most metropolises,32 but also such regulation had been present in a number of cases in which the Board found that the drivers were independent contractors.33 Furthermore, regardless of whether or not the Board has dealt with the presence of municipal regulations consistently, in terms of substantive principle the existence of legal restrictions on the performance of an occupation are relevant but not necessarily controlling on the question of whether or not a given individual is an employee or an independent contractor.
Government regulations constitute supervision not by the employer but by the state.34 Thus, to the extent that the government regulation of a particular occupation is more extensive, the control by a putative employer becomes less extensive because the employer cannot evade the law either and in requiring compliance with the law he is not controlling the driver. It is the law that controls the driver. Thus requiring drivers to obey the law is no more control by the lessor than would be a routine insistence upon the lawfulness of the conduct of those persons with whom one does business. The effect of state regulation is a far cry from such restrictions as cause "the actor's physical activities and his time (to be) surrendered to the control of the Master," Restatement (Second) of Agency § 220, comment at 487-488 (emphasis added). In the situation before us, whatever control is exercised is not the master's but that of the local government. That the state has chosen to so regulate cab drivers that those who lease cabs can be reasonably confident of the conduct of the drivers while in their cabs does not mean that the lessors thereby "control" this conduct. That government regulation has made supervision or control by the lessor unnecessary is not the equivalent of the presence of actual supervision or control. Looking at the "realities" of the situation, as the NLRB explicitly insists one must,35 leads to the conclusion that to the extent that municipal ordinances prescribe the conduct of lessee drivers they are regulated by law, not supervised or controlled by Checker or Yellow and in this context it is significant that the lessor does not control, or have the right to control, the lessee in the performance of those functions that are free of local regulation.
The Board itself has noted that incorporation of government regulations into a contract does not alone establish an employer/employee relationship, Local 814, IBT (Santini Bros.), supra; Portage Transfer Co., Inc.,
It appears that the cab companies' chief method of controlling their drivers in the past has been through the use of a "trip sheet" on which the driver was required to record all his rides and on the basis of which his commission was calculated. The companies evidently are prepared to concede that if they still made use of trip sheets to force drivers to account for their income, their drivers should be considered employees.37 Under the Companies' leasing plan, however, trip sheets are not required as they would serve no purpose. The driver who leases a cab is not required to produce any revenue and the company receives the same amount of money irrespective of the amount the driver receives. The absence of a trip sheet or any other means of holding drivers accountable for their income is a significant indication of the lack of company control over the drivers.38
The Union points out that the City of Chicago itself has recently promulgated a regulation requiring all cab-drivers to maintain a trip sheet whether or not they operate on a lease or commission basis.39 This additional municipal regulation, however, no more changes the nature of the cab company/driver relationship than did any of the other regulations alluded to above. Although a lessee-driver now presumably must fill out much the same records as a commission cabbie, the company does not use these records to exert any financial control over the drivers. The formality is required by the ordinance, but this does not involve control by the company. It is not the simple fact of having to fill out a trip sheet, but the use made of that sheet by the employer which is relevant to the inquiry as to whether an individual is an employee or an independent contractor. In this case, the Companies make no use whatsoever of the trip sheets. They can be very useful in law enforcement and to that extent the city may legitimately require them. If they were required for other purposes the ordinance might be of doubtful validity.
As additional evidence of the control in fact exerted by Yellow and Checker over their drivers, the Board makes much of the short-term of the leases offered by the cab companies, the brevity of their duration creating the possibility of swift disciplinary action (by refusal to renew a lеase) and keeping the drivers dependent on remaining in the good graces of the company. The length of the lease has been acknowledged as pertinent to the inquiry as to whether or not a lessee is sufficiently controlled by the lessor to be deemed an independent contractor, See, e. g., NLRB v. A. S. Abell, supra,
Moreover, conceptually the length of the lease term does not reflect on the nature of the lessor/lessee relationship During the term of the lease. Regardless of how short the leases under which Yellow and Checker drivers operate may be, the fact remains that once they have obtained a lease they do not within limits designed to prevent subleasing40 and to ensure compliance with the applicable laws have to account to the cab company for the operation of their cabs. Rather than working for and at the command of Yellow or Checker, the drivers essentially work for themselves and merely pay the companies for the service of providing the use of a cab and medallion. The companies for a price provide the instrumentalities of the drivers' livelihoods, and also reserve the right to review at short intervals whether or not they desire to continue to supply a given driver. Having done so, however, they do not supervise or control or, indeed, have much interest in, how the driver goes about his business of transporting persons for hire. The length of the lease term in no way affects this fundamental characteristic of the relationship between Yellow and Checker and their drivers while the latter are operating leased cabs.
The Board also remarked upon,41 and the Restatement, Second, mentions,42 the importance of a lack of investment in the instrumentalities of one's occupation as tending to indicate employee rather than independent contractor status. However much importance this factor should in general have in the determination of employee as opposed to independent contractor status, it does not support the Board's position here. Although the Board drew support from "the drivers hav(ing) no investment in the instrumentalities of their work," in fact, it appears that the Board has been deceived by the brevity of these agreements. To be sure, the amount paid for each day of leasing is not large $22 per day, $16 per night and $31 for a twenty-four hour lease43 but when aggregated over a years' driving, it comprises a substantial investment on the part of the driver, amounting to somewhere in the neighborhood of $7,000.00.44
The drivers do not acquire any equity interest in the cars they drive, but in this respect they are no different from a shopkeeper who rents commercial space. The leasehold interest of the drivers is as legitimate a property right as the title retained by Yellow and Checker and is equally the product of an investment by the drivers, See generally I American Law of Property Chapter 2 (Casner ed. 1952).
The extent to which the lessee-drivers do indeed have a legitimate investment in their cabs is accented by a comparison between this case and situations in which an undoubted employer/employee relationship exists. In the usual employment relationship, the employer not only owns the instrumentalities of lаbor, but also supplies them free of charge to the worker. Rather than leasing out tools so that the "employees" can pursue Their chosen ends, the typical employer hires the employees to operate his machines in order to accomplish His chosen ends. The relationship of leasing drivers to their cabs is radically different from that of the ordinary employee using or operating his employer's tools. The lessee uses the instruments which he leases to produce as much income for himself as possible; the latter merely collects a wage for operating instrumentalities to produce wealth for his employer.
B.) The Dispositive Factors
It would be unjustifiable to claim that the NLRB was incorrect in claiming that the cab-lessees in question did not have some of the characteristics of employees. These characteristics,45 however, are of only minor importance compared with the crucial factors that go to determine whether or not cab companies have such control over their lessee-drivers that these drivers should be considered employees rather than independent contractors. When a driver pays a fixed rental, regardless of his earnings on a particular day, and when he retains all the fares he collects without having to account to the company in any way, there is a strong inference that the cab company involved does not exert control over "the means and manner" of his performance. This conclusion is justified because under such circumstances, the company simply would have no financial incentive to exert control over its drivers, other than such as is necessary to immunize the proprietor of a cab from liability which arises from its operation by virtue of the lessor's ownership. However the driver conducts his occupation, the company has received its financial reward and the cab driver's self interest in the success of his venture and the municipal regulations are some assurance that the cab service will continue to be attractive to customers.
Not only do cab companies have no financial incentive to impose controls on their lessee-drivers, but also it would be anomalous for them to try to do so. This is true because one of the motivations behind the institution of leasing was an attempt to enable the companies to be less involved in the routine difficulties of directing the daily operation of their cabs.46 Moreover, to the extent that the companies' assertion of control would likely be resented by potential drivers, to the extent that the company sought to assert such controls beyond those required to guard against liability, it would be acting against its own best interests. In sum, once financial accountability is no longer important, Yellow or Checker have little business justification for seeking to continue to hold their drivers accountable in other matters.
The surrender of the right to make the drivers account for their earning causes a fundamental change in the relationship between the companies and their drivers which will usually remove the latter from the category of "employees." Even though the appearance of the leased cabs might be identical to that of commission cabs, such similarity of appearance has elsewhere been dismissed as unimportant, See Sida of Hawaii, Inc. v. United States, supra; Greater Houston Transportation Co. and all Other Employees d/b/a Yellow Cab Company, supra. Furthermore, the economic realities of the commission and leasing operations are quite different. The Court of Claims, in the context of another statute but in the course of applying the same common law principles explicitly embraced by the Act47 has succinctly stated the nature of this difference:
. . . There (under a leasing rather thаn a commission system), each taxicab driver rented a taxicab from the owner at a flat daily rental; the driver also defrayed the principal expense involved in the operation of the taxicab (i. e. the cost of the gasoline in both cases, and also the cost of the oil in Party Cab Co.); and the driver kept all the fares that he was able to earn through the operation of the taxicab. Thus, each driver was, in essence, a small businessman, either making a profit of sustaining a loss on his activities, depending on the relationship between the total amount of the fares collected, on the one hand, and the total amount of the expenses incurred, on the other hand.
Morish v. United States,
When, as in the case of lessee cab drivers, an individual's labor does not benefit his lessor beyond the sum received for leasing equipment, it is stretching the traditional concept of "employee" to categorize such individuals as servants, I. e., employees. At the very least such lessees do not fit into the usual understanding of employees, and there is clear evidence that Congress did not intend that an unusually expansive meaning should be given to the term "employee" for the purpose of the Act. In 1947, the National Labor Relations Act was amended with the specific intent of overturning two then recent Supreme Court cases, United States v. Silk,
The Internal Revenue Service has ruled that if a cab lessee pays only a fixed rental for the cab and the company from which he leases does not require an accounting of its drivers' receipts, that the lessee will be considered an independent contractor, I.R.S. Rev. Ruling 71-572, C.B. 1971-2 p. 347. The I.R.S. ruling was rendered under the Internal Revenue code rather than the NLRA, and the Board is not compelled to follow that decision, E. g., Lorenz Scheider Co.,
Pursuing this line of analysis, the IRS found that the most important difference between employee cab drivers and lessee cab drivers to be the fact that the latter paid a fixed rate for their car and that their company "has no right to obtain, for its own benefit, an accounting with respect to the fares collected for operation of the taxicabs by either the owners or the lessees." Rev. Ruling 71-572, C.B. 1971-2 p. 34. This analysis mirrors our own, and we consider it to be a true statement of the law. There are two important elements here which determine that the lessee drivers are independent contractors and not employees. First, is the lack of control by the lessor in the manner and means in which the drivers carry on their business after they leave the garage. Second, is the fact that the compensation (rent) that the Company receives for the lease of the cab is not related to the amоunt of fares collected by the lessee-driver. Therefore the drivers must be considered independent contractors and beyond the reach of the Act.
C.) The Possibility of Estoppel
Not only are the cab lessees in this case independent contractors for the reasons set forth above, but also, they are, as discussed above, in a virtually identical situation to those that the Board found to be independent contractors in Columbus Green Cabs, Inc., supra. This decision continued the movement begun in Greater Houston Transportation Co. and All Other Employees d/b/a Yellow Cab Company, supra and Barwood, Inc., supra, away from previous NLRB law, E. g., Checker Cab Ass'n, supra; Buffalo Cab Co., Inc., supra, which had held cab-lessees to be employees.
Had the Board continued the decisional pattern of earlier cases without embarking on the new course seen in the Barwood-Columbus Green Cabs line of cases,50 its decision in this case would at least have had the merit of consistency. As it is, however, not only did the board indicate by the Barwood-Columbus Green Cabs authority that cab-lessees would be considered independent contractors, but moreover, Yellow and Checker also as mentioned above explicitly relied on these decisions in formulating their leasing plan.51 In such circumstances, an element of estoppel enters this particular case.
