[1988] OLRB Rep. February 206
2262-87-R; 2288-87-R The Ontario Provincial Conference of the International Union of Bricklayers and Allied Craftsmen, Applicant v. 542590 Ontario Ltd. c.o.b. as Travelers Motor Inn, Respondent; Labourers' International Union of North America, Local 1081, Applicant v. 542590 Ontario Ltd. c.o.b. as Travelers Motor Inn, Respondent
BEFORE: N. B. Satterfield, Vice-Chair, and Board Members J. Trim and J. Redshaw.
APPEARANCES: David Strang and Keith Rimmington for Labourers' International Union of North America, Local 1081; Thomas Oldham and Danny DeMonte for the Ontario Provincial Conference of the International Union of Bricklayers and Allied Craftsmen; T. J. Billo and Zisi Konstantinou for the respondent.
DECISION OF N. B. SATTERFIELD, VICE-CHAIR, AND BOARD MEMBER J. REDSHAW; February 24, 1988
The name of the respondent in these applications is amended to read: "542590 Ontario Ltd. c.o.b. as Travelers Motor Inn". The name of the applicant in File No. 2288-87-R has been amended to read: "Labourers' International Union of North America, Local 1081".
These are two applications for certification made under the construction industry provisions of the Labour Relations Act.
The reply to each application claims that the persons whom the applicants are seeking to represent are not employees of the respondent, rather they are employees of Mark Warren Masonry. When the applications came before the Board for hearing, respondent counsel raised two further issues. First, should the Board find that the respondent was the employer of the persons in question, the respondent was not a person who operates a business in the construction industry and, therefore, is not an employer within the meaning of clause (c) of section 117 of the Act. Second, and in the alternative, if the Board finds that the respondent is a person who operates a business in the construction industry, the persons whom the applicants are seeking to represent are independent contractors and, therefore, not employees within the meaning of the Act. The respondent had not served on the Board or the applicants any notice of intent to raise the issues at the hearing. The Board, however, ruled that the first of the two issues raises a question which the Board must answer in every application for certification stated to be brought under the construction industry provisions of the Act before it can apply section 119 of the Act to the application. If the Board finds that the respondent is not a person who operates a business in the construction industry, the application will not be processed under the construction industry provisions of the Act. With respect to the second issue, the Board reserved its ruling after receiving the submissions of the parties on whether it should entertain the issue in the hearing. By the time the Board had received the evidence and representations of the parties on the other two issues, it was necessary to adjourn the hearing without rendering a decision on the issues. Accordingly, the Board set April 8, 1988, for continuation of hearing into the two applications. In these circumstances and in the event that the Board's decision on the two threshold issues does not dispose of the applications, the Board ruled that it would entertain the independent contractor issue at that time, since there was no longer any prejudice to the applicants from lack of notice about the issue.
The Board's findings of fact on the issues of whether the respondent or Mark Warren Masonry is the employer of the persons affected by this application and whether the respondent is a person who operates a business in the construction industry are based on the testimony of Zisi Konstantinou for the respondent and Thomas Oldham and Mark Warren for the applicants. There were no major conflicts in the evidence, but, having assessed the credibility of the witnesses according to the commonly applied criteria and having regard to what is reasonably probable in all of the circumstances, where there is conflict in the evidence of Konstantinou and Warren, the Board prefers Warren's evidence.
Konstantinou is secretary-treasurer of the respondent and, together with his parents, operates the respondent's business. The respondent owns and operates a 20-unit motel in Cambridge. At the time these applications were made, the respondent did not own or operate any other motels. Konstantinou and his parents decided to extend the motel by adding a second floor of 20 units, and engaged an architect towards this purpose. The architect designed the extension, prepared drawings for it, obtained for the respondent all of the permits necessary in order to build the extension, obtained bids from electrical and mechanical contractors for the electrical and mechanical components of the extension, and inspected finished work, including the masonry work at issue. The respondent sought bids also from three masonry contractors, but had difficulty initially finding ones who were prepared to start the work at a time satisfactory to the respondent and who would submit bids for the masonry work. This circumstance led the respondent ultimately to enter into an arrangement with Mark Warren to construct the exterior masonry walls of the extension. The precise nature of that arrangement is the focal point of the issues before the Board.
