390 U.S. 254 (1968), 178, National Labor Relations Board v. United Insurance Co. of America

Docket NºNo. 178
Citation390 U.S. 254, 88 S.Ct. 988, 19 L.Ed.2d 1083
Party NameNational Labor Relations Board v. United Insurance Co. of America
Case DateMarch 06, 1968
CourtUnited States Supreme Court

Page 254

390 U.S. 254 (1968)

88 S.Ct. 988, 19 L.Ed.2d 1083

National Labor Relations Board


United Insurance Co. of America

No. 178

United States Supreme Court

March 6, 1968

Argued January 23-24, 1968




Petitioner insurance workers union seeks to represent respondent insurance company's "debit agents." The company refused to recognize the union, claiming that the agents were independent contractors, rather than employees. The National Labor Relations Board (NLRB), in the ensuing unfair labor practice proceeding, determined under the common law of agency that the agents were employees. It found that the agents do not operate their own independent businesses, but perform functions that are an essential part of the company's normal operations; are trained by company supervisory personnel; do business in the company's name and ordinarily sell only the company's policies; operate under terms and conditions established and changed unilaterally by the company; account for funds under strict company procedures; receive the benefit of the company's vacation plan and group insurance and pension fund, and have a permanent working arrangement under which they may continue with the company as long as their performance is satisfactory. The Court of Appeals refused to enforce the NLRB's order.

Held: The NLRB's determination that the agents were company employees, and not independent contractors, represented a choice between two fairly conflicting views, and its order should have been enforced by the Court of Appeals. Pp. 256-260.

371 F.2d 316, reversed.

Page 255

BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

In its insurance operations, respondent United Insurance Company uses "debit agents" whose primary functions are collecting premiums from policyholders, preventing the lapsing of policies, and selling such new insurance as time allows. The Insurance Workers International Union, having won a certification election, seeks to represent the debit agents, and the question before us is whether these agents are "employees" who are protected by the National Labor Relations Act or "independent contractors" who are expressly exempted from the Act.1 Respondent company refused to recognize the Union, claiming that its debit agents were independent contractors, rather than employees. In the ensuing unfair labor practice proceeding, the National Labor Relations Board held that these agents were employees, and ordered the company to bargain collectively with the Union. 154 N.L.R.B. 38. On appeal, the Court of Appeals found that the debit agents were independent contractors and refused to enforce the Board's order. 371 F.2d 316 (C.A. 7th Cir.). The importance of the question in the context involved to the administration of the

Page 256

National Labor Relations Act prompted us to grant the petitions of the Board and the Union for certiorari. 389 U.S. 815.

At the outset, the critical issue is what standard or standards should be applied in differentiating "employee" from "independent contractor" as those terms are used in the Act. Initially this Court held in NLRB v. Hearst Publications, 322 U.S. 111, that

Whether . . . the term "employee" includes [particular] workers . . . must be answered primarily from the history, terms and purposes of the legislation.

322 U.S. at 124. Thus, the standard was one of economic and policy considerations within the labor field. Congressional reaction to this construction of the Act was adverse, and Congress passed an amendment specifically excluding "any individual having the status of an independent contractor" from the definition of "employee" contained in § 2(3) of the Act. The obvious purpose of this amendment was to have the Board and the courts apply general agency principles in distinguishing between employees and independent [88 S.Ct. 990] contractors under the Act.2 And both petitioners and respondents agree that the proper standard here is the law of agency. Thus, there is no doubt that we should apply the common law agency test here in distinguishing an employee from an independent contractor.

Since agency principles are to be applied, some factual background showing the relationship between the debit agents and respondent company is necessary. These basic facts are stated in the Board's opinion, and will be very briefly summarized here. Respondent has district offices in most States which are run by a manager who usually has several assistant managers under him.

Page 257

Each assistant manager has a staff of four or five debit agents, and the total number of such agents connected with respondent company is approximately 3,300. New agents are hired by district managers, after interviews; they need have no prior experience, and are assigned to a district office under the supervision of an assistant district manager. Once he is hired, a debit agent is issued a debit book which contains the names and addresses of the company's...

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