Although an agency may change its policy as it determines is in the public interest, E. g., NLRB v. Wentworth Institute,
IV. THE DECISION TO LEASE AS A MANDATORY SUBJECT OF BARGAINING
The NLRB concedes that if cab-lessees are not employees, Yellow and Checker have not committed an unfair labor practice in instituting their leasing program.53 The Union, however, advances the alternative argument that the decision to commence leasing was a mandatory subject of bargaining in that it affected the commission drivers' "wages, hours, and other terms and conditions of employment."54 Thus, even if the companies were within their rights in not recognizing the Union as representative for the lessee-drivers, the Union contends that the companies nevertheless were guilty of an unfair labor practice by their unilateral creation of a leasing option.55
The companies' response to the Union's alternative theory is two-fold. They assert that there was no proof that the mere creation of an opportunity for those who desire to lease cabs to do so affected the "conditions of employment" of the commission drivers. Moreover, even if such an effect was demonstrated, Yellow and Checker argue that the decision to begin a leasing operation was not an unfair practice because it constituted a basic change in their corporate operation and thus was within their managerial discretion.56 They also raise the additional defense even if the leasing decision was a mandatory subject of bargaining, that the Union itself was the party that refused to bargain by refusing to negotiate for the Commission employees unless the companies first recognized the Union as the representative of the lessee-drivers.
The Administrative Law Judge found that there was no evidence that the institution of leasing affected the conditions of employment of the commission drivers, but we feel that we must defer to the Board's expertise in this regard and concur in its rejection of this position. Despite the Union's inability to point to any specific decline in the commission drivers working terms, the Board's argument that any decision which virtually inevitably reduces the size and hence the strength of an employee-group's bargaining unit affects its conditions of employment seems persuasive.57
The fact that an employer's decision affects conditions of employment does not necessarily imply, however, that it is a mandatory subject of bargaining. The law draws a distinction between those decisions "primarily about the conditions of employment" which must be made a subject of bargaining and those which, while affecting the employees' working conditions, are entrepreneurial judgments "fundamental to the basic direction of a corporate enterprise" U.A.W. v. NLRB,
At the same time that the law has been careful to insist on preserving the integrity of collective bargaining by mandating bargaining on certain issues, the courts have also been careful not to "significantly abridge (the management's) freedom to manage its own affairs." NLRB v. Adams Diary,
The leading case concerning what is and what is not to be considered so fundamental a change as to lie outside the scope of mandatory bargaining is Fibreboard Paper Products Co. v. NLRB, supra. The ambiguity of this opinion is reflected by the fact that both parties in this, as well as other cases, cite the decision in support of their mutually contradictory positions, E. g., UAW v. NLRB, supra,
The precise scope of the Fibreboard decision is unclear, See 5 Kheel, Labor Law 20-175, and the Courts of Appeals have applied a case-by-case approach to delineating what decisions are beyond the scope of compulsory bargaining, U.A.W. v. NLRB, supra,
The Fibreboard company essentially only replaced more expensive union labor with more economical outside workers. By no stretch of the imagination could it be said that the company underwent any basic change in its operations. In the case of Yellow and Checker, on the other hand, the entire point of the companies' going into leasing was significantly to alter what had become a low profit operation.
The institution of leasing in this case differs markedly from the usual case of subcontracting. The issue here might be much closer had Yellow and Checker merely subcontracted out their commission driving work to some chauffeur agency, E. g., U.A.W. v. NLRB,
By moving into cab leasing, Yellow and Checker ceased to be concerned directly with the profitability of the transportation of persons for hire and instead assumed a position analagous to that of a car or truck rental firm.58 This alteration in the underlying nature of the business of the companies was unquestionably a change in the "basic direction of the corporate enterprise," See 5 Kheel, Labor Law 20-101, and when such changes are motivated by economic considerations there is no duty to bargain concerning them. UAW v. NLRB, supra; NLRB v. Drapery Mfg. Co., supra,
The instant case is similar in many respects to the decision in NLRB v. Adams Dairy, Inc., supra. In that case the Eighth Circuit reaffirmed in the light of Fibreboard59 its holding that a company's decision to abandon its own distribution service and rely on independent contractors was not a mandatory subject of bargaining. The court stated:
In Adams Dairy, on the other hand, a basic operational change did take place when the dairy decided to completely change its existing distribution system by selling its products to independent contractors. . . . The work done by the independent contractors, contrary to the situation in Fibreboard, was not primarily performed in the Adams plant for the benefit of the dairy. Adams was not directly concerned with whether or not any given distributor sustained a profit or loss, as would have been the situation with the driver-salesmen. The only major restrictions that Adams placed upon the independent distributors by contract related to sanitation matters and to the maintenance of high products standards and the maintenance of good will.
Contrary to the situation in Fibreboard, then, there is more involved in Adams Dairy than just the substitution of one set of employees for another. In Adams Dairy there is a change in basic operating procedure . . .
Just as Adams Dairy no longer was concerned with the success of its independent distributors, Yellow and Checker are no longer concerned with the success of their lessees. In both instances a change was made in "basic operating procedure."
As in other areas of labor law, E. g., American Ship Building v. NLRB,
Just as there is no indication that the companies acted from any anti-union animus, there is no reason to suppose that their purpose was merely to replace one set of employees with another an action which obviously would be a mandatory subject of bargaining, Fibreboard Paper Products Co. v. NLRB, supra; NLRB v. Kelly & Picerne, Inc.,
In light of the above analysis, it is highly probable we would decide that the decision to lease cabs was not a mandatory subject of bargaining. However, we cannot ignore the fact that determining which decisions affect "conditions of employment" and which of those that do constitute "fundamental corporate changes" is a procedure inevitably wrapped in some ambiguity, Compare Adams Dairy, supra, and Ozark Trailers, Inc.,
The findings of the Administrative Law Judge, unchallenged by the Board, are sufficient testimony of the Union's preclusion of bargaining:As the lessees were nonemployees, the Union's demand was a nonmandatory subject of bargaining, if not improper, and the Companies were warranted in breaking off their discussions at this point. Therefore it cannоt be found that the Companies acted unlawfully by unilaterally instituting leasing. The Union was given notice of the Companies' intention to go into leasing, and an opportunity to discuss the matter and bargain about its impact on the commission drivers, but the Union rejected the opportunity for such bargaining. (63
The Board argued that even though the Union's demand to be recognized as the bargaining agent for the cab-lessees prevented bargaining, this action was "immaterial" in view of the Companies' "preordained refusal to bargain about the decision to lease."64 What the Board failed to recognize was that the companies' attitude was itself in large part provoked by the Union's outspoken and unwavering rejection of cab leasing.
The Union did not directly respond to Yellow about the matter (leasing proposals) . . . Instead, the Union flexed its political muscles. At a meeting of the Chicago Federation of Labor on May 5, Union President Clark informed the press that the Union was opposed to leasing, accused the Companies of engaging in union-busting tactics by setting up Bell and Comet (subsidiaries through which Yellow and Checker initially had planned to lease a number of their cabs), and implied that the drivers might strike. In late May, Commissioner Carter informed Yellow that he would not approve transfer of the license; and, in fact, Yellow's application has never been acted upon. (65
In the face of such overt hostility by the Union, there could be no reasonable expectation of real negotiation on the subject of leasing.66 Indeed, set against this background, the fact that the companies informed the union that they were considering leasing and "invited discussion Before their final decision"67 (emphasis added) evinces a greater commitment on their part to the collective bargaining process than was reflected by the Union.68 When, in addition to its vitriolic attacks on leasing, the Union proceeded to refuse to engage in any negotiations despite the companies' explicit invitation to do so until it was recognized as the bargaining agent for the lessee drivers, it is hard to see what options Yellow and Checker had left other than to initiate their leasing program. It would make a mockery of the labor law for this court to hold that The Company had committed an unfair labor practice by refusing to bargain when the Union gave a public demonstration of its intransigent opposition to a management proposal, attempted to thwart the realization of this proposal by political action, and conditioned any bargaining on an illegal recognition of it as collective bargaining representative. To uphold such conduct would be a distortion rather than a vindication of the Act, See NLRB v. Kelly Bros. Nurseries, Inc.,
V. THE UNILATERAL IMPOSITION OF A CAB "TAKE-HOME" FEE
An additional point, having nothing to do with the leasing problem, concerns the companies' unilateral imposition of a $10 per week charge to commission drivers for the privilege of taking their cabs home with them at night.
In January and February of 1975, some six months before the beginning of their leasing operations, the companies decided that their rule prohibiting overnight privileges was impossible to enforce and instead of prohibiting the practice altogether elected to impose a take-home charge. In doing so, it made no attempt to consult with the Union.
The Companies do not address in their briefs the question of whether or not failing to bargain concerning the imposition of a take-home charge was an unfair labor practice,70 nor did Checker except to this finding before the Administrative Law Judge.71 Accordingly, they may be deemed either to have conceded that the Board's determination that they committed an unfair labor practice was justified or to be barred on procedural grounds from here challenging this decision. Whether or not one or both of these arguments for dismissing the companies' petition to review this aspect of the Board's order has merit, it is clear they did indeed commit an unfair labor practice by not bargaining concerning take-home charges.
There appears to be some dispute as to whether or not it had been the established custom of the companies to allow drivers to take their cabs home at night,72 however, whatever the past practice may have been, the imposition of unprecedented take-home fees was a change from such practice, and thus was a mandatory bargaining subject because it affected the drivers' conditions of employment, See United Electrical Radio and Machine Workers of America v. NLRB,
Leasing fees for company houses have consistently been held to be a mandatory subject of bargaining, E. g., NLRB v. Lehigh Portland Cement Co.,
There can be no question that an employer violates section 8(a)(5) of the Act, 29 U.S.C. § 158(a)(5)75, by unilaterally changing the conditions of employment without giving the union an opportunity to negotiate concerning the change, NLRB v. Katz,
VI. THE BOARD'S REMEDY
The final question presented here concerns the appropriateness of the remedy ordered by the Board. The Union submits that as the imposition of the take-home fee without bargaining was an unfair labor practice the Companies should reimburse all those who had paid that fee.78 The Board refused to order such relief on the grounds that no showing had been made that the drivers who had paid the ten dollar fee had been injured by doing so.79 Although there was testimony that some drivers were allowed to take their cabs home at night before the companies instituted the take-home charges,80 most of them were prohibited from doing so.81 Thus, many of those who paid the $10 fee may in fact have been making a profit in doing so, depending on how many additional fares they could obtain while driving to and from their homes.82
In such circumstances of ambiguous injury, it was clearly within the Board's discretion to decline to order reimbursement. Not only is the Board directed by the Act to impose only remedial, not punitive relief, See Local 60, United Brotherhood of Carpenters v. NLRB,
The Union's other challenge to the remedy imposed by the Board is vitiated by our finding that the companies did not commit an unfair labor practice in refusing to recognize the Union as representative of the lessee drivers, Yellow and Checker cannot be held liable to the union for those "dues and initiation fees which (the Union) certainly would have received"84 had it been recognized as the representative of the lessee-drivers.
In accordance with the above analysis, we grant Yellow and Checker's petition to review in respect to its challenges to the Board's decision that the companies' lessee-drivers are employees and not independent contractors and that Yellow and Checker committed an unfair labor practice by refusing to bargain concerning their decision to institute leasing. We deny the Union's petition for review of that part of the Board's order that refused its claim for "dues and initiation fees," "take-home fees" and "interest." We grant the NLRB's cross-application for enforcement only insofar as the Board found that the unilateral imposition of a cab take-home fee violated section 8(a)(5) and (1) of the Act and ordered its rescission.
