Teamsters Local Union 938 v. The Toronto Sun, a Division of Sun Media Corporation

[1999] OLRB REP. JANUARY/FEBRUARY 104

0672-98-R Teamsters Local Union 938. Applicant v. The Toronto Sun, a Division of Sun Media Corporation, Responding Party

Bargaining Unit - Certification - Dependent Contractor - Employee - Union seeking to represent bargaining unit composed of dependent contractors engaged as wholesalers to distrib­ute Toronto newspaper - Employer asserting that wholesalers actually independent contractors -After representation vote, union taking position that some but not all wholesalers are dependent contractors and, at direction of the Board, setting out basis for distinguishing between wholesalers alleged to be dependent contractors and those said to be independent contractors - Board noting that representation vote had become a nullity where union conceded that not all persons who had voted were dependent contractors and where there was no segregation of ballots - Board conclud­ing that categories proposed by union for definition of which wholesalers fall within and which fall outside bargaining unit inherently uncertain and open to continual disagreement - Board accepting employer's submission that bargaining unit must be readily ascertainable from its description and that union's proposed unit lacking that quality - Application dismissed - Board declining to order one year bar as requested by employer

BEFORE: Christopher J. Albertvn, Vice-Chair, and Board Members J. A. Ronson and R. R. Montague.

APPEARANCES: James Robbins and Ernie Bishop for the applicant; F. G. Hamilton and Tim Driscoll for the responding party.

DECISION OF THE BOARD; February 15, 1999

1. This is a certification application under the Labour Relations Act, 1995 ("the Act") in respect of dependent contractors engaged as wholesalers to distribute the Toronto Sun ("the employer" / "the Toronto Sun" / "the Sun"). The employer has opposed the application principally on the basis that the wholesalers with whom it has a contractual relationship are independent contractors.

2. The Board has issued previous decisions on May 21, July 6, August 25, and October 14, 1998. A representation vote has been held and the ballot box is sealed. There has been no segregation of the ballots.

3. There have been two hearing dates in this matter: on July 6, 1998 and January 12, 1999. At the first hearing the applicant ("the union") was asked by the Board to clarify which persons from the list of wholesalers provided by the employer it regarded as being dependent contractors for the purposes of the bargaining unit it had proposed. The union pointed out the persons it considered to be dependent contractors. The Board was concerned that the union's selection of the wholesalers it considered to be dependent contractors and those it accepted are independent contractors appeared to be arbitrary. The matter concluded on July 6, 1998 with the union being given an opportunity to clarify for the Board the basis of its differentiation between those wholesalers it contended were dependent contractors for the purposes of the Act, and those wholesalers it accepted were independent contractors.

4. What was clear at the end of the first day of hearing was that the representation vote which had been held had become a nullity, in that the union conceded that not all of the persons who had voted in the representation ballot were dependent contractors and that some of them were independent contractors. As stated, there was no segregation of ballots in the representation vote so, if some of those who voted are excluded from the bargaining unit, the vote is meaningless.

5. The union provided its explanation of the principles upon which it was working to determine which wholesalers were to be in the bargaining unit, in a written submission on August 21, 1998. The outcome of the union's explanation was that some of the wholesalers who, on July 6, the union had said were dependent contractors, were treated as being excluded from the bargaining unit by reason of their being independent contractors, and vice versa. In other words, the union's theory of which wholesalers should be in, and which out, of the bargaining unit had changed.

6. Thus, with the filing of the union's written representations, the union had taken three different positions of the categorization of dependent and independent contractors. In its application and at the representation vote it contended that all of the wholesalers were dependent contractors. At the first day of hearing the union identified some wholesalers as being independent contractors. In its written submission of August 21 it identified a different group of wholesalers as independent contrac­tors, and for different reasons from those advanced at the first day of hearing.

7. In response, the employer contended that the union's explanation was unsustainable and that the application should be dismissed for failing to disclose a prima facie case.

8. The second day of hearing, on January 12, 1999, was for the purpose of considering the prima facie exception to the application. This decision is issued in respect of the arguments presented by the parties then.

9. The employer's counsel argues that an application for certification must define a specific bargaining unit, which must be expressed objectively. We accept that. The union responds by saying that the bargaining unit it proposed in its application meets that standard. It has applied for a bargaining unit consisting of "all dependent contractors engaged as wholesalers distributing the Toronto Sun working in and out of the City of Toronto". The union argues that this description is specific and objectively ascertainable. But the union's reply begs the important question - the question we required the union to answer in our decision of July 6, 1998 - what is the union's rationale for treating some of the wholesalers as dependent contractors and others as independent contractors?