The reply states that Mark Warren Masonry is the employer. There is no evidence before the Board from which it reasonably could conclude that there is a business of that name. Mark Warren is a second year apprentice with a masonry contractor who operates in the Cambridge area and whose employees are said to be represented by the applicants. Mark Warren's brother Lloyd was working for the respondent at the time the decision was made to proceed with the extension of the motel. He suggested to his brother and to Konstantinou that the two of them discuss the possibility of Mark Warren doing the masonry work. To that end, Mark Warren reviewed the drawings with Konstantinou and with Roman Jakowski and learned that Konstantinou wanted the exterior walls erected before winter so that the extension could be roofed, thus allowing the interior work to be completed during the winter. Konstantinou described Jakowski as a carpentry contractor who had done some renovation work for the respondent and had been engaged for carpentry work on the extension project. He also helped Konstantinou review bids submitted by trade contractors for the motel extension.
After Warren had reviewed the drawings with Konstantinou and Jakowski, he was of the view that a masonry crew could complete the exterior walls on a Saturday and Sunday. He took a set of the drawings and reviewed them with his own foreman and estimated the kind of crew and equipment that would be needed to do the job in two days. Next he spoke with persons whom he thought would make up a suitable crew, apparently all employees of his own employer, and identified the rates for which they would be willing to work. Based on the information which he gathered, Warren determined that the job could be done in two days, a Saturday and Sunday, at an estimated cost of $4,950.00 for labour, equipment and disposable supplies. His estimate broke out the total cost into $2,800.00 for labour, $1,750.00 for equipment and $400.00 for supplies. He had obtained a quotation on equipment costs from a rental company which he and Konstantinou called "Reitzels". Warren presented his estimate to Konstantinou, whereupon Konstantinou asked him for details about the kind of equipment needed, the number of persons on the crew and the hourly rates at which they would be paid. Konstantinou recorded this information on the estimate sheet which Warren had given to him.
Konstantinou eventually arranged with Warren to have the exterior walls built on the basis which Warren had proposed; in other words, it would be completed by a crew working on a Saturday and a Sunday at the hourly rates which Warren had used to estimate the labour cost. The respondent was to supply all materials at its cost and pay for the rented equipment. The rental from Reitzels required a deposit on delivery of the equipment. The respondent issued a certified cheque for $2,000.00 as a deposit and was later invoiced for and paid the actual cost of the rental. Konstantinou decided on his own not to rent a forklift truck from Reitzels and made his own arrangements to get one from another source. Warren told Konstantinou that each person on the masonry crew was to be paid at the end of the day on Sunday for work done on Saturday and Sunday. Payment was to be made by the respondent to each person in Warren's presence and was to be in cash without any deductions. They were to be paid at the rates of pay and hours reported by Warren to Konstantinou. According to Konstantinou the reason why the respondent supplied all of the materials, paid for the rental of equipment and agreed to pay each person in cash was because Warren had no line of credit of his own. By the time Konstantinou advised Warren that he wanted him to do the work according to that arrangement, the respondent had received the bids from two other masonry contractors. Warren presumes that the respondent proceeded with this arrangement because the work could be done immediately and at a lower cost than was available from the contractors who eventually bid the work.
Warren began laying out the job on Friday evening, November 6th and completed the layout on Saturday with the assistance of Brian Hutt, the foreman for his regular employer. Warren arranged for the crew which he had selected to begin work on Saturday at the rates which he had arranged with each one of them and on the basis of the above payment. Work began as planned on Saturday and some work was done on Sunday, but weather and a breakdown of the forklift truck limited the amount of work with the result that the exterior walls were not completed in the two days. The employees were paid for the work performed on the Saturday and Sunday, or either day, at the hourly rates and for the hours of work as reported to the respondent by Warren. With certain exceptions, they were paid by the respondent issuing cheques made out personally to them and then cashing the cheques immediately. The exceptions involved the respondent's payment to Mark Warren. It included, in addition to payment for the hours which Warren worked, reimbursement for the wages which Warren had paid to Brian Hutt on Saturday because Hutt was not going to work on Sunday, and a small amount for payment to another person to correct an error in pay. The rest of Warren's own payment was for the hours which he worked at the same rate ($16.00 per hour) which was paid to other second year apprentices on the crew. Warren also had a dispute with Konstantinou's father about the calculation of the payment for each person. Konstantinou's father unilaterally deducted a half hour from the hours reported by Warren for a meal break on each of the two days. Warren had not included the meal times in the hours he had reported. It is not clear from the evidence whether the error was corrected. Warren decided, as a result of the dispute, that he would not be responsible any more for reporting the hours worked by the masonry crew. He told Jakowski of his decision and, further, told him that he, Jakowski, could report the time to the respondent.