So ordered.
ON PETITION FOR REHEARING
Before TAMM and MacKINNON, Circuit Judges; and MARKEY,* Chief Judge, United States Court of Customs and Patent Appeals.
ORDER
PER CURIAM.
Upon consideration of respondent's petition for rehearing, and of the response filed thereto, it is
ORDERED, by the Court, that respondent's aforesaid petition for rehearing is denied for the reasons set forth in the opinion for the Court filed herein this date.
Opinion for the Court filed by MacKINNON, Circuit Judge.
MacKINNON, Circuit Judge:
The Board and the Union (hereinafter "petitioners") petition for rehearing contending that the court must defer to the Board's decision that the lessee cab drivers were "employees" within the meaning of the Labor Act, and that the panel's failure to do so was "revolutionary."1 Specifically, petitioners make the following arguments: (1) the panel exceeded the scope of its judicial authority by conducting a "De novo review" of the Board's decision; (2) "the Board's history of vacillation and the basically legal nature of the question"2 should not reduce the amount of deference due the Board's determination; and (3) the panel ignored substantial evidence supporting the Board's finding that the lessee cab drivers are "employees" rather than "independent contractors." In addition, petitioners argue that the panel opinion is inconsistent with Fibreboard Paper Products Corp. v. NLRB,
* Petitioners describe the court's opinion as constituting a De novo review, and cite a number of cases which hold that courts should not engage in De novo review of administrative decisions. Of course, De novo review of the Board's decisions is ordinarily inappropriate,4 and should not be indulged in "as an original matter."5 The flaw in petitioners' argument is their assertion that the court's decision is a product of De novo review. It is not.
The term "do novo review" is often used loosely. Losing parties tend to apply it to unfavorable court decisions as an epithet. But actually, it has a rather precise meaning.
We must always be conscious of the distinction between a de novo trial, where the case is tried a second time and the record is made up in the district court, and a court's review of findings of an administrative body, where the record is solely that of the administrative body.
Globe-Union, Inc. v. Chicago Telephone Supply Co.,
In light of this definition, it is clear that the court did not engage in objectional De novo review. It did not re-examine the Board's findings of fact. Rather we considered whether the Uncontroverted facts, when they were applied to the settled law, were sufficient In law to warrant the Board's conclusion that the lessee drivers are employees rather than independent contractors. Following that standard the opinion pointed out that the Board's findings of fact did not support its Conclusion of law,7 that the lessee drivers are employees. The defects in the ruling were set forth in considerable detail, and the Board's decision was therefore reversed.8 In sum, while De novo review would have been improper, that rule is not relevant here because our decision is not a product of a De novo review. Rather it is a product of the responsibility placed on a court that reviews the action of an administrative agency to "fully review . . . administrative decisions." In our view the facts of record are insufficient to support a conclusion of law that the lessee cab drivers are employees, and, as we develop below, to so hold would violate the "statutory mandate" and the "congressional policy" underlying the statute.
II
This Court's opinion states:
195 U.S.App.D.C. at ---,
* We recognize that the Board's decision is not subject to De novo review merely because it was "a determination of pure agency law involv(ing) no special administrative expertise that a court does not possess." NLRB v. United Insurance,
We also recognize, as the Supreme Court stated in NLRB v. Weingarten, Inc.,
The use by an administrative agency of the evolutional approach is particularly fitting. To hold that the Board's earlier decisions froze the development of this important aspect of the national labor law would misconceive the nature of administrative decisionmaking.
The instant decision, however, is erratic rather than evolutional. In Weingarten the Board carried out its obligation to explain the shift by pointing to "significant developments in industrial life . . . ."
We are not disposed to argue whether the Board has ignored prior precedent or whether the Board's decisions on this issue have, as it states, creаted a situation where, "Significantly, none of the later cases (arriving at a different result) overruled any of the prior cases."12 Either situation requires us to examine its decision with especial care. An agency has an admitted discretion in matters of Policy, but the principal issue here is a matter of decisional law, not policy. As we indicated previously, the only significant development that impacted on the Board's current decision is the recent change in the composition of the Board that reversed the decision of the Administrative Law Judge and "narrowly construed" the latest existing precedents to the point of extinction.13 Such erratic decisionmaking is unacceptable particularly as to Issues of law. While the Board is authorized to change its mind, when it does so it must at least carefully explain its reasons, justify the change and follow controlling law. Otherwise previously created propositions of law based on factual determinations operate as precedents, Stare decisis. Republic Aviation Corp. v. NLRB,
(An agency) not only may but must take notice of applicable law, whether the law is embodied in the Constitution, a statute, judicial decisions, or administrative decisions . . . That those decisions rested upon findings which in turn rested upon evidence, is no reason for saying that the (Interstate Commerce) Commission was not bound to follow them or to distinguish or overrule them.
K. C. Davis, Administrative Law Treatise § 15.04 at 376 (1958) (hereinafter Davis). While the Board may change its mind it cannot change the statutory and decisional law as fixed by court decisions following the express mandate of Congress. The Board's failure here to follow, not its own vacillating decisions, but the decisions of the federal courts cannot be condoned.14
B
Our decision does not depend on the niceties between various standards of review and our conclusion that the Board's decisionmaking has been unacceptably erratic is not necessary to the result we reach. On the contrary, even if the Board's decision followed prior Board precedent, it would be necessary to reverse the Board's determination that the lessee cab drivers are "employees" under the National Labor Relations Act because it does violence to the intent of Congress and established principles of agency law as enunciated by the courts. The operative facts here fall considerably short of the amount and character of control necessary to a finding that the lessees are employees.
The Supreme Court has consistently stated that reviewing courts should Not Defer to the Board when the Board's decision is inconsistent with the statute that is supposedly being applied.15 A recent decision to this effect is NLRB v. Brown,
This proposition rests upon our statement in Buffalo Linen (
The cases cited by petitioners do not undercut the rationale of Brown. In NLRB v. Local 103, Iron Workers,
The judicial role is narrow: The rule which the Board adopts is judicially reviewable for Consistency with the Act, and for rationality, but if it satisfies those criteria, the Board's application of the rule, if supported by substantial evidence on the record as a whole, must be enforced.
In a number of cases since United Insurance, supra, on which petitioners chiefly rely, courts of appeals have found it necessary to reverse the Board's determination that certain workers were not "independent contractors." See, e. g., Lorenz Schneider Co., Inc. v. NLRB,
In short, under United Insurance, Iron Workers, Beth Israel, and other cases, Supra, courts should defer to the Board's decisions as long as the decisions are consistent with the National Labor Relations Act, but none of these cases signal a departure from the admonition in Brown,
III
The National Labor Relations Act provides that "independent contractors" are not "employees." 29 U.S.C. § 152(3). Yet, the Board held here that the lessee cab drivers involved are "employees." In accordance with Brown, supra, we reversed the Board's decision because under the applicable law "we are able to determine that the lessees in this case were independent contractors . . . ." 195 U.S.App.D.C. at ---,
Petitioners assert that the list of thirteen factors included in the Board's opinion20 provides reasonable and substantial support for the Board's determination. Those thirteen factors are support for the Board's decision, however, only if they are evidence that the Companies have a "right to control . . . the means to be used in attaining the result. . . . (W)here the employer has reserved only the right to control the ends to be achieved, an independent contractor relationship exists." Yellow Cab Co.,
Party Cab Co. v. United States,
(G)enerally the (employee) relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the Details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. * * * In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the Means and methods for accomplishing the result, he is an independent contractor, not an employee.
The matter of control which is material is that which the plaintiff exercised over the drivers during the period they were in possession of the cabs rather than what the plaintiff might do either prior or subsequent to such period.
Id.
The issue, therefore resolves itself into determining whether the Board's thirteen enumerated factors are sufficient proof of the Companies' right to control the detail, means and methods by which the lessee drivers conduct their operations. The court's opinion already discussed these factors at some length, but more can be said. In considering the relevant facts, which are not in dispute, it must be recognized that the lessee drivers here do not work for hire, for wages or salaries, or under direct supervision. They are not paid any money by the Company. They depend for their income solely upon their own efforts and the profits that they are able to derive from the difference between their cost of leasing and operating the cab and what they collect from the public in fares.
At no time in the conduct of their operation are their physical activities controlled by the lessor. As the Board recognized, the lessees are "not required to operate in any prescribed manner, to accept any calls or dispatches, to report the location of the cab during the lease period, . . . to maintain the cab in any designated place,"21 or to buy their gasoline from the company. In addition, "drivers are admittedly on their own once they leave the garage and are free to prоspect for fares when and where they choose . . ."22 There is only an agreement to pay a daily rate for the least of the cab, to use care and skill in driving it, and to comply with applicable laws and regulations. See, Restatement of Agency 2d, § 220, Comment (e) at 487-88. As in Associated General Contractor of California, Inc. v. NLRB,
The lease arrangement between the parties also states that the parties intend to create an independent contractor relationship. This provision is pertinent to the nature of the relationship created since it is some indication of a refusal by the lessee to submit to pervasive control by the company and a recognition by the company of the absence of a master's control over the lessee. See, Restatement of Agency 2d, § 200, Comment (m) at page 492. The Treasury Department has also ruled that the drivers are not "employees" for purposes of the Social Security taxing statutes. From this it can be concluded that they pay income and social security taxes as self-employed persons.
We now address the Board's thirteen points. The italicized statement at the head of each of the following numbered paragraphs sets forth the fact the Board asserted in support of its conclusion:
1. "No investment in the instrumentalities of their work."23 Generally, employees do not rent the tools of their trade from their employer or pay their operating costs nor put up bonds to compensate the employer for damage to his tools. Here, however, over the course of a year, a lessee driver will invest close to $7,000 in lease payments for the car and substantial additional sums in the necessary gasoline and oil. 195 U.S.App.D.C. at ---,
2. Goodwill. The Board asserts that "All goodwill arising from the operation of the cabs inure to the Companies' benefit."25 (Emphasis added.) This factor, even if true, has no relevance to the Companies' control of the drivers. It is only of minimal, if any, importance.26 Moreover, goodwill does inure Directly to the benefit of the lessees who drive the cabs. It is their principal stock in trade. Every fare a cab driver receives is based in substantial part on the goodwill which the drivers build up. The attractiveness of their cab service to passengers constitutes the principal basis for the income of the lessees. It is incorrect for the Board to state that the drivers do not benefit from the goodwill they create.
3. Drivers' work is essential to companies operations. This is true, but it has no relevance to the issue of whether the lessor controls the means and methods by which lessees operate their cabs. Moreover, one would expect this to be true in many recognized independent contractor situations. See Judge Friendly's comment in Lorеnz Schneider Co., Inc. v. NLRB,
4. Lease term is short and renewable at the companies' option. The Board finds control of the lessees in the companies' "use of day and night leases (i.e., those of less than 24-hour duration)" whereby it argues the companies "are able to prescribe the hours of work."27 This argument conveniently overlooks that leases are available for "24 hour(s)" and "for 2 days at a time, or 3 days on weekends . . ."28 Moreover, the term of the lease whether for 12 hours or 3 days does not Authorize the company to control the lessee in the manner in which he operates his cab. At most, it could furnish an opportunity for the companies to exercise some indirect control, but since there is no evidence that the companies use the threat of nonrenewal to exercise pervasive control over the manner and means in which drivers conduct their business, the provision in the lease does not furnish any support for the conclusion that the drivers are employees.29 195 U.S.App.D.C. at --- - ---,
It is informative to contrast the variously expressed attitudes of the Board and the courts as to the probative effect of the duration of the relationship in these cases. Here, the Board argues that a short lease renewal at the Companies' option is indicative of an employee relationship. This is in sharp contrast to a decision in the 4th Circuit which commented that:
(T)he relatively permanent nature of the relationship and the manner in which it may be terminated . . . are more characteristic of the employment relationship than of independent contractor status.