10. The union gave an answer to that question in its submission following the Board's decision of July 6, on August 21, 1998. The union suggested that the following categories of wholesalers should be excluded from the bargaining unit because they are independent contractors:

• wholesalers who had pre-existing distribution businesses when they com­menced distribution of the employer's product;

• wholesalers who do transshipments, i.e. those who are engaged in taking papers from the employer's production facilities to other wholesalers for distribution;

• wholesalers who have contracted out all of the wholesaling functions;

• wholesalers who operate in areas which allow for entrepreneurial activity;

• wholesalers who have made a capital investment in vehicles which are driven regularly by persons other than the wholesaler.

Categories such as these have been given recognition by the Board in Algonquin Tavern [1981], OLRB Rep. August 1057, quoted extensively in The Citizen, a division of Southam, Inc. [1985] OLRB Rep. June 819 and further quoted in Journal Le Droit [1985] OLRB Rep. September 1372.

11. The union was asked by the Board to take a position as to whether the wholesalers' helpers, of whom there are about 160, more than double the number of wholesalers, are to be treated as employees of the Toronto Sun, or not. The union's written position is that they are not employees of the Toronto Sun. The union contends that they are dependent contractors or employees of the wholesalers, which would put those wholesalers who the union says are in the bargaining unit in the position of being employers in relation to their helpers and dependent contractors in relation to the Toronto Sun. The union relies upon the Board's decision in Miore Distributing Co. Limited [1981] OLRB Rep. February 192, at para. 25 in which the Board said the following:

25 we have considered but put little weight on the fact that some of the drivers make use of a helper. The occasional use of a helper in the circumstances present here falls far short of making the drivers entrepreneurs who derive substantial profits or benefits from the labour of others such as might lead to a conclusion that they more clearly resemble independent contractors than employees. See Dominion Dairies Limited, op cit, and Comfort Guard Services [19781 OLRB Rep. Oct. 905.

The employer argues that the exclusion of the helpers from the proposed bargaining unit is fundamen­tally untenable because it would put the wholesalers into a conflict of interest, as employees in relation to the Sun and employers in relation to the helpers. It argues that Moire Distributing is not applicable because in this case there are 160 helpers and in that case the number of helpers was insignificant. The wholesalers derive profits from their labour and they are in regular employment for the wholesalers. According to the employer, there is nothing occasional about their employment. In its written submis­sions the union took the position that the helpers were dependent contractors or employees of the wholesalers. At the January hearing, the union suggested that the helpers, although employees of the wholesalers, might be treated also as employees of the Sun, though located within a different bargaining unit from that of the wholesalers.

12. The employer's counsel contends that the weakness in the union's proposed criteria for defining which wholesalers are independent contractors is that the result is left to the subjective choice of the wholesalers concerned. A wholesaler can arrange his or her affairs in such a way that he or she falls either in or out of the bargaining unit. So, for example, a wholesaler might decide to cease or to commence transshipments in order to put himself or herself in or out of the bargaining unit. Similarly, a wholesaler may decide to contract out some, but not all, of his or her obligations to the Sun, which would put him or her in the bargaining unit. A wholesaler may decide, whether for labour relations reasons or for reasons unrelated to labour relations, perhaps for tax advantages, to lease rather than buy a vehicle. That would put him or her in the bargaining unit. The employer argues that if the determina­tion of whether a wholesaler is in or out of the bargaining unit is left to the individual choice of each wholesaler, the composition of the bargaining unit could never be determined with any degree of certainty or finality.

13. The employer suggests that the categories of exclusion from the bargaining unit proposed by the union are fraught with problems. For example, taking the union's proposed category of wholesal­ers with pre-existing businesses: some may have had pre-existing businesses, which have now ceased to operate; or which have been disposed of. Some wholesalers may have expanded their businesses beyond servicing the Sun to make deliveries, say, for the National Post. The employer asks rhetorically, would such wholesalers necessarily be any less independent in relation to the employer than a whole­saler who had a pre-existing business?

