[1983] OLRB Rep. August 1378
2413-82-M United Brotherhood of Carpenters and Joiners of America, Local Union 1669, Applicant, v. 384368 Ontario Ltd. o/a Thunderhawk Developments, Respondents
BEFORE: N. B. Satterfield, Vice-Chairman and Board Members A. Hershkovitz and J. A. Ronson
DECISION OF N. B. SATTERFIELD, VICE-CHAIRMAN AND BOARD MEMBER A. HERSHKOVITZ; August 18, 1983
There have been two earlier interim decisions issued by the Board dealing with a procedural matter with respect to this referral of a grievance under section 124 of the Labour Relations Act.
The applicant, United Brotherhood of Carpenters and Joiners of America, Local 1669, ("Local 1669") has alleged that the respondent, 384368 Ontario Ltd. o/a Thunderhawk Developments ("Thunderhawk") is bound to a collective agreement with Local 1669, has violated the hiring provision to that agreement and has failed to pay the proper wages prescribed by it. This decision deals with the single issue of whether Thunderhawk is the employer of the employees who are the subject matter of the grievance.
The reply filed by Thunderhawk states, in part, that it is not the general contractor on the Flinder’s Park Senior Citizens Home (“the Home”) which has given rise to the grievance; that Flinder’s Park Senior Citizens Group Inc. (“Flinder’s Park”) is the owner and general contractor of the project; and that Thunderhawk only performs supervisory duties for Flinder’s Park under the terms of a project manager agreement between Flinder’s Park and Thunderhawk. Counsel for Thunderhawk at the hearing reiterated and elaborated on that position and contended that, while it may appear that Thunderhawk is the employer because of certain services which it has contracted to provide to Flinder’s Park, the real employer is Flinder’s Park. Counsel for Local 1669 took the position that Thunderhawk is not only the apparent employer, but is the real employer. Thus the issue joined before the Board is whether Thunderhawk is the employer of the persons whom Local 1669 alleges have been hired contrary to the collective agreement which it alleges is binding upon Local 1669 and Thunderhawk.
The Board heard the testimony of Lawrence DeGagne and Roger Dolyny. DeGagne was called by the applicant and Dolyny by the respondent. DeGagne is the president of Flinder’s Park and one of its four directors. Dolyny is the owner of Thunderhawk. The findings of fact herein are made on their evidence having regard for their demeanour.
Flinder’s Park was incorporated September 21, 1982 as a non-profit company. It was formed for the purpose of obtaining funding for the building of the Home. Four directors carry out its business purposes. None of them have had experience with operating a business in the construction industry. Flinder’s Park and Thunderhawk entered into an agreement which states that it was signed September 24th, 1982 and which contains the following provisions:
CONTRACT
Between
384368 Ontario Ltd. 0/A THUNDERHAWK DEVELOPMENTS,
P.O. Box 566, Fort Frances, Ontario
and
FLINDER'S PARK SENIOR CITIZENS HOUSING GROUP INC.
P.O. Box 99, Fort Frances, Ontario
THUNDERHAWK DEVELOPMENTS agrees to provide the services necessary to the supervision of construction of a 40-unit Senior Citizens apartment complex owned by the Flinder' s Park Senior Citizens Housing Group Inc. and located in the Town of Fort Frances, Ont. The FLINDER'S PARK SENIOR CITIZENS HOUSING GROUP INC. shall act as the general contractor in the project and Thunderhawk Developments shall provide the supervision necessary to the construction of the 40-unit Senior Citizens apartment complex.
Such supervisory services shall encompass the following:
Appointment of a project manager (namely, Roger Dolyny) for the on-site construction supervision of the project at a minimum of 8 hours per working day.
Provide a temporary office and storage shed on-site during the course of construction. Such facility shall be approximately 8' X 24' weathertight, equipped with a keyed lock, ventilating window, heating, and adequate lighting. Such facility shall be for the storage of materials, tools and equipment which may be damaged by weather and shall be the location of all plans, specifications, notices and construction bulletins of all types.
Provide an on-site telephone to be available to all personnel involved in the construction of the project.
Keep all wage records necessary for any labour as hired by the Flinder's Park Senior Citizens Housing Group Inc. during the construction of the project. Disburse wages accordingly.
Keep all necessary records as may be required by the Flinder's Park Senior Citizens Housing Group Inc. pertaining to the construction costs of the project.