NLRB v. A. S. Abell Company,
5. Lease terms unilaterally set by the companies. This is evidence of bargaining power, but the Board does not explain how the terms of the lease, which are uniform, have in any way been used to control the drivers in the manner and means that they operate their cabs under the lease. Nothing in the record indicates that this power has been so used.
6. Lessee must obey municipal regulations. The Board has long recognized that agency regulations are evidence of government rather than employer control. Back in 1963, in Reisch Trucking and Transportation Co., Inc.,
The same issue of required compliance with governmental controls was involved in Local 814, Int. Brotherhood of Teamsters v. NLRB,
there was a layer of carrier regulation put upon the (owner-operators) Beyond what was required by government regulation, impairing the (owner-operators) independence.
Meyer Dairy, Inc. v. NLRB,
In SIDA of Hawaii, Inc. v. NLRB,
The Board has itself noted that the fact that a putative employer incorporates into its regulations controls required by a government agency does not establish an employer-employee relationship.
See 195 U.S.App.D.C. at --- - ---,
7. No subleasing is permitted. This restriction is designed to protect the lessors' property (the cab) by insuring that the licensed driver to whom they have agreed to lease the cab will personally drive the cab and not turn it over to some other person whose reliability and responsibility the lessor has not had an opportunity to determine. As long as the lessee is the driver, he is free to conduct his business as he pleases. 195 U.S.App.D.C. at --- n.45,
8. Companies discipline lessee drivers through the threat of city action. This is a partial repetition of 6 above.33 The companies give notice to their drivers that they must follow the law. The drivers would be required to comply with the law even if the lease did not so provide. And companies would be required to cease doing business with drivers who used company property to violate the law even if the contract did not so provide. "(R)equiring drivers to obey the law is no more control by the lessor than would be a routine insistence upon the lawfulness of the conduct of those persons with whom one does business. . . . It is the law that controls the driver."
9. Drivers are subject to having their references checked when they apply for a lease. This is another factor which is not in any way probative of employer control over the manner and means in which the driver conducts his business.34 The Board's reliance on this fact, which is not relevant to control, is a good example of the paucity of support for the Board's conclusion. We are particularly unimpressed with the Board's reference to the garage manager's "wide latitude" in deciding who qualifies to be a lessee. The Board states:
the lease garage manager will refuse to lease to someone who has a record of unsafe driving or is addicted to drugs, as well as to those who lack experience or who have no chauffeur's license. . . . As a practical matter, the lease garage manager will refuse to renew a lease for reason of a bad at-fault accident, unsafe driving, subleasing, drinking, and failure to pay money. . . . Customer complaints will not, however, constitute grounds for refusing to lease unless the complaint relates to matters which indicate unsafe driving, drinking, etc.35
In our view it is in the public interest that such policies should be followed by all transportation companies whether they operate through independent contractors or employees, and the application of operating policies to overcome such hazards is not indicative of that control that influences a determination of employee status.
10. Companies determine fault in accidents. This is a minor example of Company control over a business decision, but is not evidence of pervasive control.36 That the decision as to who is Legally at fault in an accident is made in this way does not support the claim that the Company controls the means and methods by which the lessee conducts his operation.
11. 250 mile limitation. The mileage limitation for one day's driving (like the lease term) defines the outer boundary of the lease. A lessee driver is free to drive the cab as he pleases within the 250 mile limit. This is about twice as much mileage as the 111 miles that lessees drive their cabs in an average day.37 The limitation operates to prevent subleasing. The Board's opinion virtually concedes that this is not an important restriction; it says "(t)heoretically, at least, this mileage limitation imposes a limit on the lessee drivers earnings."38 But with 111 miles being the average daily mileage, a 250 mile limitation is more theoretical than real. Obviously this is not proof of pervasive employer control.
12. Dress restrictions. The Administrative Law Judge found that in practice dress restrictions were limited to a "no sandal" rule.39 Beyond this the only dress restrictions are those imposed by municipal regulations.40 The Union acknowledges that this is "not the most weighty control."41 Actually, it is very minimal.
13. Workmen's Compensation. Illinois Courts have interpreted the Chicago Municipal Code as requiring cab companies to provide workmen's compensation insurance to all drivers, even if they are independent contractors. This is an example of government control. The requirement that such insurance be carried does not affect "the basic relationship established . . . (consensually) between the Companies and their drivers." 195 U.S.App.D.C. at --- - --- n.38,
As a sub-part of the argument addressed to the workmen's compensation coverage the Board argues that one of the factors which "support our conclusion that the drivers herein are employees . . . (is that the) Companies have Considered offering group hospitalization and retirement plans . . ." (Emphasis added)42 It further asserts that "(t)he absence of fringe benefits is of some relevance (as indicating that the lessees are independent contractors) but is of little probative value (especially in light of the fact that the Companies have Considered making fringe benefits available to the lessees)."43 That is a specious argument: group hospitalization is clearly available to groups of independent contractors and retirement benefits can be worked out for the self-employed. To hold that merely "Considering " such plans somehow indicates a master-servant relationship is even more "far-fetched" than the rationale in Hearst, which Congress repudiated. Participation in group medical and liability insurance were also held not to bring the drivers into an employee status in Meyer Dairy, Inc. v. NLRB,
Thus, of the thirteen factors listed by the Board, only 7, 10, 11 and 12 relate to control and these are plainly insufficient to support a finding that the lessee drivers are employees. The inclusion of the other 9 items, which for the reasons stated are not indicative of control over the manner and means of the drivers' operations, indicates that the Board is straining at gnats to find some evidence to support its conclusion that the drivers are " employees." The balance between "control" over the details of the cab driving operation and the independence of the drivers is heavily on the side of " independence". As Judge Sanborn found in Site Oil Company of Missouri v. NLRB,
In reaching its conclusion the Board relied upon many factors that obviously are not indicative of an employer-employee relationship and it gave inordinate weight to factors which were merely very minimal instances of lessee control. This was substantially the same erroneous pattern that Judge Sneed pointed out the Board had followed in Associated General Contractors of California, Inc. v. NLRB,
Some circumstances, like the Companies' power to impose lease terms unilaterally, are evidence of economic power, but as the 9th Circuit stated in Carnation Company v. NLRB,
The House Report on the bill that eventually excluded independent сontractors from coverage under the National Labor Relations Act stated:
"Employees" work for wages or salaries under direct supervision. "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.
H.R.Rep.No.245, 80th Cong., 1st Sess. 18 (1947), Reprinted in 1 NLRB, Legislative History of the Labor Management Relations Act, 1947, 309 (1948). Except for the reference to hiring of others,46 the lessee cab drivers involved here exactly fit the mold of those the House Report indicated were "independent contractors."Petitioners assert that we have established a Per se rule "that all persons who lease taxicabs are independent contractors for purposes of the Act, regardless of the extent to which the employer controls their actions while they are driving his cabs."47 That is incorrect. We hold only that when the lessee drivers are not subject to that control by the Company that is determinative of employee status as determined By the courts, and by agency decisions cited by the Administrative Law Judge,48 they clearly fall within the common law definition of independent contractors and the Board cannot bring them within its jurisdiction. In this case under well established common law rules of agency, the minor controls, analyzed above, are simply too insubstantial to justify a conclusion that the lessee cab drivers are "employees."
IV
This opinion would be incomplete without a more detailed discussion of the legislative history of the controlling provisions of the statute and some of the subsequent judicial decisions that have excluded "independent contractors" from Labor Board jurisdiction.
* It all started with the Supreme Court decision by Justice Rutledge in NLRB v. Hearst Publications,
when the particular situation of employment combines these characteristics, so that the Economic facts of the relation make it more nearly one of employment than of independent business enterprise With respect to the ends sought to be accomplished by the legislation, those characteristics may outweigh Technical legal classification for purposes unrelated to the statute's objectives and bring the relation within its protections . . . (The Act's) applicability is to be determined broadly, in doubtful situations, by Underlying economic facts rather than technically and exclusively by previously established legal classifications. Cf. Labor Board v. Blount, supra (
The opinion proceeded to assign the "definitive limitation around the term 'employee' . . . primarily to the agency created by Congress to administer the Act. '(and) to the usual administrative routine' of the Board."
In United States v. Silk,
We conclude that, since (the object of the Labor Act) was the elimination of labor disputes and industrial strife, 'employees' included workers who were such as a matter of Economic reality. . . . We approved the statement of the National Labor Relations Board that 'the primary consideration in the determination of the applicability of the statutory definition is whether effectuation of the declared policy and purposes of the Act comprehend securing to the individual the rights guaranteed and Protection afforded by the Act.' Labor Board v. Hearst Publications,
Congress was so incensed with the fanciful construction of its legislative intention in Hearst that in 1947 it specifically excluded "independent contractors" from the coverage of the Act and condemned the Court's rationale in Hearst Publications as giving "far fetched meanings" to the words that Congress had used. Congress went on to state that the Board should give these words their "ordinary meaning." This means that the first step in determining the coverage of the Act is to decide whether the individuals involved meet the technical legal classifications of "employees." The Committee Report in the House, where the 1947 amendment originated, set forth the Congressional intent as follows:
(D) An "employee", according to all standard dictionaries, according to the law as the courts have stated it, and according to the understanding of almost everyone, with the exception of members of the National Labor Relations Board, means someone who works for another for hire. But in the case of National Labor Relations Board v. Hearst Publications, Inc. (
House Report No. 245 on H.R. 3020, p. 309.
The Conference Report on the Bill evidenced the same congressional intent:
Although independent contractors can in no sense be considered to be employees, the Supreme Court in N. L. R. B. v. Hearst Publications, Inc. (1944),
House Conference Report No. 510 on H.R. 3020, p. 536-7, U.S.Code Cong.Serv.1948, pp. 1135, 1138.
Senator Taft, one of the principal contributors and advocates of the legislation, in remarks summarizing the principal differences between the Conference Agreement on H.R. 3020 and the Bill which the Senate passed, stated:
The legal effect of the amendment (exempting "independent contractors") therefore is merely to make it clear that the question whether or not a person is an employee is always a Question of law, since the term is not meant to embrace persons outside that category under the general principles of the law of agency.