14. The problem with the union's approach to this case is the following. It has proposed categories which, individually, are of value to the Board in its overall determination of whether someone is a dependent, or an independent, contractor. In the ordinary course the categories suggested by the union are helpful to the Board because they are likely to be indicative of the status of the person under consideration. But that is not how the union has used the categories here. The union is not suggesting that the categories are the kinds of considerations the Board will look to when making a status determination. Instead, the union is seeking to rigidify or hypostatize the relevant categories into individually hard and fast rules which, on their own, are determinative of the wholesalers' individual status. The Board has never intended the categories to be used in that way. They are valuable as guides to a person's employment status, not fixed determinants. If they are treated as set rules, as the union purports to do, then they are of little intrinsic value.

15. The difficulty with the criterion of the existence or non-existence of a pre-existing business is that it is not determinative of whether a wholesaler is a dependent or an independent contractor. It should be merely indicative, nothing more. If it is treated as determinative, then the following problems arise: a pre-existing business may have ceased, and the wholesaler who conducted it may have become wholly dependent upon the employer; alternatively, a wholesaler who had no pre-existing business may have acquired other businesses besides the work being performed for the Sun, and established a formidable independence. Therefore the category - wholesalers with pre-existing businesses - is, in our view, a useful indicator, but it is not a reliable determinant of the relative dependence or independence among the wholesalers.

16. The employer refers to the proposed category - those wholesalers who have wholly con­tracted out their obligations to the Sun - as an example to demonstrate the uncertainty which might result. The employer contends that there are some wholesalers who have contracted out all of the delivery functions to others; there are wholesalers who collect only, and contract out all other functions; and there are wholesalers who contract out only the driving duties to others. The employer asks, why should one of these groups of wholesalers be treated as independent contractors, while the others are not? This is a legitimate concern. If the wholesalers who contract out some of the obligations owed to the employer are excluded from the union's proposed bargaining unit by reason of the contracting out, then half of the proposed bargaining unit would be deemed to be independent contractors. The union does not go that far; it wants to exclude only those wholesalers who contract out all of the obligations they owe to the Sun. There is some merit in the union's distinction bearing in mind the definition of "dependent contractors" in the Act:

"dependent contractor" means a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compen­sation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor.

[emphasis added]

However, the difficulty with the union's stance is that it has hypostatized what should not be a fixed and rigid rule, but a mere indication of a person's status. What should be treated as intimation or denotative of status is being set in stone. If this category is rigidified in the manner suggested by the union, then, what makes the wholesaler who collects only and contracts out the rest of the functions, or the wholesaler who contracts out the driving, any less an independent contractor? The answer is by no means clear. Were this category to form the basis for the distinction between dependent and independent contractors then individual wholesalers could arrange their affairs by contracting out more or less of their work in order to be in or out of the bargaining unit. That subjective regulation of the determination of who falls within or out of the bargaining unit would likely result in uncertainty as to who was in, and who out, of the bargaining unit.

17. It falls within the discretion of the wholesaler as to whether or not he or she decides to transship. A wholesaler might decide to become a transshipper, or a transshipper may decide to cease transshipment. That decision rests within the prerogative of the wholesaler. Hence, if the proposed category were treated in the fixed manner suggested by the union, a wholesaler could effectively decide whether he or she wanted to be in or out of the bargaining unit by deciding whether to cease or undertake transshipment work. That, the employer argues, is untenable because there would be no certainty as to who was in or out of the bargaining unit.

18. A similar point is made in respect of the union's proposed exclusion of those who have entrepreneurial opportunities. The union, in its submissions, suggested that the outlying areas, some distance from Toronto, were not saturated or bounded and that there was therefore scope for entrepre­neurial activity. The employer responds by contesting the union's factual assumption. The employer says that all of the distribution areas are bounded and defined. Also, according to the employer's statistics of anticipated population growth, the main urban centres, particularly Toronto, have the greatest prospect of growth, hence the scope for entrepreneurial activity is strongest there. This interpretation of the notion of entrepreneurial opportunity is quite the opposite of the union's. Both notions are plausible and arguable, yet they are contradictory. Which interpretation is to be preferred is uncertain. That means that, were that category to be determinative of the composition of the bargaining unit, there would be inherent uncertainty as to who was to be regarded as a dependent, and who an independent, contractor. Also the scope for entrepreneurial activity would likely shift over time, which also would affect the determination of who was in, and who out, of the bargaining unit.

