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National Labor Relations Board v. Keystone Floors Inc.

July 10, 1962


Author: Kalodner

Before GOODRICH, KALODNER and GANEY, Circuit Judges.

KALODNER, C. J.: Two points are presented by this petition for enforcement of an order of the National Labor Relations Board ("Board"):*fn1

First: were respondent's salesmen its employees or independent contractors;

Second: did the evidence sustain the Board's findings that respondent engaged in unfair labor practices in violation of Section 8 of the National Labor Relations Act, as amended.*fn2

The facts critical to the first issue, as evidenced by the record and found by Board, may be summarized as follows:

Respondent, Keystone Floors, Inc., d/b/a Keystone Universal Carpet Co. ("Keystone"), is engaged in the retail sale and installation of home carpeting in Pittsburgh, Pennsylvania. Written agreements entitled "Dealer's Agreement Form", entered into by Keystone with its salesmen, assign a specific territory to each salesman and provide that he is "an independent agent and not subject to control, rights or privileges of an employee". These agreements are terminable at will by either party. Salesmen are not permitted to handle products of any other company.

The agreements provided for a weekly $100.00 "draw" (drawing account) against a 10 per cent commission basis plus bonuses on excess of $1,000.00 weekly business. The 10 per cent commission basis was subsequently reduced to 7 per cent by unilateral action of Keystone, without even consulting its salesmen. Drawing accounts were likewise substantially reduced in some instances.

No deductions are made by Keystone from its salesmen's compensation for social security, income tax withholding, etc. The salesmen do not receive vacations with pay.

Each Monday morning the salesmen are required to attend a meeting of the entire sales force, presided over by Keystone's sales manager. At these meetings, "leads", obtained through extensive newspaper advertising, are distributed and the salesmen are given information concerning sales techniques and the patterns that have been added or discontinued.

Each morning between 8 and 9 a.m., except Mondays, Keystone's sales manager telephones the salesmen at their homes to notify them of the leads that have been obtained in their respective territories. The salesmen schedule their workday by contacting the prospective customers and setting up appointments at the customers' homes.

The salesmen are required to work a minimum of eight hours a day and to put in a full workweek. They are required to call upon all leads in their territory which are furnished by Keystone. Although most of their working time is spent in following up these leads, they are expected to spend their remaining time in door-to-door canvassing. They are required to report regularly on what action they have taken with respect to their leads and the extent of their canvassing. They must telephone the office each afternoon. Unsold leads are followed up by the sales manager or one of Keystone's supervisors to ascertain whether the salesmen have called on the customers and why sales were not made. The supervisors also train new salesmen by accompanying them for about a week, teaching them how to approach customers and conclude and write up sales.

In calling on prospective customers the salesmen use their own automobiles, defraying the cost of operation, including gasoline and insurance. Keystone furnishes the salesmen with sample kits, for which they pay a deposit of $25.00 at the rate of $5.00 per week for their first five weeks with Keystone. The deposit is refunded when the kit is returned.

The selling price of the carpeting is fixed by Keystone and may not be varied by the salesmen. When a sale is made, the order is written up on Keystone's order sheets, and the salesman signs as "salesman". All orders are subject to approval by Keystone, which also handles any credit arrangements. Cash received by salesmen is paid over to Keystone; and when a customer pays by check the check is made payable to Keystone. When orders cannot be filled as written, Keystone contacts the customers directly and makes the necessary changes without consulting the salesmen. If the change results in a higher sales price, the salesman's commission is still based on the original order, but if the sales price is lowered, the commission is reduced accordingly. Installation of the carpeting and customer complaints are not handled by the salesmen.

On the facts as stated, the Board adopted the Trial Examiner's Intermediate Report determination that Keystone's salesmen "are ...

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