93 Cong.Rec. 6441-6442 (emphasis added).
It is very significant to this case, as the Senator noted, that "the question whether or not a person is an employee is always a question of law." Id. It is a legal conclusion to be drawn from the facts not a question of policy. The court in Allied Chemical and Alkali Workers v. Pittsburgh Glass Co.,
In NLRB v. United Insurance Co.,
Initially this Court held in NLRB v. Hearst Publications,
The significant observation in this quotation is its description of the standard for coverage that Hearst had attempted and which Congress rejected, I. e., it was a standard whereby the ordinary meaning of the words used in the Act, principally the word "employee," would be largely ignored and the Board's jurisdiction would be determined by a "Standard . . . of economic and policy considerations within the labor field." When this standard was applied, workers who were considered to be subject "as a matter of Economic fact, to the evils the statute was designed to eradicate and . . . the remedies it afford(ed)," were to be found by the Board to be covered by the Act even though they might not be employees in the ordinary usage of that term. By this construction the court ruled that the Act would be applied to all situations where "employers and employees not in proximate relationship may be drawn into common controversies by Economic forces." (Emphasis added). This was truly a remarkable expansion. The application of the Act was to be determined "by underlying Economic facts rather than technically and exclusively by previously established legal classifications." (Emphasis added). Such construction did away with the application of common law principles of agency. Finally came the almost open ended standard for coverage that "where all the conditions of the relation require Protection, protection ought to be given." (Emphasis added)
The vice of this construction lay in the fact that it was grossly indefinite and it began at the wrong end. Instead of first determining that the workers in question were within the "legal classification" of employees as that word is normally understood, and therefore subject to the Act, it began by inquiring whether "economic forces," or "economic reality" as Silk interpreted Hearst, had drawn the parties into a controversy that the Board considered required "protection" in furtherance of the policy of the Act. If so they were found to be subject to the Act even though they might not be ordinarily considered to be employees. The opinion continued on to state that the task of making a completely definitive limitation around the term of employee was "assigned primarily to the agency created by Congress to administer the Act."
So under the construction of the Act in Hearst the Labor Board was to define the extent of its own jurisdiction by discarding "established legal classification(s)." When "Economic facts " or "economic reality" indicated with respect to individuals "drawn into common controversies by Economic forces " that there existed a "relation (that) require(d) Protection " under the Act, the Board was to rule that such "protection" be given the individuals in question even though they might be independent contractors, lessees, or joint venturers.
As indicated above, this construction of the Board's jurisdiction under the Act was completely rejected by Congress in its 1947 amendments and so recognized by the Court in United Insurance Co., and Allied Chemical, supra.
The decision in United Insurance, held, as had been generally recognized, that debit agents of insurance companies are employees. Basically debit agents are collectors of insurance premiums who go door to door in a prescribed area on a regular basis under supervision by the company. They participate in fringe benefits and are paid a percentage of the premiums collected. Collected premiums are turned in weekly. The case "involved the application of law to facts" as the court stated:
The Board examined all of these facts and found that they showed the debit agents to be employees. This was not a purely factual finding by the Board, but involved the application of law to facts what do the facts establish under the common law of agency: employee or independent contractor? It should also be pointed out that such a determination of pure agency law involved no special administrative expertise that a court does not possess. On the other hand, the Board's determination was a judgment made after a hearing with witnesses and oral argument had been held and on the basis of written briefs. Such a determination should not be set aside just because a court would, as an original matter, decide the case the other way. As we said in Universal Camera Corp. v. NLRB,
We also note the admonition of Justice Reed that the determination of independent contractor status from litigated facts is not a "specialized field of knowledge" to the extent that the Labor Board "carr(ies) the authority of an expertness which courts do not possess and therefore must respect . . ." Radio Officers v. Labor Board,
The opinion of the majority of the Board in the instant case seeks support from the same rationale of Congress' intent as was expressed in Hearst Publications, and that Congress specifically rejected as far back as 1947. Thus, the current Board opinion vaguely claims its conclusion is supported by the "Business realities " of the relationship, which is merely another way of relying upon what Hearst Publications described as "economic facts,"50 and what Silk referred to as "economic realities."
Such contentions are a repetition of the same argument advanced by the dissent to Columbus Green Cabs, Inc.
In my view, the majority is following its new direction as seen in Greater Houston Transportation, ignoring significant evidence and giving no credence to the Business realities involved.
The Board also argues here that its prior decision in Columbus Green Cabs, Inc., which held cab drivers, who were subject to more control than those here, were independent contractors, was to be narrowly construed "in order that employees not be denied the Protection of the Act through an undue extension of independent contractor status."51 This is a partial reversion to the same "protection of the Act" argument that was advanced in Hearst as a beginning point in determining coverage, and thereafter rejected by Congress, United Insurance and other decisions.
The dissent in Greater Houston Transportation,
It is difficult to know exactly what the members of the Board are referring to when they rely on "economic facts," "economic realities" and "business realities." Plainly such vague generalities do not rise to the dignity of factual findings. There is a strong indication that the Board is harking back to vestiges of the Hearst rationale when it includes among the numerated items in its opinion many that are Not indicative of control but nevertheless are illogically relied upon as upholding a determination of employee status. The factors the Board enumerated that clearly fall into this category are: (2) Goodwill; (3) Drivers' work is essential to Companies' operations; (4) Lease term is short and renewable at the Companies' option; (5) Lease term unilaterally set by the Companies; (9) Drivers are subject to having their references checked when they apply for a lease; and (13) Workmen's Compensation. The Board has been criticized for giving Inordinate weight to isolated examples of company control and to factors which are Not persuasive evidence of the employer-employee relationship. Associated General Contractors, supra,
Also when the Board points in its Petition for Rehearing, at 3, to the substantial number of lessees it implicitly is contending that since the drivers are a large group they obviously should be given "protection" and be deemed to be "employees" because of their number and substantial effect on commerce. Actually, the number of drivers involved is an irrelevant consideration as to whether or not they are employees subject to the Act. The numbers argument is a reversion to part of the Hearst rationale and ignores the fact that Congress gave "independent contractors" as much right to be excluded from the Board's jurisdiction, regardless of their numbers, as "employees" were given to be included, regardless of their numbers.
To argue further that prior decisions applying the control test and holding certain individuals to be independent contractors should be given a "narrow construction" is nothing more than an attempt by the Board in its construction of the Act to ignore the Congressional direction that the terms "independent contractors" and "employees" be given their "ordinary meanings" not narrow meanings. House Report, supra. Congress was very specific in its language and it was very specific in the Committee Report that it intended its 1947 amendment to be given its ordinary meaning, the same as the other provisions in the Act. The Board's "narrow construction" does not do that.
B
The history delineated above establishes that principles of agency law determine whether a worker is an employee or an independent contractor, and that "employee" and "independent contractor" are to be given their "ordinary meanings" by the Board. It is not acceptable for the Board to expand its jurisdiction by a narrow reading of "independent contractor." Congress clearly intended that only Employees would be covered by the Act. Thus, if a worker is an independent contractor, as that term is normally understood, then the Board has no authority under the Labor Act.
We have already cited a number of decisions in which courts of appeals have reversed the Board on this point. See, e. g., Associated General Contractors v. NLRB,
the natural tendency of the Board and of reviewing courts to look primarily to other NLRB cases involves some degree of moving away from the "pure agency law" test mandated by Congress in the Taft-Hartley Act and inching back toward the view expressed in the Hearst opinion,
We cannot say that here the Board had no basis for its conclusion. But Universal Camera, as implemented in this area by United Insurance, could not have meant to extend immunity from judicial review that far; to do so would run counter to the whole thrust of that important opinion as to the new "mood" concerning judicial review,
The foregoing comments are equally applicable here and they accurately express our opinion and findings as to the instаnt case. Particularly in view of those frequent instances where the Board enumerated items it considered evidence of a master-servant relationship, when in reality they were not relevant to control, we cannot conscientiously agree when the common law test is applied to the whole record that there is substantial evidence Fairly supporting the Board's decision.
V
In our initial opinion we reversed the Board's decision that "the Companies unlawfully refused to bargain about their decision to lease cabs to drivers,"53 and held that "the companies' unilateral action was not an unfair labor practice because the union itself made any negotiation impossible by imposing an improper condition as a prerequisite to bargaining."54 The Board and the Union contend that this was error. They maintain that the "panel's conclusion is simply not supported by the record"55 and that "the panel has wholly misapprehended the rationale of the Board's decision."56 They also contend that Fibreboard principles were violated by some comments in the decision. We have reviewed the petitioners' points in this respect and as hereinafter indicated we rest our opinion in this regard wholly upon the Union's improper refusal to bargain.
Both the Administrative Law Judge (ALJ) and the Board acknowledged that the Union refused to bargain about leasing unless it was recognized as the bargaining representative of the lessee drivers. The ALJ conceded that the Companies "had no intention of permitting the Union to participate in (the decision to lease.)" In addition, however, he found:
For its part, the Union was equally adamant in insisting that any negotiations about the leasing program be conditioned upon company recognition of the Union as the collective bargaining representative of the lessees.57
Later in his opinion the ALJ held:
the Union precluded bargaining along these lines (about the decision to go into leasing) by adamantly insisting that it could not consider any alternative to the Companies' plan unless they recognized the Union as the bargaining representative Of the lessees under the existing collective bargaining contract.58
In its opinion reversing the ALJ, the Board did not contest this factual finding. It stated: "The Union, for its part, insisted that any negotiations about the leasing program be conditioned upon company recognition of the Union as the collective bargaining representative of the lessee drivers."59 Yet despite this Union imposed prerequisite to bargaining, the Board held that the Companies were guilty of unfair labor practices. The Board stated:Given the Companies' preordained refusal to bargain about the decision to lease, we, contrary to the Administrative Law Judge, find it immaterial and no defense for the Companies that the Union adamantly sought to condition negotiations upon its being recognized as the bargaining representative of the lessee drivers.60
The Board's decision is wrong as a matter of law. A union "may not insist on recognition as representative of persons wholly outside the coverage of the Labor Act."61 If a union requires such recognition as a pre-condition to bargaining, then the employer's refusal to bargain on those terms is not an unfair labor practice. As Judge Friendly wrote:
if a union insists on speaking on behalf of persons for whom it cannot properly so insist, an employer cannot be faulted for refusing to bargain.
NLRB v. Kelley Brothers Nurseries, Inc.,
Here, the Union wrongly pre-conditioned its willingness to bargain on the companies' recognition of it (the Union) as representative of the lessee drivers. Since those drivers are independent contractors, the Union has no right to represent them.63 More important, the Union had no right to refuse to negotiate about the leasing decision until it was recognized. By making recognition a prеrequisite to bargaining, the Union effectively excused the companies' obligation to bargain.
The Board did not explain why it concluded that the Union imposed prerequisite to bargaining was "immaterial." The most likely reason is that in the posture of the case then, the Union was entitled to be the bargaining agent for the lessee drivers. The Board's opinion held that those drivers were "employees" subject to the coverage of the Labor Act. Assuming that, there is nothing unfair or unreasonable about the Union requiring the Companies to recognize it as bargaining agent for those "employees." After all, the Union has long been "certified as the collective-bargaining representative of both Companies' employees. . . ."64 But the whole justification for the Board's decision crumbles in light of our holding that the lessee drivers are independent contractors, not employees. Independent contractors are outside the coverage of the Labor Act, and a union may not require that it be recognized as the representative of independent contractors as a condition to participating in negotiations.
Another possible justification for finding the Union's refusal to bargain to be "immaterial" is that the Companies were allegedly "first" in refusing to bargain. Though this argument was not made in its opinion, the Board's petition for rehearing states: "it was the Companies which first adopted an intrasigent attitude on the subject, wholly independent of any actions on the Union's part. . . ."65 We find this newly advanced argument to be based on an incomplete application of the admitted facts66 and to be unpersuasive.
Neither the Board's nor the ALJ's opinion establishes that the Companies' refusal to bargain was the cause of the Union's refusal to negotiate. The Board's petition for rehearing alleges two grounds that assertedly prove that the Companies' decision to lease was irrevocable long before the negotiation process started: (1) "the Companies began formulating their leasing plans as early as the summer of 1974 . . .; . . . the Union indirectly found out about the plans shortly thereafter, and sought a meeting, which the Companies refused"; and (2) "the Companies did not meet with the Union until the following summer, when the Companies specifically stated that, 'We are not asking for your permission (to lease). We are going to do it.' . . ."67 Because of other facts which were overlooked neither fact proves the Board's contention.