19. In the same vein, the determination of whether a distribution area has become saturated is inherently problematic. On the union's proposal, wholesalers whose area is saturated would fall within the bargaining unit; those whose area is unsaturated would be deemed to be independent contractors, and so fall outside of the bargaining unit. But what is to be the determination of whether an area has become saturated? There is no clear criterion for that determination; it is a vague notion. The parties would likely be faced with regular litigation to make the determination of whether the area of a particular wholesaler had become saturated or not. This consideration adds to the concern that the union's proposal for the determination of the composition of the bargaining unit is inherently unclear.

20. We conclude, therefore, that the categories proposed by the union for the definition of which wholesalers fall within, and which fall outside, of the bargaining unit are inherently uncertain and open to continual disagreement.

21. We accept the employer's principal argument, which is that a bargaining unit must be readily ascertainable from its description. That is not the case as regards the union's proposed unit. It is uncertain as to which wholesalers are dependent contractors. The criteria suggested by the union to clarify the matter, although helpful if they were applied as the Board has done in the past, as guides to employment status, are not of assistance as stringent determinants. Applied in the manner suggested by the union, the categories do not enable the Board and those who would be affected to make a prompt and informed decision as to who is in, and who out of, the unit. Furthermore, the union's proposal leaves too much discretion to individual wholesalers to arrange their affairs in such a way as to suit their contingent interest as to whether they want to be in, or out, of the unit.

22. There is a further problem with the union's proposals. The exclusion of the helpers means that those wholesalers whom the union wishes to include in the bargaining unit, will be simultaneously employers and dependent contractors for the purposes of the Act. That is an untenable position, which the Act was not designed to accommodate. The scheme of the Act is that a person affected by it will be deemed to be either a manager (or employed in a confidential capacity in respect of labour relations) or an employee; never both. The Act contemplates that employees will bargain with their employers over the terms and conditions of their employment. Persons in the position of employees are deemed not to be employers, and vice versa. The structure of the Act is such that a person cannot simultaneously be in contrary positions: a person cannot be both an employee and an employer. Employees cannot bargain with one employer to regulate the terms of their own employment, and at the same time bargain the terms of employment of persons whose livelihood depends upon them. The Act does not anticipate cascading tiers of bargaining, in which one set of negotiations are wholly dependent upon another, superior set. A reason for the categorization of persons as being either employees or employers under the Act, is that, if there were two tiers of bargaining (as employees in one instance and as employers in another), the subordinate negotiations would tend to be artificial, in that they would depend entirely upon the outcome of the bargaining in the superior level of negotiations. There would be an inherent conflict of interest for the wholesalers in their roles as employees and as employers. The Act does not contemplate that occurring.

23. The fundamental requirement of the Act that persons be either employees or employers was referred to in Canada Crushed Stone 111977], OLRB Rep. December 806, at paragraphs 20 and 22:

20. In seeking to draw the line in such a way as to bring within the Act those dependent contractors who by the nature of their business more closely resemble employees and to exclude those who more closely resemble independent contractors the Board has been struck by the qualitative difference between the contractor who derives income from the labour of others and the contractor who does not. The Board takes the view that the line must be drawn so as to exclude from the operation of the Act those contractors who, although economically dependent, are themselves employers deriving income from the labour of others. It must be found that the nature of their business is such that within the meaning of the Act they more closely resemble independent contractors than employees in their relationship with the employer. The exclusion of these persons accords with the statutory definition and also maintains the clear division between employers and employees created by the overall scheme of The Labour Relations Act.

21. If the Board was to extend the benefits of The Labour Relations Act to certain employers simply because of their economic dependency, the result would be to create the very potential for conflict of interest which the Act is designed to prevent. The constitution of the applicant in this matter extends membership eligibility to both dependent contractor-employers and to the employees of these persons conditional upon a finding by the Board that they are "employees" for purposes of the Act. If the applicant were to organize the employees of one of these dependent contractor-employers, the anomalous situation of an employer and his employees belonging to the same union would exist. (See Dr. George A. Morgan U.A. W Dental Centre, [1977] OLRB Rep. Jan. 1.) The Act must be interpreted in such a way as to avoid the potential for conflict of interest which might thus develop if independent contractor-employers were found to be "dependent contractors" within the meaning of the Act.