Compile and submit any and all records of construction costs to whatever agency or representative that the Flinder's Park Senior Citizens Housing Group Inc. may designate.
Supervise the performance of all sub-trades or other personnel necessary to the construction of the project in the strict adherence of the drawings and specifications as set out by the engineers (Peterson, Pawliuk and Assoc. Ltd.).
Ensure that all sub-trades and construction personnel perform their work within the confines of all regulatory agencies codes (i.e. Ontario Dept. of Labour, Workmen's Compensation Board of Ontario, and any other federal, provincial or municipal agency).
Keep a daily construction log of all activities during the project.
Record any deviation from the plans and specifications on an "as built" set of blueprints to be presented to the Flinder’s Park Senior Citizens Housing Group Inc. at project completion.
Take all reasonable precautions and institute any reasonable safeguard necessary for the prevention of theft of tools and materials from the project.
Take all reasonable precautions and institute any reasonable safeguard necessary for safety on the project.
Take all reasonable precautions and institute any reasonable safeguards necessary to the protection of all work that has been performed.
Ensure that all sub-trades and personnel perform their duties within the timeframes allowed in the construction schedule (Acts of God, strikes, or material delay excepted).
Any deviation from the plans and specifications by any sub-trade or other personnel in either labour or materials must be reported promptly to Peterson, Pawliuk & Assoc. Ltd., Flinder’s Park Senior Citizens Housing Group Inc. and any other agency that this would involve. Such notice shall be both oral and written and shall be given to all parties concerned.
Thunderhawk Developments shall correlate the activities of all sub-trades, construction personnel~ supervisors, inspectors and any other agency to ensure the speedy and efficient completion of the construction of the project.
Such services as listed above shall be provided by Thunderhawk Developments to the Flinder’s Park Senior Citizens Housing Group Inc. at a rate of 8% of the project cost (excluding the cost of the land and the C.M.H.C. mortgage insurance fee.) There shall be no additional charges for overtime hours by the project manager during the course of the construction of the project.
Dated at Fort Frances, Ontario, this 24th day of September, 1982.
That agreement was executed on behalf of Thunderhawk by Dolyny and on behalf of Flinder’s Park by DeGagne and the three other directors.
Construction of the Home began on December9, 1982, with site preparation having started in late November. Some of the work was performed by a direct-hire work force and the remainder by sub-contracting to various trade contractors. All materials were purchased directly by Flinder’s Park. The employees on the direct-hire work force were supplied through the local office of The Canada Employment Immigration Commission ("Canada Employment") under the Program for the Employment-Disadvantaged. This is a program under which wage costs are subsidized by a rebate which ranges from 25% to 85% of eligible wages paid. While Dolyny testified originally that workers were supplied without any written agreement between Thunderhawk and Canada Employment, he later admitted that a written undertaking is made between Thunderhawk and the Commission with respect to each worker supplied by the Canada Employment Office for employment. The sample document tendered in evidence shows the name of the employer as Thunderhawk and is signed on behalf of the employer by Dolyny. It is dated December 3rd, 1982 and indicates the amount of subsidy which will be paid to the employer for the particular worker over a specified period of employment. The wage subsidies are paid by the Commission to Thunderhawk. By an arrangement between Thunderhawk and Flinder's Park, they are applied to reduce the wage costs of constructing the Home. Since Flinder’s Park is a non-profit corporation, it is eligible for a rebate on Federal Sales Tax on all materials purchased. By making the project eligible for these two sources of rebates, Flinder’s Park was able to bring the project costs within the limits which would qualify for a mortgage from The Central Mortgage and Housing Corporation ("CMHC"). This approach to constructing the Home was adopted in order to bring the costs of the project within the mortgage funding available from CMHC after two prior attempts at putting the job out for tenders had failed because the cost of constructing it by letting contracts to the lowest bidders would have been greater than the mortgage funds available through CMHC.