(1) The Company's refusal to negotiate in the summer of 1974 is irrelevant to this appeal. First, the Board's complaint, which defines the boundaries of this case, cites the Companies' alleged refusal to bargain "(s)ince on or about June 5, 1975. . . ."68 The complaint, and therefore this appeal, has nothing to do with alleged refusals to bargain before that date.69 Second, there is a good reason for the June 5, 1975 date in the Complaint. In 1974 the Companies were considering a different leasing plan involving the transfer of cab licenses to separate companies to be newly incorporated as wholly owned subsidiaries. When this transfer was denied by the city of Chicago, the Companies "for the first time manifested consideration of a plan for direct leasing of cabs."70 The alleged refusal to bargain involved in this appeal is with respect to the subsequent direct leasing plan, not with the discarded plan to use new corporations. The Companies' position on bargaining about the earlier leasing plans is irrelevant, and was not cited as evidence of the Companies' intransigence by either the ALJ or the Board. To raise it now also amounts to impermissible Post hoc rationalization.71
(2) While it is true that the ALJ and the Board found that the Companies "had no intention of permitting the Union to participate in (the decision to lease)"72, this finding does not establish that the Companies' decision was reached "first," or that it caused the Union to take a hard line. There is a great deal of evidence that the Union was every bit as intransigent on the leasing question as the Companies were. In its statements to the press, the Union indicated that it was opposed to leasing.73 When the Companies subsequently "Invited discussion (with the Union) before their final decision" (emphasis added), they referred to the Union's public position on leasing, and asked the Union to "confirm, deny, or qualify" its earlier statements.74 The Union never responded to this request. Thus, even if the Companies were the first to take an intransigent position they subsequently offered to correct their error and negotiate thereon but the Union refused to negotiate. And there is evidence that the Union's only comment to the Companies during June, 1975, when negotiations were under way was to "(g)et out of the leasing business."75 Thus the evidence indicates that the Union, like the Companies, was unwilling to bargain about leasing.
More important, neither the ALJ nor the Board concluded from the evidence that the Companies' refusal to bargain caused the Union's intransigent position on the recognition issue. Both the Board and the ALJ found that the Companies had a preordained position on leasing, And that the Union would not negotiate at all unless it was recognized as representative of the lessee drivers. Though they disagreed as to the significance of the Union's precondition to bargaining, the Board and the ALJ approached the question in exactly the same way. The ALJ wrote:
If General Counsel is correct, and the lessees are employees within the bargaining units, then the Union was entitled to adhere to its contractual rights, and the Companies violated the contract and the Act by embarking upon leasing. If, however, General Counsel is wrong, then the Union effectively precluded negotiations about leasing by conditioning such negotiations on a nonmandatory subject of bargaining, i. e., recognition of the Union as representative of a group of individuals who were either not employees or who were employees outside of the bargaining unit.76
Similarly, the Board recognized and applied the principle that the scope of the valid bargaining unit controls the extent of the bargaining obligation:77
If, as General Counsel and the Union contend, the lessee drivers are employees within the meaning of the Act, then by failing to apply the terms of its collective-bargaining agreement with the Union to these lessees the Companies violated Section 8(a)(5) of the Act. If, as the Companies contend (and the Administrative Law Judge found), the lessee drivers are not employees within the meaning of the Act, but are instead independent contractors, then Respondent Companies' refusal to recognize the Union was not a violation of the Act.78
The Board and the ALJ reached opposite results because the Board held that the lessee drivers were employees, whereas the ALJ found them to be independent contractors. The Board's conclusion did not rest on the Companies' alleged responsibility for the Union's precondition to bargaining.
In short, neither the evidence nor the opinions below support the Board's assertion that the Companies are primarily responsible for the break-down of negotiations. On the uncontroverted facts, such a conclusion would be remarkable. Even accepting the Union's position, the Companies only had "preordained" views on the issue of whether to institute a leasing program. There is absolutely no evidence that the Companies would not negotiate on the details of a leasing plan and there is evidence that they subsequently "invited" such discussion. The Union, however, refused to bargain entirely both with respect to the decision to lease and the details of any leasing plan. Thus, if it were necessary to decide which party was more at fault in the last analysis, we would have to choose the Union.
With respect to its representation of the commission drivers the opinion of the Administrative Law Judge found the following uncontroverted facts:
The Union raised some questions about the possible impact of the leasing program upon the commission drivers and the commission fleet. However, the Union never requested the Companies to bargain about any possible or asserted removal of work from the commission fleet, beyond declaring its opposition to leasing, nor did the Companies manifest an unwillingness to discuss such matters as distinct from their decision to go into leasing. If, for example, the Union felt that the Companies were failing to provide their commission drivers with cabs, as provided in article III, section 3 of their contract, or were unreasonably suspending or discharging commission drivers for low bookings or high mileage, whether or not such actions were influenced by the leasing program, they could have filed appropriate grievances and pursued them to arbitration. However, the Union did not do so. Moreover, as will be discussed Infra, such matters are beyond the scope of the present complaint.79
In summary, the Union refused to bargain unless it was recognized as bargaining representative for the lessee drivers. Since the lessee drivers are not employees, the Union had no right to make this demand. This Union imposed obstacle to bargaining undercuts the Union's claim that the Companies committed an unfair labor practice by refusing to bargain.
Conclusion
We adhere to our conclusion that the leasing of the cabs did not constitute a hiring of the lessees under a master-servant relationship and that the companies did not commit an unfair labor practice within the period covered by the General Counsel's complaint. The petitioners' motions, addressed to the division of the court, to rehear the case are therefore denied.
So ordered.
Notes
Sitting by designation pursuant to 28 U.S.C. § 293(a)
Yellow and Checker Cab Companies are related corporate entities (Yellow is a wholly owned subsidiary, JA 37a). Together they provide three-fourths of the taxis in the Chicago area. The total number of cab licenses is fixed at 4,600 of which Yellow holds 2,166 and Checker 1,500. JA 3a. Both are employers engaged in commerce within the meaning of section 2(6) and (7) of the Act, JA 34a
The Union was certified as the commission drivers' collective bargaining representative in 1961, JA 3a; Checker Taxi Co. et al.,
The additional remedies requested by the Union were the reimbursement to the cab drivers of "take-home fees," unlawfully collected from them, See section V and VI, Infra, and to compensate the union for initiation fees and dues allegedly lost by the Companies' refusal to recognize it as the bargaining agent for lessee drivers, See section VI, Infra
Yellow has been engaged in business for over 60 years and Checker since 1951. JA 39a
The conditions in the cab industry were sufficiently poor that the Union president himself consented to expedited negotiations during the summer of 1974 so that a new collective bargaining agreement could be reached in time for the City Council to vote on a proposed cab fare increase. On August 21, 1974 the Council approved a 19 per cent fare increase rather than the requested 25 per cent increase. This rate increase did little to improve the financial condition of the companies, and did nothing to reduce the "irregular but perceptible decline" in the total number of shifts worked by drivers. The primary cause of this decline was the decrease in full-time drivers. JA 43a-44a (Findings of the Administrative Law Judge)
For an example of the tone of these meetings, when the Company attorney asked the Union attorney if the Union had any proposals to discuss, the truculent response was: "Yes, I have. Get out of the leasing business." JA 46a (Findings of the Administrative Law Judge)
JA 46a (Findings of the Administrative Law Judge)
JA 5a, 47a (Findings of both the Board and the Administrative Law Judge)
Despite an absence of solicitation, leasing was obviously much more attractive to the drivers than commission work. As of November, 1977, only two-and-a-half years after leasing began some 72% Of the Yellow and Checker drivers were lessees rather than commission operators, Brief for Union as Intervenors in No. 77-1673 at 33. Perhaps the popularity of leasing was due to the lack of control that the drivers felt they were under from the Company when they leased as opposed to driving for a commission. A lessee witness testified, concerning leasing: "No trip sheet, nothing. No problem. It is free and I really like that. I love it. I am free" (Tr. 1183)
Checker requires a $100 bond; Yellow requires a $250 bond, JA 49a
JA 38a (Findings of the Administrative Law Judge)
JA 60a, 62a
JA 2a-3a, 12a-17a
JA 11a-17a
JA 17a
Ordinarily, we show considerable deference to the judgment of the NLRB, E. g., IBT, Local 782 v. NLRB,
See pages --- - --- of 195 U.S.App.D.C., pages 872-878 of 603 F.2d
The Board has provided so little rationale for its decisions that the Administrative Law Judge was lead to conclude that the only way to reconcile the Board precedents relating to trucks, E. g., John Himmer Transfer, Inc.,
For example, Members Miller, Kennedy, and Penello have uniformly voted to find that driver-lessees are independent contractors, E. g., Barwood, Inc.,
JA 14a-15a. The General Counsel to the NLRB has referred rather euphemistically to the "ebb and flow" of the Board's decisions in this area, JA 59a (Findings of the Administrative Law Judge) See note 19, Supra. The Board will have to indulge in less flow
JA 15a (decision of the NLRB)
Subsequent to oral argument and while this opinion was circulating counsel for the NLRB and the Union directed our attention to the NLRB's decision of August 25, 1978 in Columbus Green Cabs, Inc., et al.,
Although the Board found in the 1974 Decision involving the Employer that the drivers therein were independent contractors, our findings as to the employee status of the drivers in the instant case are based on an expanded current record which contains a number of factors not discussed in our earlier Decision, as considered in the light of recent taxicab cases. . . . (T)he current record contains evidence concerning the relationship between the drivers and the taxicab Companies which is similar to that presented in recent taxicab cases. Accordingly, we do not deem ourselves bound by the earlier Decision which was based on a more limited record. (Footnotes omitted.)
NLRB No. 176 at 9-10
The Board's flip-flop in Columbus Green Cabs highlights the erratic nature of its opinions which decide whether cab drivers are employees or independent contractors. The shift in the second Green Cabs case was predictable since the new panel included both Fanning and Jenkins. See note 20, Supra. In the 1974 decision Chairman Fanning had dissented.
Moreover, the 1978 opinion gives only perfunctory attention to the 1974 decision that was being reversed. The Board cited two factors in the "expanded current record" that distinguish the situation in 1974 from that in 1978:
(1) the employer's unilateral revision of the lease, (2) its arrangement with the railroads, its detailed contracts with the city of Columbus concerning school trips and the airport concession, and the many mandatory provisions and specific directions set forth in these contracts as well as in the manual.
NLRB No. 176 at 10. The first factor was mentioned by Chairman Fanning in his 1974 dissent and therefore cannot explain the different result in 1978. The second factor involves some elements of control which might be probative of employee status, but it has no factual counterpart in this case. Thus the result in Columbus Green Cabs II is not inconsistent with the result we reach here
Unilateral revision of the lease. The NLRB states in Green Cabs II that "the provisions of the lease are prepared by the Employer which has unilaterally and without negotiation with the drivers changed the rental and mileage fees."
In addition, the company's economic bargaining power is not a basis for distinguishing the 1974 Columbus Green Cabs decision from the 1978 decision. In Member (now Chairman) Fanning's dissent from the 1974 decision, he pointed out that
the Employer( ) retain(s) the ultimate power to refuse to renew, or to rescind, a lease at any time for any cause. . . . I am not persuaded by the Employer's contention that the lease fee can be negotiated when the record shows only that the Employer occasionally accepts less than the usual fee when a driver gets sick on the job.