24. The union's endeavour to have the wholesalers whom the union wants in the bargaining unit treated as employers of the helpers, must fail. If the wholesalers are employers in relation to the helpers, then they are employers for all purposes under the Act, including in relation to the Sun. Alternatively, if they are to be treated as dependent contractors of the Sun, then they are dependent contractors for all purposes under the Act and their helpers are then arguably also employees of the Sun. But that option is not available to the union, given the election it made to treat the helpers as being employees of the wholesalers, and not of the Sun.

25. The employer makes the point that the Act is not intended to regulate purely commercial relationships. While it may be desirable to have some regulation of the bargaining process between commercial entities, that is not the scope of the Act. It is not intended to redress the divergent bargaining power of entrepreneurs. For that reason, argues the employer, the essentially commercial relationship between the wholesalers and the Toronto Sun - and, according to the employer, it is the same relationship between each of the wholesalers and the Sun - should not become the subject of regulation by the Act.

26. We are satisfied that the bargaining unit proposed by the union, as clarified by the union's submissions as to which wholesalers it considers should be excluded and which not, is inherently unworkable and impractical. It lacks sufficient certainty and clarity to be identifiable as a bargaining unit. The employer's prima facie objection to the application is therefore good and the application must be dismissed.

27. In reaching this conclusion we do not find that all of the wholesalers are independent contractors, as contended for by the employer. We have not addressed that question. Having regard to the Board's decision in Kitchener- Waterloo Record (unreported decision of February 11, 1997), it is possible that they are, or that only some of them are independent contractors. But it is not necessary for us to make that determination because the union has not yet set out a sustainable foundation for distinguishing between the wholesalers.

28. An issue emerged as to who should bear responsibility for the non-segregation of the ballot, given that the union's position is now that at least some of those who cast ballots in the representation vote should not be part of the bargaining unit. Each side took the position that the other was responsible for requesting an order from the Board to segregate the ballots.

29. The employer alerted the applicant and the Board to its challenge to the application when it filed its response. It explained that it would be taking the position that all of the wholesalers are independent contractors. The question arises, who then should have contemplated the possibility of some of the wholesalers being dependent, and some being independent, contractors? The answer, in the first instance, is the Board. If a responding party to a certification takes the position that all of the persons whom the union says are employees or dependent contractors are in fact independent contractors, the Board should anticipate the possibility that some of the contested positions, if not all, may prove to be out of the bargaining unit. The Board should therefore segregate the ballots, pending some agreement by the parties as to which categories, if any, the segregated ballots can be grouped into. In making the segregation the Board's officer conducting the vote should be sensitive to the need to assure voters that, despite the segregation, their ballots will remain secret. Should the Board make the segregation, the parties are then at liberty to decide which of the contested positions should be grouped together, and treated alike. If the parties consolidate the segregated ballots into agreed groups, then the outcome of the status dispute concerning the segregated ballots in any one group will be determined on a common basis. If the parties lump a group of contested positions or persons together, then they cannot later resile from that common treatment. They cannot later claim that some of the group are distinguishable from the others. All within that group will be treated alike.

30. We have concluded that the union's bargaining unit, as amplified by the particulars the union provided on August 21, 1998, is unsustainable because it is not possible for the Board, on the basis of the union's submissions, to configure a clear, coherent and objectively determinable bargaining unit. That view is enhanced by the manner in which the union seeks to treat the wholesalers' helpers. The wholesalers would be put into a conflict of interest (as dependent contractors in relation to the Sun, as employers in relation to the helpers) which is untenable under the Act. The representation vote has become irrelevant because of the non-segregation of the ballots of persons whom the union contends are dependent contractors. In all of these circumstances, the Board is satisfied that the application is so defective it should not continue.

31. For these reasons the application is dismissed.

32. The employer has asked that a one year bar be imposed upon the union in respect of the wholesalers in the event of our upholding its exception to the application.

33. We are not empowered to grant such a bar. A bar may be imposed by the Board under subsection 7(9) of the Act if a union withdraws an application before a representation vote is taken, and a bar shall be imposed by the Board under subsection 7(10) if a union withdraws an application after a representation vote. Neither situation applies here. The application has not been withdrawn; it is being dismissed. The other circumstance in which the Board imposes a bar is under section 10 of the Act, if the Board dismisses an application after a vote when the union has lost the vote. That is not the case here. The ballot has not yet been counted so the union's support has not been tested.

34. In the result, the application is dismissed. The vote held is treated as a nullity and the Registrar should ensure that the ballots sealed in the ballot box are destroyed, without being counted.