The evidence of DeGagne and Dolyny is that Flinder’s Park, in order to resolve the dilemma of bringing the costs of the project within limits which would qualify it for CHMC funding, decided to build the project using a combination of a direct-hire work force, sub-contractors and purchasing all of the construction materials itself, on the expectation that Flinder’s Park would qualify for wage subsidies available through federal government programs for the unemployed. They testified that Flinder’s Park could not qualify for those programs because it was a non-profit corporation and the programs were available only to taxable corporations. Moreover, Flinder’s Park did not qualify for a rebate of Federal Sales Tax on building materials except as a non-profit corporation. It needed these two sources of funds in order to keep the cost of the construction project within limits satisfactory to CHMC. Thunderhawk, on the other hand, was a business which would be eligible to apply under the federal government programs for the unemployed. Therefore, Flinder’s Park decided and Thunder-hawk agreed that Thunderhawk would enter into arrangements with the Commission to qualify for wage subsidies with the understanding that Flinder’s Park would be the beneficiary of the subsidies. Minutes of a meeting of Flinder’s Park's Board of Directors held on November 30, 1982 contains the following minute:
Motion to have Project Manager, Thunderhawk Developments, put through Manpower Employment Programmes in its name because of Revenue Employer No. and set up payroll to coincide which will take advantage of grants through the Canada Manpower Programmes and protect the pending application for a non-profit Number Re: Federal Sales Tax rebate."
Pursuant to the arrangement between Thunderhawk and the Commission, the Canada Employment office supplied Thunderhawk with a list of available manpower together with phone numbers and other data about the persons on the list. Whenever the project required persons on a direct-hire basis, Dolyny hired from the list in order beginning with the first name. The first requirement was for six persons and Dolyny hired the first six persons on the list. The persons hired are put to work and remain employed as long as there is a need for them and they can perform the work. If an employee is unable to perform the work, he is dismissed and the next person on the list is hired. Twice monthly when Flinder’s Park gets progress payments from CMHC, it puts Thunderhawk in funds sufficient to cover the payroll costs of the persons hired through the Canada Employment office. Thunderhawk pays the employees on the first and 16th of each month, withholds and remits the statutory deductions for income tax, Canada Pension Plan and unemployment insurance and makes the employer contribution required. The cheques issued to the employees are cheques of Thunderhawk and the statutory deductions and contributions are reported under Thunderhawk’s name and its taxation number. According to the evidence before the Board, an employer must have such a number in order to be eligible for the wage subsidy programs. Flinder’s Park did not have the requisite taxation number and DeGagne testified that the directors believed it to be ineligible for a taxation number because of its non-profit status. Thunderhawk files claims monthly with the Canada Employment office which Dolyny signs attesting to the accuracy of the hours worked which are recorded on the claim. When an employee is terminated from the project, he is issued a Record of Employment for unemployment insurance claims purposes by Thunderhawk, showing Thunderhawk as the employer. Dolyny admits that the Canada Employement office considers Thunderhawk to be the employer to whom it is referring the unemployed-disadvantaged persons and that Revenue Canada would see Thunderhawk in the same light with respect to the income tax, Canada Pension Plan and unemployment insurance remittances and contributions.
Dolyny assesses the work performance of the direct-hires and decides whether they are performing satisfactorily. If they are not, he advises the directors and the persons are let go. DeGagne and Dolyny each testified about one such instance involving two labourers. DeGagne testified that he thought the two labourers had been dismissed and that Dolyny had advised the board that it was necessary for him to let them go. Dolyny testified that he had advised the directors of a problem with respect to the performance of two labourers, had got the directors' authority to deal with the sitution, including dismissing them if needed, and that some three weeks later he spoke to both persons about their work. At that time, he dismissed one and retained the other. The Board prefers DeGagne’s evidence that Dolyny had simply told the directors what he had done.
Dolyny issues all of the day-to-day instructions on the project to the direct-hire employees and to the sub-contractors. He also deals directly with any building inspectors or inspectors from CMHC who visit the project site. In both respects, he keeps the Flinder’s Park directors advised of what is happening on the project. This is generally done at a monthly meeting with the directors held at the project site on a set date. If problems arise between the monthly meetings, Dolyny will meet with the directors to inform and advise them and get instructions from them with respect to dealing with problems. The directors, as noted above, have no experience with the operation of construction business, nor does any of them have any experience with the supervision of construction activities. Flinder’s Park has no supervision on the site other than Thunderhawk in the person of Dolyny. In fact, it has no physical presence on the site and the project secretary who works in the site office was referred to Thunderhawk for employment under the same wage subsidy programs as the other direct-hire employees.