NLRB 751, 753-4. Thus, the ability of the company to unilaterally determine a particular term in the lease provisions is not the kind of new fact that warrants the NLRB's conclusion that its earlier decision is not a binding precedent in this case
Contracts. According to the 1978 opinion, Columbus Green Cabs agreed to provide regular service at the railroad and the airport and contracted with the school board for the transportation of handicapped students to school.
However, there are no "special instructions" in the instant case. On the contrary, the Companies exercise virtually no control over the drivers. While the drivers are required to comply with applicablе municipal regulations, this would be the case even though it were not so provided in the leases. See ---- - ---- of
Another point stressed in the 1978 Columbus Green Cabs opinion is that calls from dispatchers account for "75 to 80 percent of (each driver's) trips."
(T)hese drivers rely heavily on calls from the dispatch service, which furnishes the best chance to make money, as Employer admits; drivers keep their radios on and use the cab stands. To say that a driver has the "discretion" to cut himself off from what amounts to 70 percent of the business available to him is simply not realistic.
NLRB at 754
In summary, the facts in the 1978 Columbus Green Cabs case are distinguishable from the facts here. More important, the cavalier way in which the Board determined that it was not bound by its 1974 decision is further evidence of the unsatisfactory manner in which it causes its decisions in this area to "flow." See note 21, Supra. With respect to this 1978 decision it should also be noted that it relies on some 19 enumerated items as indicating control by the lessor but a great many of said enumerated items are not probative of control over the manner and means with which the lessee-cab drivers carry out their trade and business. In this respect and elsewhere in the opinion, conclusory assertions are relied upon in place of reasoned analysis and specific discussion. Finally it appears that the Three member panel in Columbus Green Cabs (1978) (Fanning, Jenkins, Murphy) is in effect overruling the underlying holding in Greater Houston Transportation Company,
See note 17, Supra
The Board recently restated the "right-of-control test" in Twin City Freight, Inc., S & B. Nelson, Inc.,
The Board applies the common law right-of-control test in determining whether individuals are employees or independent contractors. (Citing N.L.R.B. v. United Insurance Cо. of America,
The thirteen factors to which the Board called attention were the following:
(1) the lessee drivers have no investment in the instrumentalities of their work; (2) the lessee cabs display the Companies' insignia and all goodwill arising from operation of the cabs inures to the Companies' benefit; (3) the work performed by the lessee drivers is an essential part of the Companies' normal operations; (4) the lease term is short and is renewable only at the Companies' discretion; (5) the terms of the lease are unilaterally set by the Companies; (6) the lessee driver is required by the Companies, upon penalty of forfeiture of the lease, to obey a pervasive scheme of municipal regulations; (7) no subleasing is permitted; (8) the Companies discipline lessee drivers through the threat of city action; (9) the lessee drivers are, in the manner of regular employees, subject to reference checks at the time of application for a lease; (10) the Companies unilaterally determine whether a lessee driver is at fault in the event of an accident; (11) the Companies have imposed a 250-mile limitation on miles driven during the term of the lease; (12) the Companies have imposed dress restrictions on the lessee drivers; and (13) the Companies, at least arguably, provide workmen's compensation insurance for the lessee drivers.
JA 12a-13a.
JA 13a ("only by ignoring business realities can it be said that these drivers exercise any real 'independence' "); Compare Member Fanning dissenting in Columbus Green Cabs, Inc., supra,
JA 13a, 15a-16a
JA 14a
Id
JA 15a
Restatement (Second) of Agency § 220 (1958) provides:
§ 220. Definition of Servant
(1) A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control.
(2) In determining, whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant; and
(j) whether the principal is or is not in business.
JA 61a
Id
The fact that independent drivers, who obviously are not "employees" must also follow the municipal regulations or risk suspension of their chauffeur's privileges is some indication that obedience to these rules even if compelled by one's putative employer is not an identifying characteristic of an "employee" as opposed to an "independent contractor."
See note 24, Supra
JA 61a
See Companies' Brief at 7; JA 41a ("The trip sheet is, as Checker President Feldman testified, the Companies' principal means of controlling the driver in order to determine whether he is doing his job properly.") (footnote omitted)
The Companies also provide no fringe benefits whatsoever for their lessee drivers, JA 48a (findings of the Administrative Law Judge). The Companies do carry liability insurance on each cab, but this coverage is clearly designed to insulate them from the liability imposed upon them as the owner of the cabs, not as a hidden fringe benefit to their drivers, JA 53a (findings of the Administrative Law Judge). The Companies also did not consider their lessees to be covered by workmen's compensation. Two recent decisions of the Illinois Supreme Court, Morgan Cab Co. v. Industrial Commission,
That the Chicago code specifically requires Companies to pay for workmen's compensation for their lessee drivers does nothing to affect those factors which are considered fundamental to determining independent contract status under the National Labor Relations Act, See Section IIIb, Infra. Moreover, the municipal regulation requiring the proprietor of a cab to pay workmen's compensation for the driver is simply another instance of the external intrusion of government regulations, not affecting the basic relationship established consensually between the Companies and their drivers. We note that despite Section 28-12's requirement that the proprietor pay workmen's compensation, Section 28-9 provides that The relationship between the licensee and the driver of a cab may be such as is mutually agreed upon by contract. See generally JA 37a-38a (findings of the Administrative Law Judge).
JA 38a-39a n.7 (findings of the Administrative Law Judge). The regulation was promulgated subsequent to the hearing by the Administrative Law Judge
In some instances prohibiting subleasing has been considered significant in the determination of employee status, NLRB v. Pony Trucking, Inc.,
JA 12a, 13a
Restatement (Second) of Agency § 220, comment k at pages 490-91 ("The ownership of the instrumentalities and tools used in the work is of importance. The fact that a worker supplies his own tools is some evidence that he is not a servant. On the other hand, if the worker is using his employer's tools or instrumentalities, especially if they are of substantial value, it is normally understood that he will follow the directions of the owner in their use, and this indicates that the owner is a master. This fact, is, however, only of evidential value.")
JA 49a (findings of the Administrative Law Judge)
$7,000 (actually $6886.00) is a minimum figure for the yearly investment in cab leases, as for this amount a driver would only obtain the use of a cab for some 313 days at $22.00 a day
For example, that the terms of the lease are unilaterally set by the companies; that the Companies prohibit sub-leasing; that all goodwill arising from the operation of the cabs inures to the Companies' benefit
JA 43a-44a (findings of the Administrative Law Judge)
It is clear that when Congress amended the Act in 1947, one of its specific purposes was to ovеrturn two then recent Supreme Court decisions, United States v. Silk,
See Note 47, Supra
There is no question that under the Act as amended in 1947 independent contractors are not included, E. g., Carpet, Linoleum, Soft Tile and Resilient Floor Covering Layers, Local Union No. 419, AFL-CIO v. NLRB,
The Administrative Law Judge commented: "If the Board's decisions ended at volume 207, I would have little alternative but to find that the lessees are employees. In a line of decisions prior to that point, the Board found lessees of taxicabs to be employees within the meaning of the Act. . . . However, in Greater Houston Transportation Company d/b/a Yellow Cab Company,
The fact that the same decisional inconsistency that was the basis for our reluctance to show any particular deference to the Board's decision in this case, See Section II, supra, is also the basis for the equitable argument made here, illustrates the axiom of administrative law that agencies are only entitled to deference when they act according to the rule of law, in an equitable and non-arbitrary fashion
Concerning Yellow and Checker's efforts to model their leasing program after those that had been held to create independent contractor rather than employee drivers, the intent of the parties is not completely dispositive of the question of whether a relationship is one of employment or of independent contracting, but intent is pertinent in that it may reflect on the presence Vel non of control, See Lorenz Schneider Co., Inc. v. NLRB,
As demonstration of how successful Checker and Yellow had been in copying the leasing program instituted in Columbus Green Cabs, Inc., consider the following comments by Member Penello, dissenting from the decision of the Board in this case:
The majority opinion attempts to distinguish this case from Columbus Green Cabs despite the fact that they are virtually indistinguishable. The following similarities exist in both cases: the Companies provide the taxicab, maintenance thereon, as well as licenses, fees, taxes, and insurance; the Companies make no deductions for Federal, State, or local taxes; the lessee driver provides his own gas; the lease agreement expressly disavows the creation of an employer-employee relationship; there are no prescribed or required hours of work for the drivers; the drivers are not required to report their location; the lessees are required to inspect their vehicles for mechanical defects at the beginning of the lease term; the lessee is not permitted to sublease to any other person; the Companies will not refuse to execute a lease because of a customer complaint unless the complaint relates to unsafe driving; and the lessee agrees to operate the taxicab in conformity with all applicable laws.
Moreover, most of the factors upon which the majority relies in distinguishing this case from Columbus Green Cabs are not, in my opinion, indicative of an employer-employee relationship. For example, the majority cites the 250-mile-per-lease limit on drivers and the requirement that drivers have all repairs on cabs performed at the Companies' garages. These factors, however, more likely represent the Companies' efforts to preserve the life of the taxicabs they own and keep down the cost of repairs, rather than their attempts to restrict drivers' earnings or present subleasing, as asserted in the majority opinion. Moreover, by offering day and night leases, the Companies do not, as the majority contends, prescribe the drivers, hours of work. For, as their opinion also indicates, the Companies offer a 24-hour lease as well, as was the case in Columbus Green Cabs.
Furthermore, the majority cites the existence of a provision in the lease making compliance with the pervasive scheme of municipal regulations a condition thereof, However, this provision was also present in Columbus Green Cabs. The majority asserts that this provision allows the Companies to exercise effective control over all matters covered by the regulations. But, the actual effect is just the opposite it constitutes an abdication by the Companies of control over such matters in favor of the municipal authorities.
In sum the facts in the instant case are virtually indistinguishable from Columbus Green Cabs . . .
JA 26a-27a (footnotes omitted).
In view of our determination that the lessee drivers are not employees and thus clearly not part of the same bargaining unit as the commission drivers, it is not necessary for us, as it was not necessary for the Administrative Law Judge, to pass on the Companies' alternative argument that as there are now three times as many lessee as commission drivers it would be improper to "accrete" the larger unit unto the smaller one, See JA 61a n. 18 (findings of the Administrative Law Judge)
JA 34a ("Indeed it is the position of the General Counsel that this (the question of whether or not the lessee-drivers were independent contractors) is the 'crux' and only substantial issue in the case, and he concedes that if the lessees are independent contractors, his complaint should be dismissed."). In their brief before this Court, the NLRB suggests only that the Companies committed an unfair labor practice in not providing information to the unions relevant to how the decision to institute leasing Would affect the commission drivers. It nowhere suggests that bargaining had to take place concerning the inauguration of leasing Per se, granting that the lessee-drivers were not employees. See Brief for the NLRB 50-53
29 U.S.C. § 158(a)(5) makes it an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title." 29 U.S.C. § 159(a) in turn provides that collective bargaining representatives "shall be the exclusive representatives of all the employees in (the bargaining unit) for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment . . . ."