Since the work was not completed on the Sunday, Mark Warren and another bricklayer, Mike Sunk, came to work on Monday, along with Warren's brother Lloyd and a fourth person, Michael Wilbur. It is reasonable to infer from the evidence before the Board that Lloyd Warren and Michael Wilbur performed the work of masonry tenders to the bricklayers. In the masonry trade, that work is customarily performed by construction labourers. Representatives of the applicants became aware of the work which the four persons were doing on Monday, came to the job and arranged to meet with them off site at lunch time. These applications for certification were made that same day as a result of those meetings. At the end of the day, because of his dispute with Konstantinou's father on Sunday, Warren did not report to the respondent the actual hours which he and the three other persons had worked. The respondent decided to pay them for four hours work which, for Mark Warren was 3 1/2 hours less than he actually worked. It was his evidence that the other three persons were not paid for the actual hours which they worked either.
The respondent had no say in whom Mark Warren chose to work on the masonry crew on Saturday, Sunday or Monday, how much work they were to do or the hours which they were to work. Warren had sole control over how the work was to be done. He removed one person from the crew on Saturday because of unacceptable work and he did so without checking with anyone.
Neither the respondent nor Warren made any statutory remittances for income tax, unemployment insurance or contributions to the Canada Pension Plan for the persons who worked on any of Saturday, Sunday or Monday. Nor did the respondent or Warren pay any assessment for Workers' Compensation. Konstantinou had Warren and each of the persons on the crew sign, in common, a statement which Konstantinou called a "disclaimer" that the respondent would not be responsible for an injury occurring to any one of them while working on the motel site. He thought this might protect the respondent from liability in the event of injury on the job.
The persons who are affected by this application are Mike Sunk, Lloyd Warren, Michael Wilbur and, should the Board find that the respondent is their employer, Mark Warren. They are the persons who were at work on November 9, 1987, the date of making of this application. For ease of discussion, the Board will assume for the time being that Sunk, Lloyd Warren and Wilbur are not independent contractors. The Board's task at this stage of the proceedings is to decide whether the respondent is their employer for purposes of the Labour Relations Act. Should the Board find that the respondent is not their employer, these applications would be dismissed. On the other hand, should the Board find the respondent to be their employer, the Board will assume Mark Warren to be an employee of the respondent also. It would become necessary, at that point, for the Board to determine whether the respondent is an employer within the meaning of clause (c) of section 117 of the Act; that is, a person who operates a business in the construction industry.
The parties made full submissions to the Board on both issues. The Board, in reaching the conclusions set out hereunder, has considered their submissions and the cases cited therein, but finds it unnecessary to either detail or summarize their arguments for purposes of this decision. It is sufficient to say that, with respect to the question of whether the respondent is the employer of the persons affected by these applications, respondent counsel argued that Warren exercised control over the persons performing the masonry work, the means of construction, the equipment used, the time of employment and such working conditions as when the work was to begin and end, who was to be hired or fired and what work each person would do. Counsel also asked the Board to apply the same criteria which it has used in the past when deciding whether an entity is an employer, particularly the fourfold test. The Board understands counsel to mean the test referred to by Lord Wright in Montreal v. Montreal Locomotive Works Limited, 1946 CanLII 353 (UK JCPC), [1947] 1 D.L.R. 161 (P.C.) at page 169. Applicant counsel, on the other hand, relied primarily on the seven criteria identified in the Board's decision in York Condominium Corporation, [1977] OLRB Rep. Oct. 645, adopted and more widely canvassed by the Board in Sutton Place Hotel, [1980] OLRB Rep. Oct. 1538. The York Condominium criteria have been used by the Board to help it focus on the realities of an arrangement which is alleged to be or not to be an employment relationship, rather than on the appearance or purpose of the arrangement. In the peculiar circumstances of the instant case, the Board finds it unnecessary to rely on those criteria for that purpose.
The facts of this case clearly cast the respondent in the role of general contractor for the building of the motel extension. The respondent negotiated a price with Roman Jakowski for the carpentry work, invited bids for the electrical, masonry and mechanical work, evaluated the bids with Jakowski's assistance, selected the parties who were to do the work and entered into arrangements with them for the performance of the work. In the case of the masonry work, the arrangement was with or through Warren. The question for the Board is whether that arrangement was a contract for the supply of labour, equipment and disposable supplies, as the respondent contends, or an arrangement to employ Warren and the others to perform the masonry work.
Respondent counsel does not claim that there is a contract in writing between the respondent and Warren. Rather, as the Board understands counsel's argument, he contends that the written estimates which Warren supplied to Konstantinou together with Warren's actions in undertaking and performing the work, constitute an implied contract between the respondent and Warren for Warren to construct the exterior walls of the motel extension for the total cost of the estimate which he had presented to Konstantinou and which was accepted by him without question. According to respondent counsel, the fact that the respondent chose to protect itself by paying for the work as it progressed, does not alter the contract price. It was merely a move by the respondent to protect itself against Warren walking away from the job.