Dolyny has held three job meetings with the direct-hire employees. One of these meetings was held because he found it necessary to explain to the employees that Thunder-hawk was not their employer and that Flinder’s Park was. According to Dolyny, this need arose when two employees who had left the project for employment elsewhere requested letters of reference from Thunderhawk as their former employer. Dolyny claims that this request caused him to realize that the employees must be confused as to the identity of the true employer.
Counsel for Thunderhawk contends that it has been engaged by Flinder’s Park as project manager for construction of the Home; that Flinder’s Park is its own general contractor and the true employer of the direct-hires on the project, not Thunderhawk. Counsel admits that Thunderhawk is the employer of record, but argues that Thunderhawk is in that position solely to assist Flinder’s Park in becoming the beneficiary of wage subsidies from the federal government programs for the unemployed-disadvantaged. The question for the Board is not one of whether Thunderhawk is the project manager or the general contractor for construction of the Home, rather the question is whether Thunderhawk is the true employer of the direct-hire employees amongst whom Local 1669 claims are the persons who were hired contrary to the collective agreement which it alleges is binding on Thunderhawk and Local 1669. Whenever the Board has the task of determining which of two or more companies is the employer of a group of employees for purposes of the Act, it must look beyond the form and appearance of the relationships involved to their realities. The Board has adopted certain criteria to assist in this kind of determination. Those criteria and the manner in which they have been applied by the Board were extensively canvassed in the Board's decision in Sutton Place Hotel, [1980] OLRB Rep. Oct. 1538. That decision adopts seven criteria which were set out in another Board decision, York Condominium Corporation, [1977] OLRB Rep. October 645. They are:
(1) The party exercising direction and control over the employees performing the work. See the Municipality of Metropolitan Toronto case, 61 CLLC ¶16,214; the Sentry Department Stores Limited case [1968] OLRB Rep. Sept. 540, 546; the Beer Precast Concrete Limited case, [1970] OLRB Rep. May 224, 227-8; the Belcourt Construction (Ottawa) Limited case, [1971] OLRB Rep. June 321, 324; and the Reid's Holdings (Belleville) Limited case, [1972] OLRB Rep. July 753, 761.
(2) The party bearing the burden of remuneration. See the Municipality of Metropolitan Toronto case, supra; the Goldlist Construction Limited ease, [1966] OLRB Rep. Oct. 487, 488; the Kel Truck Services Ltd. case, 1972 CLLC ¶16,068; and the Templet Services case, [1974] OLRB Rep. Sept. 606, 608.
(3) The party imposing discipline. See the Reid's Holdings (Belleville) Limited case, supra; and the Templet Services case, supra.
(4) The party hiring the employees. See the Municipality of Metropolitan Toronto case, supra; the Sentry Department Stores Limited case, supra; and the Reid's Holdings (Belleville) Limited case, supra.
(5) The party with the authority to dismiss the employees. See the Municipality of Metropolitan Toronto case, supra; and the Templet Services case, supra.
(6) The party which is perceived to be the employer by the employees. See the Sentry Department Stores Limited case, supra.
(7) The existence of an intention to create the relationship of employer and employees. See the Belcourt Construction (Ottawa) Limited case, supra.
The Board in Sutton Place, supra, observed that those criteria were applied to the particular facts in York Condominium without being given any particular priority by the Board. Rather the Board came to a decision on the preponderance of evidence. The same approach was followed by the Board in Sutton Place to sort out the intricate corporate relationships and to decide which of several corporate entities was the employer. In contrast to Sutton Place, the instant case is simple and straightforward. Consequently, the task of applying the criteria to the facts is a considerably simpler and more straightforward one.
Six of the seven criteria point in the direction of Thunderhawk being the true employer of the direct-hire work force, the exception being item (2) above, the party bearing the burden of remuneration. It is Thunderhawk which has entered into an arrangement for the supply of the persons at issue from Canada Employment under the terms of the federal program for the unemployed-disadvantaged. Canada Employment referred a list of persons eligible under the program to Dolyny on behalf of Thunderhawk. Dolyny contacted the persons in the order listed and put them to work on the project. He alone assigned them to their work, supervised them, evaluated the quality of their work and decided whether it was acceptable. In at least one instance he terminated one worker when that person failed to shape up after his performance deficiencies were pointed out to him by Dolyny. While the Board preferred DeGagne’s testimony that Dolyny simply advised the Board of his actions, even were the Board to accept Dolyny’s evidence, that evidence would be entirely consistent with him effectively recommending the termination of the direct hire relationship.