Brief for the Union as Intervenor in No. 77-1673 at 28-33
Brief for the Companies at 16-21
The Administrative Law Judge found that "the Union failed to prove that leasing has had any adverse impact on the commission drivers, unless the transfer of cabs to the lease garages can be deemed, Per se, to have such effect. The Union failed to prove that as a result of leasing, commission drivers have suffered diminution of income, assignment to inferior cabs, inability to obtain safe and operable cabs, or terminations or discharges for low bookings or high mileage, or that applicants for commission driving have been turned down for lack of a cab. JA 62a. The Board's response to this argument appears at JA 17a
The Administrative Law Judge commented that he did not see as meaningful the cab companies' proposed analogy between their leasing operations and rental car businesses because the latter exerted much less control over their renters than the former did over their drivers and, in addition, the rental agencies uniformly prohibited the use of their autos as taxicabs. JA 50a. The differences pointed out by the Administrative Law Judge unquestionably do exist; however, the essential basis of the analogy is not the use or degree of control exerted or the types of car usage prohibited by lessor cab companies and rental agencies, but rather that both enterprises base their income on a flat rate payment by the lessee unconnected with any profit he himself may realize from the use of the car
The original denial of enforcement of the Board's order was reported in NLRB v. Adams Dairy, Inc.,
JA 44a (Findings of the Administrative Law Judge)
The union denounced the decision to institute leasing as an anti-union attack, JA 45a (findings of the Administrative Law Judge), but other than such self-serving statements, there was no doubt whatsoever concerning the declining profitability of the commission cab operation, the need for a rate increase, and the "serious conditions" in the cab industry in general. Indeed, the Union president himself acknowledged these problems, JA 43a-44a (findings of the Administrative Law Judge) See note 6, Supra
The reason for this reluctance was aptly expressed by this court in UAW v. NLRB,
JA 62a (findings of the Administrative Law Judge)
The Board did not question the findings that "the Union adamantly sought to condition negotiations upon its being recognized as the bargaining representative of the lessee drivers," but rather held that this intransigence was "immaterial," JA 17a.
JA 17a
JA 45a-46a (findings of the Administrative Law Judge)
There is no need to become embroiled in the quandary of whether if the Companies had not arrived at a "preordained" decision to commence leasing the Union might itself have been less intransigent. The fact that the Companies strongly supported leasing does not mean that they had precluded all meaningful collective bargaining. Even assuming that they were not prepared to compromise on the basic concept of leasing, many of the details appear to have been open to compromise and discussion. It was the Union's refusal to engage in Any discussions unless recognized as the bargaining representative for the lessee-drivers which precluded negotiation, together with its own premature abandonment of collective bargaining in order to pursue its adamant opposition to any leasing in other forms
JA 46a (findings of the Administrative Law Judge)
The Act was framed with a recognition that refusals to negotiate had been a major cause of industrial unrest, Vaca v. Sipes,
The Board also held that the Companies had violated 8(a)(5) and (1) of the Act by refusing to give the Union information it requested concerning a.) the number of new cabs purchased and placed into use in 1972-1975 and whether any new cabs had been ordered for assignment to drivers not covered by the collective bargaining contract (I. e., lessees); b.) the reasons for each employee termination in the years 1973-1975; and c.) the Companies' operating statements and tax returns from 1973 to date. Although the duty to bargain in good faith obliges the employer to furnish information necessary for the union to act intelligently on its grievances, NLRB v. Acme Industrial Co.,
The basic reason for our conclusion that Yellow and Checker were not required to provide the data requested by the Union is that this data related to the Companies' decision to institute leasing and this decision was, as we have explained above, not a mandatory subject of bargaining. In addition, as the Union represented only the commission drivers, the information it requested would not "ordinarily (be) relevant to its performance as bargaining representative" and in such cases the courts have required "a special showing of pertinence before obliging the employer to disclose," Prudential Insurance Company of America v. NLRB,
In addition to this underlying justification for the Companies' action, several additional factors supporting their refusal to divulge the information are significant. In arriving at their collective bargaining agreement, the parties had specifically included a provision, Article VI, Section 4 (JA 79a) providing that the Companies must notify the Union within thirty days of any separation of an employee from employment. Nothing whatsoever was said about notifying the Union of the reasons for this termination. Accordingly, by the terms of the agreement itself, there was no obligation to provide the additional information requested. In regard to the request for financial statements, this was made After the June 5 and 17 meetings at which the Union's position had precluded negotiation. By this point, the Union had forfeited its opportunity to negotiate and was not entitled to further information. Moreover, the Companies' financial statements were on file with the City of Chicago, and the fact that the Union never examined them suggests that this particular request for information was meant largely for the purpose of harassment, not bargaining. An employer is not obliged to disclose his financial statements merely because they might be helpful to a union, E. g., C-B Buick, Inc. v. NLRB,
See Retail Clerks Union, Local 1401, R.C.I.A. v. NLRB,
Brief for NLRB at 54; 29 U.S.C. § 160(e); NLRB v. Ochoa Fertilizer Corp.,
JA 64a-65a (findings of the Administrative Law Judge)
The scope of the mandatory bargaining subjects, "wages, hours, and other terms and conditions of employment," has been broadly construed, 5 Kheel, Labor Law 19-4 (1974)
For example, one cab driver testified that the arrangement enabling him to take his cab home at night was worth some $46 a day to him, JA 64a (findings of the Administrative Law Judge)
The Board and the Administrative Law Judge were in agreement that Yellow and Checker had committed an unfair labor practice in this aspect of the case. JA 24a, 67a, 69a. There is no question that the Union was the recognized bargaining agent for the commission drivers and thus had to be consulted concerning a change in the terms of their employment, National Labor Relations Act § 8(a)(5), (d), as amended, 29 U.S.C. § 158(a)(5), (d)
Although in many of the cases where the employer has changed the conditions of employment unilaterally there is clear indication of anti-union animus, E. g., Wil-Kil Pest Control Co. v. NLRB,
An employer may change terms of employment without bargaining to impasse if he has given a reasonable opportunity for counter-proposals from the Union, NLRB v. Citizens' Hotel Co.,
Brief for Union as Petitioner in No. 77-1512 at 23-25
JA 67a-68a (findings of the Administrative Law Judge adopted by the Board)
See note 65, Supra
JA 64a (findings of the Administrative Law Judge) ("President Feldman testified that he had uniformly demanded adherence to the rule which required drivers to check in their cabs at the end of each shift.")
See note 74, Supra
Virginia Electric & Power Co. v. NLRB,
(A Board remedy may not be overturned) unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act.
Brief for the Union as Petitioner in No. 77-1512 at 11. The Union also argues that the rate of interest which the Board assesses on its monetary awards is inadequate. Although the 6% Rate assessed by the Board in this case has since been revised somewhat upward by the Board, Florida Steel Corp.,
Sitting by designation pursuant to Title 28 U.S.C. § 293(a)
Petition for Rehearing (Local 777) 1 (hereinafter Union Petition)
195 U.S.App.D.C. at ---,
Petition for Rehearing (NLRB) 9 (hereinafter NLRB Petition); Union Petition 12-14
See, e. g., NLRB v. Local 103, Iron Workers,
United Insurance, supra,
See also United States v. First City Nat'l Bank of Houston,
The court's opinion states:
(The Board) has tended to rely on a variety of factors some of which are of only marginal relevance while glossing over the fundamental question of whether or not the putative employer has the right to control the driver during the course of his operation of the cab in the manner and means in which he earns his income and whether the drivers can be most aptly described as working for themselves or for a wage they receive from companies.
. . . We deny enforcement of the Board's order because we are able to determine that the lessees in this case were independent contractors.
195 U.S.App.D.C. at ---, ---,
because of the Board's history of vacillation and the basically legal nature of the question before us, it is inappropriate for this court to extend any great amount of deference to the Board's disposition of the problem of whether or not Yellow and Checker's lessee-drivers are employees or independent contractors.
Accord: NLRB v. Local 103, Iron Workers,
See cases and authorities cited in 195 U.S.App.D.C. at ---, ---,
For example, in Universal Camera Corp. v. NLRB,
direct(ed) that courts (of appeal) now assume more responsibility for the reasonableness and fairness of Labor Board decisions than some courts have shown in the past. Reviewing courts must be influenced by a feeling that they are not to abdicate the conventional judicial function. Congress has imposed on them responsibility for assuring that the Board keeps within reasonable grounds . . . .
In Weingarten, the Board's order was enforced because "the Board's construction there, while it may not be required by the Act, is at least permissible under it . . . ."
See Allied Chemical & Alkali Workers v. Pittsburgh Glass Co.,
We have repeatedly affirmed that the task of determining the contours of the term "employee" "has been assigned primarily to the agency created by Congress to administer the Act." NLRB v. Hearst Publications,
One could argue that the language in Chemical Workers discussing the Board's broad discretion to determine which workers are employees exceeds the intention of Congress when it repudiated Hearst And adopted the 1947 amendment excluding independent contractors from the definition of employees. In any event, that discretion in the Board that Hearst referred to is lessened when independent contractors are involved because of the 1947 amendments which followed the 1944 decision in Hearst and narrowed the range of discretion by specifically excluding them. The resulting decision thus becomes more one of law where independent contractors are concerned. The Board's discretion is greater when considering other forms of relationships.
See 195 U.S.App.D.C. at --- n.25,
195 U.S.App.D.C. at --- n.45,
See, e. g. NLRB v. A. S. Abell Co.,
See Local 814, I.B.T. (Santini Brothers),
In Columbus Green Cabs I,
Perhaps this is why the Board's petition for rehеaring referred to the "pervasive scheme of municipal regulations" (at 7), but did not even mention the Companies' requirement that these regulations be followed
The Board states that Employees' references undergo similar checks, but the similarities in the method of handling the applications does not in any way indicate Any control over drivers. Reference checks are a common business practice in non-employee situations (e. g. apartment leasing, bank loans, franchise agreements); this is not evidence that the lessee drivers are employees. Such checks are required by the law to weed out those with certain criminal records if the owner of an automobile wants to protect his property against forfeiture to the government for carrying contraband drugs. That a lessor follows the practice of only contracting with responsible persons is no indication of control over such person's actions
The Board did not mention this factor in its petition, and the Board's opinion never explains how this factor is relevant to control. Yellow Cab Co.,
Cf. Joint Council of Teamsters No. 42 v. NLRB,
App. 53a
App. 56a. Companies' Response to the Petition for Rehearing 9 n.7. Neither the Board's opinion nor the petitions for rehearing state the nature of the supposedly significant dress restrictions
App. 56a
Union Petition 5
In SIDA of Hawaii, Inc. v. NLRB,
Local 814, I.B.T. (Santini Brothers),
195 U.S.App.D.C. at ---,
The "hiring of others" referred to was a general reference to the relationship of artisans, and not to those instances where the work by its nature is not transferrable. This minimal restriction on the lessee drivers' freedom pointed to by the Board and the Union is not sufficient to change the drivers' status to that of "employees" obviously only one person can drive a cab at one time and contracting on that basis is not pervasive control
NLRB Petition 8
JA 58a-61a
Allied Chemical, supra, also stated: "we have never immunized Board judgments (as to which persons are 'employees' under the Act) from judicial review."
195 U.S.App.D.C. ---,
NLRB Petition 10
Union Petition 13
JA 47a
JA 62a (emphasis added)
R. Gorman, Basic Text on Labor Law 528 (1976). See NLRB v. Sheet Metal Workers Int'l Ass'n,
Accord: NLRB v. Retail Clerks Int'l Ass'n,
See Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co.,
NLRB Petition 10-11
It is well established that the findings of the administrative law judge are a part of the entire record and must be considered by the Court when it determines whether the Board has decided in accordance with substantial evidence. Universal Camera Corp. v. NLRB,
NLRB Petition 10
Complaint, Yellow Cab Co. v. Local 777, No. 13-CA-14142, at 4
See NLRB v. Sears, Roebuck & Co.,
JA 46a (ALJ opinion)
Burlington Truck Lines, Inc. v. United States,
See JA 47a, cited in text at n.56
JA 45a (ALJ opinion)
JA 46a (ALJ opinion)
Id
JA 48a
Allied Chemical and Alkali Workers v. Pittsburgh Plate Glass,
JA 48