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L-44-305 M-174 June 7, 1944 to the Director of Retirement Claims

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L-44-305 M-174 June 7, 1944 to the Director of Retirement Claims L-44-305 M-174 # June 7, 1944 TO The Director of Retirement Claims FROM The General Counsel SUBJECT Creditability of service rendered under ore dock operations contract between Addison Miller, Inc. (Minnesota) and Lake Superior and Ishpeming Railroad Company In response to your request I herewith submit my opinion on the following: QUESTION Is service rendered under contract between Addison Miller, Inc. and Lake Superior and Ishpeming Railroad Company covering ore dock operations at Presque Isle, in the City of Marquette, Michigan, creditable under the Railroad Retirement and Railroad Unemployment Insurance Acts? OPINION It is my opinion that the service in question is creditable as "employee" service rendered to Lake Superior and Ishpeming Railroad Company. It is my further opinion that even if it were determined that the ore dock operations have been conducted by Addison Miller, Inc. independently, the individuals performing the contract work would, nevertheless, be covered under the Railroad Retirement and Railroad Unemployment Insurance Acts since, in that event, Addison Miller, Inc., with respect to such operations, would itself be an "employer" under the Acts as a carrier by railroad subject to Part I of the Inter­ state Commerce Act. DISCUSSION On February 5» 1925, the Lake Superior and Ishpeming Railroad Company entered into a contract with Addison Miller, Inc., a corpora­ tion organized under the laws of Minnesota, for the operation, during the shipping season of 1925, 1926 and 1927, of the Railroad's iron ore -2- The Director of Retirement Claims docks situated at Presque Isle, in the City of Marquette, Michigan. The ore dock operations, performed under tariffs filed by the Railroad Company with the Interstate Commerce Commission, consist of the unload­ ing of iron ore from railroad cars spotted on the Railroad's dock into ore pockets located thereon, and the loading of the ore from the pockets into the holds of vessels waiting at the ore docks to receive the ore for transportation to various Great Lake ports. Such loading and unloading operations are accomplished by means of ore handling machin­ ery located on the dock. Although the contract of February 5# 1925 provided for the operation of the ore dock during the shipping seasons of 1925, 1926 and 1927, the contract, it appears from information submitted by the Railroad Company, has been extended from time to time and has been continued in effect. Under the terms of that contract, Addison Miller agreed promptly to unload from railroad cars into such ore dock pockets "as may be designated by the representative of the Railroad Company" and promptly to load from such pockets "into the holds of the vessels designated" all iron ore transported by the Railroad to its dock, "furnishing an adequate supply of labor therefor, including necessary foremen and checkers and whatever general supervisory service is necessary for the successful completion of the work". It was provided that the "labor so supplied shall in addition perform such work as has been heretofore ordinarily done by such laboi". For each ton of ore transferred, Addison Miller was to be paid monthly at the rate of one and three-quarters cents per ton. It was agreed that each ore shipping season should constitute a separate unit for accounting under the contract and, for the purposes of such accounting, the term "costs" was defined to include only the actual pay roll on the ore dock v/ork, except that, if the costs, as so defined, should exceed one and three-fourths cents per ton, there should be added, insurance and bond premium costs and any necessary "off line transportation" and supervisory wages or expenses. If at the end of the ore shipping season in each year the costs for the entire season should exceed one and three-quarters cents per ton but should not ex­ ceed two cents per ton, the Railroad agreed to reimburse Addison Miller for the costs plus two per cent. If the costs should exceed two cents per ton, but should not exceed two and one-half cents per ton, the Railroad agreed to reimburse Addison Miller for the costs plus one per cent. If the costs should exceed two and one-half cents per ton, the Railroad agreed to reimburse Addison Miller for actual costs only. The contract provided that the Railroad would place the ore cars at the proper pockets for unloading; furnish and keep in repair all the tools and equipment customarily used in the handling of iron ore; furnish free transportation on its lines to the Contractor and -3- The Director of Retirement Claims the employees travelling on business connected with the contract; sup­ ply the Contractor, free of charge, any necessary boarding cars or bunkhouse facilities, including