If the arrangement between the respondent and Warren was a contract for the supply of labour, equipment and supplies as contended by respondent counsel, the respondent immediately began to breach the contract. First, Konstantinou unilaterally decided to arrange rental of a forklift truck from a source other than Reitzels. Second, Konstantinou's father reduced the hours reported by Warren without consulting with him when the father calculated payments for the work done on Saturday and Sunday by the members of the masonry crew. It is not clear on the evidence whether the payments were eventually corrected, but even if they were, it does not alter the fact that the respondent acted unilaterally to reduce the hours reported by Warren. The respondent acted unilaterally again to decide how many hours Warren, Lloyd Warren, Sunk and Wilbur were to be paid for work which they performed on Monday, November 9th. Respondent counsel argues that the second and third instances are merely the actions of an owner making sure he does not pay for services not rendered. That is one way to characterize the respondent's action, but one would expect it to bring the dispute to the contractor's attention instead of arbitrarily adjusting payment. In the Board's view, those two actions and Konstantinou's action to make independent arrangements for the forklift truck are characteristic of the respondent seeing itself as not being under a contractual arrangement with Warren for the supply of labour and equipment, and are more like the actions of a party seeing itself as having control over the work in question and exercising it.
The facts leave no doubt that Warren assembled the masonry crew which worked Saturday, Sunday and Monday. The respondent did not participate in any way and, in fact, depended on Warren to put the crew together. Warren also worked out with each person what hourly rate was to be paid, told him when and where they were going to work and the respondent depended on him to do so. Warren decided whether the finished work was acceptable and, at least in one instance, took action when it was unacceptable to him without seeking authorization from anyone, including the respondent. The question is, was he doing it in his own right for his potential benefit or detriment, or was he doing it for the respondent.
While the facts cloak Warren with the appearance of having fundamental control over significant aspects of the working environment of the masonry crew, there is no evidence that he held himself out in any way to those persons or to the respondent as their employer. Nor is there any evidence that Warren has held himself out to the respondent as an independent contractor capable of employing others. Furthermore, there is no evidence of him having any attributes of an independent contractor capable of employing others. He has no line of credit with any financial institution or any other visible financial means for meeting a payroll on his own behalf, not even to the point of the respondent putting him in funds as work progressed so that Warren could pay the crew. Nor did he have the credit or other financial means to rent equipment and pay for disposable supplies. The only responsibility Warren took for payment of wages was to report, for Saturday and Sunday, the rates of pay and the hours worked, witness the payment to the individuals by the respondent and intercede when they were not paid for the hours which he reported. On Monday, the critical date, he took no responsibility for what the respondent paid to Sunk, Lloyd Warren and Wilbur. While the respondent was dependent on Warren's knowledge of the masonry trade for construction of the exterior walls of the motel extension, there is no evidence that Warren would have been responsible for correcting at his cost any work rejected by the respondent's architect, a responsibility that usually runs with an independent contractor relationship.
It is clear that the respondent has control of the overall motel extension project. In that context, the fact that the respondent, through Konstantinou and his father, unilaterally decided to change the source and cost of the forklift truck rental, reduced the hours of work reported by Warren for Saturday and Sunday, and decided how many hours were to be paid for Monday, points in the direction of the respondent having real control over the supply of equipment and labour for the masonry part of the project. Its reduction of the hours (and therefore the amount of pay), even if corrected later, is analogous to an employer disciplining its employees. These circumstances and the facts as a whole lead the Board to conclude that Warren was nothing more than the respondent's agent. He acted for the respondent to find enough persons who were prepared to work at predetermined rates of pay and who had the skills necessary to construct the exterior walls of the motel extension during a two-day weekend. Warren acted as the respondent's agent in two other respects: to identify the equipment needed for the work to be done, the source from which it could be rented and the cost of renting it; and to lay out the work, assign it to the members of the crew and accept or reject the completed work. As the respondent's agent, Warren stands in the respondent's shoes and that is all that distinguishes him from the other members of the crew since, otherwise, he performed the work of his bricklayer trade and was paid for that work at the same rate as two other second year apprentices.
Therefore, having regard to all of the foregoing, if Sunk, Lloyd Warren and Wilbur are found to be employees and not independent contractors, the Board would find the respondent to be their employer and, as well, to be the employer of Mark Warren. That takes the Board to the second issue of whether the respondent would be an employer for purposes of the construction industry provisions of the Act. Clause (c) of section 117 of the Act states:
In this section and in sections 118 to 136,
(c) "employer" means a person who operates a business in the construction industry, and for purposes of an application for accreditation means an employer for whose employees a trade union or council of trade unions affected by the application has bargaining rights in a particular geographic area and sector or areas or sectors or parts thereof.