The only direct evidence of discipline having been imposed is that with respect to Dolyny’s warning of the two persons about their work performance and the subsequent dismissal of one. The fact that the Flinder’s Park directors have no on-site involvement with the work at the project, however, coupled with Dolyny’s role in supervising the work force and his actions with respect to the two problem employees would make it inconsistent to conclude that Dolyny did not have the same authority with respect to discipline as he has for hiring and firing.
Counsel for Thunderhawk asserts that the hiring function is a cut and dried one, the inference being that no significance should be attributed to Dolyny’s role in that regard. The function may be cut and dried in the sense that no initial selection of employees is possible because the persons referred by Canada Employment must be taken in the order referred. It remains, however, for Dolyny to do everything that is necessary to "hire" a person. He makes the initial contact, assigns the person to work, provides the day to day supervision, assesses the quality of his performance and decides whether it is acceptable. Therefore he does everything that is essential in putting the person to work and deciding whether he will be kept at work. While according to Dolyny’s evidence, the program under which these persons are supplied appears not to permit any selection of who will go to work, there is no compulsion to retain them if they do not perform satisfactorily. Dolyny makes that assessment.
There is not a shred of doubt that the employees perceived Thunderhawk to be their employer, so much so that Dolyny claims to have found it necessary to call a site meeting of the direct-hire workers to deal with what he terms their misconception. This is not a situation where the employees’ perceptions run counter to other indicators that a different entity is their true employer, as was the case in Sutton Place, supra. The employees herein were referred by the Canada Employment Office to Dolyny for work with Thunderhawk, their pay cheques were Thunderhawk’s and, when two employees left the project, their Record of Employment forms showed Thunderhawk as their employer. There is no evidence that, prior to the meeting, any of the employees were told that Thunderhawk was not their employer or that Flinder’s Park was. It was Dolyny and not one of the Flinder’s Park directors who sought to change the employees’ perceptions. In these particular circumstances, the employees’ perceptions that Thunderhawk is their employer are wholly consistent with the other indicia of the employer-employee relationship.
There is no doubt either that, at least insofar as the program for the unemployed-disadvantaged is concerned, it was intended to create the relationship of employer and employees between Thunderhawk and the direct-hire employees on the Home project. That does not necessarily create an employer-employee relationship for purposes of the Labour Relations Act. Nor does Thunderhawk’s assertion that it was thrust into the relationship in order to allow its client to benefit from the wage subsidies payable under the program insulate it from being placed in the relationship of the employer of the employees in question for purposes of the Act. The stated reason why Thunderhawk put itself forward as the employer of record standing alone does not support a conclusion that it is not the employer for purposes of .the Act. Hypothetically, it could lend some credence to other, more convincing evidence that Thunderhawk was not the true employer, or serve to tip the scales in that direction where the evidence is otherwise in balance. In any event, that is far from the case here. There is little evidence in terms of what is actually taking place with respect to the employment relationship of the direct-hire employees which points to Thunderhawk not being the true employer. On the other hand there are compelling indications that it is. The fact that it is the employer of record, while not conclusive by itself of an employer-employee relationship for purposes of the Act, does point in that direction. Therefore, coupled with the other indicators, it is a positive indication of an employer-employee relationship.
The Board has found that Flinder’s Park puts Thunderhawk in funds twice monthly so that it can meet the payroll for the direct hires. While the Board has little doubt that Thunderhawk is the party to whom the employees who are on its payroll would look to rectify any error in pay or any failure to pay wages owing and to whom Revenue Canada would look for the proper deduction and remittance of income tax deductions and Canada Pension Plan and unemployment insurance deductions and contributions, the mechanics of the funding of the payroll satisfy the Board that Flinder’s Park has by that arrangement, undertaken the ultimate burden for Thunderhawk’s payroll costs.
All other indicia of the employment relationship point to Thunderhawk being the employer of the direct-hire work force on the Home construction project. Therefore, whatever relationship Flinder’s Park and Thunderhawk sought to create by means of the contract between them, on the facts before the Board, it finds that Thunderhawk is the employer of the direct-hire work force on the Home construction project for purposes of the Labour Relations Act.
Accordingly, the Board directs the Registrar to list this application for hearing for the purpose of hearing the evidence and representations of the parties on the remaining issues, including whether Thunderhawk and Local 1669 are bound to a current collective agreement.