necessary fuel, light, and ice; and transport free over the Railroad's lines, the Contractor's boarding outfit, bedding and supplies. Addison Miller agreed to indemnify the Railroad Company for damages arising out of injury to, or death of, employees engaged in carrying out the contract work to comply with the terms of the Michigan Workmen's Compensation Act and to procure and maintain workmen's com­ pensation insurance, as well as adequate insurance to cover claims under the Employers' Liability Act; to keep the Railroad "informed as to the manner in which said risks are insured"; and to "promptly report to the Railroad Company all accidents, and all claims for injuries or damage". Addison Miller also agreed to indemnify the Railroad for damages arising out of injury or damage to the person or property of any third parties, except that Addison Miller was not rendered liable for damage to vessels loading at the dock. The contract required Addison Miller to "employ the foremen and checkers heretofore employed for the same service by the Railroad Company", and, if it should be necessary at any time to replace any of such foremen or checkers, to employ only those individuals "who are satisfactory to the Superintendent of the Railroad Company". And the contract further provided that the wages paid to foremen and checkers "shall be no less than the wages paid by the Railroad Company for the same service during the ore shipping season in 1923". It was stipulated that all tine for work performed under the contract would be kept by timekeepers in the employ, and carried on the pay roll, of the Railroad Company: that the Railroad's auditors would "at all times have access to the books, records and accounts of the Contractor inso­ far as they pertain to this contract"; that Addison Miller would pay the employees performing the contract work "semi-monthly, upon such days as shall be satisfactory to the Superintendent of the Railroad Company"; and that Addison Miller would "promptly and adequately take care of all pay-roll obligations as they accrue". The decision of the Superintendent of the Railroad, it was agreed, "shall be final and conclusive upon the Contractor" in case of a dispute as to whether the supply of labor furnished by the Contractor is adequate for the contem­ plated contract work. Paragraph 6 of the contract states that Addison Miller "is an independent contractor, that except as herein provided, the employ­ ees engaged in the work under this contract shall be the employees of the Contractor and not of the Railroad Company", and that the contract work "shall be performed under the direct supervision" of Addison Miller. But paragraph 7 provides "that the prompt unloading and « -4- The Director of Retirement Claims release of cars, and the prompt loading and dispatch of vessels are of the utmost importance in the carrying out of this contract, and that if a dispute shall arise as to whether the operating methods and plans of the Contractor are proper to accomplish these purposes, the decision of the Superintendent of the Railroad Company shall be final and conclusive upon the Contractor". And, it was provided that, at any time, whenever in the Railroad's judgment, "its interests or the public service shall require" it, the Railroad Company "shall have the right" to terminate the contract upon twenty-four hours notice. An individual is an "employee" within the meaning of the Railroad Retirement and Railroad Unemployment Insurance Acts if he is subject to the continuing authority of an "employer" to supervise and direct the manner of rendition of his compensated service. Secs. 1(b) and l(<x) of the Railroad Retirement Acts of 1935 and 1937, and Secs. 1(d) and 1(e) of the Railroad Unemployment Insurance Act. An examin­ ation of the provisions and nature of the contract clearly indicates that, with respect to the contract work, Addison Miller does not have the status of an independent contractor, but that the individuals engaged in the performance of the contract work are subject to the con­ tinuing ■authority of the Lake Superior and Ishpeming Railroad Company and are, therefore, "employees" within the meaning of the Acts of the Railroad Company. The statement in the contract to the effect that Addison L i H e r is an independent Contractor and that the individuals perform­ ing the contract work shall be the employees of Addison Miller might, if standing alone, tend to indicate that an independent contractual relationship exists between Addison Miller and the Railroad and that the individuals performing the contract work are not "employees" of the Railroad. But this provision is by no means conclusive of the established relationship, for, in determining the true character of the relationship, it is necessary to consider all the provisions of the contract in the light of the surrounding facts and circumstances. Gulf Refining Co. v.
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