Construction industry is defined in clause (f) of subsection (1) of section 1 of the Act which states:
1.-(1) In this Act,
(f) "construction industry" means the businesses that are engaged in constructing, altering, decorating, repairing or demolishing buildings, structures, roads, sewers, water or gas mains, pipe lines, tunnels, bridges, canals or other works at the site thereof.
It can be seen from those two clauses that, in order for the Board to find the respondent to be an employer within the meaning of clause (c) of section 117, the respondent must be found to operate a business and that business must be engaged in the activities described in clause (c) of subsection (1) of section 1 of the Act. There is no dispute that the work being performed by the subject employees on November 7, 1987, was the kind of work referred to in the latter clause. Nor is there any dispute that the respondent is a person who operates a business. The issue is whether the respondent operates a business which is engaged in the kind of work which those employees were performing. In the Board's view, when, as here, the business includes the employment of employees to build an extension on the respondent's motel, being work which the Board has found is included within the definition of construction industry in clause (f) of subsection (1) of section 1 of the Act, the business is engaged in the construction industry. Accordingly, the Board finds that the respondent was a business engaged in constructing and altering buildings within the meaning of that clause at the times material to this application.
It follows, therefore, that the respondent was operating a business in the construction industry and is an employer within the meaning of clause (c) of section 117 of the Act. Respondent counsel argues that the respondent's construction of the motel extension is a "corollary" of the business of operating the motel and that the phrase "operates a business" as used in clause (c) of section 117 of the Act has to mean more than just a one time only project. It is not clear on the evidence whether, in fact, this is the respondent's first venture into the construction industry as an employer, but it is only speculation to suggest it will be its last. Even if the motel extension is the respondent's first venture as an employer in the construction industry and it does not expect to carry on another one in future, these circumstances are no reason for the Board not to hold that the respondent is operating a business in the construction industry respecting its motel extension project. See Group Thirty Three Limited, [1974] OLRB Rep. Dec. 888, at paragraph 29, and the Board decisions referred to therein. With respect to whether the phrase "operates a business~~ in clause (c) of section 117 of the Act can accommodate the fact that construction of the motel extension, to use respondent counsel's term, is a "corollary" of the business of operating the motel, a similar argument was raised with the Board in its decision in Abitibi-Price Inc., [1986] OLRB Rep. Dec. 1613. The argument was made that the Board had failed in all of its prior decisions to give full meaning to the words "'...operates a business in the construction industry...". The argument caused the Board to review the meaning which it had given to that phrase in a wide variety of factual circumstances since it was first interpreted by the Board in Tops Marina Motor Hotel, [1964] OLRB Rep. Jan. 583. The Board's discussion is found at paragraphs 40, 41 and 42 of its decision in Abitibi-Price Inc., supra. The decision notes with approval the broad meaning given to the word "business", a breadth which has accommodated situations, for example, where the work was done for the employer's own purposes, as is the case here; where the employer is carrying out its own alterations and renovations, where there is no profit motive in performing the work; and, where "construction" is not the primary or dominant business of the employer. The Board is satisfied that the broad meaning which has been given consistently to the word "business" accommodates and should be applied to the circumstances of this case.
Since the Board has found the respondent to be a person who operates a business in the construction industry and, therefore, is an employer within the meaning of clause (c) of section 117 of the Act, it is necessary for the Board to receive the evidence and representations of the parties respecting whether, on November 9, 1987, Mark Warren, Mike Sunk, Lloyd Warren and Mike Wilbur were independent contractors as respondent counsel claims. For that purpose, the hearing into these applications will continue on April 8, 1988, the date set in the hearing on February 5, 1988, in the event that the Board's resolution of the first two issues did not dispose of these applications.
These applications are referred to the Registrar to be listed for continuation of hearing on April 8, 1988.
DECISION OF BOARD MEMBER J. TRIM;
I am unable to concur with my colleagues' decision.
In my opinion the Company never operated a business in the construction industry.
This was an arrangement similar to a home owner contracting for an addition to his/her house.
The supervision of the work was never under the owner or its representatives, they merely gave directions as to what they wanted done.
The respondent's involvement in the construction industry was simply to add an extension on their inn. I do not feel that the manner in which they undertook to have this done constitutes operating a business in the construction industry nor are they an employer within the meaning of the Labour Relations Act.