[1999] OLRB REP. MARCH/APRIL 342
4335-98-G International Association of Heat and Frost Insulators and Asbestos Workers, Local 95, Applicant v. Sentinel Systems Inc., Responding Party
BEFORE: Mary Ellen Cummings, Alternate Chair.
APPEARANCES: Elizabeth Mitchell, Jim Bourne and Pat McCabe for the applicant; Mark Doerrsam and Chris Nardi for the responding party.
DECISION OF THE BOARD; April 27, 1999
This is a referral of two grievances in the construction industry, pursuant to section 133 of the Labour Relations Act ("the Act"). The applicant ("the Union") alleges that the responding party has breached its collective agreement in hiring non-union employees to do work covered by the collective agreement. In addition, the applicant alleges that the responding party has failed to make the remittances for welfare benefits, union dues etc. for any of the people it employed.
Having regard to the agreement of the parties, the style of cause is amended to name Sentinel Systems Inc. ("Sentinel") as the responding party.
Sentinel admits that it is bound to the collective agreement between The Master Insulators' Association of Ontario Inc. and the International Association of Heat and Frost Insulators and Asbestos Workers, and the International Association of Heat and Frost Insulators and Asbestos Workers, Local 95, effective until April 30, 2001. There is also no dispute that the work in issue is covered by the collective agreement. And Mark Doerrsam, a principal of Sentinel, candidly admitted that he used non-union employees on three jobs. That is a breach of Article 2.01 of the collective agreement. But Mr. Doerrsam argues that the Union placed him in a position whereby he had no choice but to resort to using non-union labour, and in any event, the applicant's estimate of damages is over-stated.
The applicant served a summons on Mr. Doerrsam, and his partner, Chris Nardi, requiring them to produce documents relevant to the grievance. The responding party did not initially comply with the summons, but on March 31, 1999, entered into an agreement whereby they would comply, once given a 24 hour extension to get access to the documents. When Mr. Doerrsam arrived at the hearing on April 1, 1999, he did not have many of the documents required by the summons. Instead he produced a letter from Sentinel's bookkeeper indicating that it would not turn over the company's documents until a dispute over fees could be resolved. Mr. Doerrsam tendered the letter as explanation for his failure to produce the documents. Counsel for the responding party asks the Board to find this an inadequate response. I agree. I must also comment that while I do not doubt the legitimacy of the dispute with the bookkeeper, I noticed that Mr. Doerrsam appeared to have with him documents that assisted his view of things, but did not have documents to refute the applicant's evidence. For example, Mr. Doerrsam had estimate files for the three jobs that the applicant discovered, but did not have estimates for any others, yet claimed there were other projects which accounted for some of the hours worked.
The parties entered into a Memorandum of Agreement, binding Sentinel to the ICI agreement, mentioned above, on October 10, 1997. I heard evidence from Jim Bourne, one of the applicant's business representatives, that at the time Sentinel entered into a voluntary recognition agreement, it had a number of ongoing jobs that the applicant agreed it could complete without complying with the collective agreement. The applicant had agreed that Sentinel could complete any job that started before September 24, 1997, and ultimately got a list of those jobs from Sentinel.
In October 1998, a routine site visit by one of the applicant's organizers, Pat McCabe, found some non-union workers employed by Sentinel. The applicant convened a meeting with Mr. Doerrsam and Mr. Nardi. There is some dispute about what was said. But, it is agreed that the parties discussed Sentinel's continuing eligibility for participation in the applicant's industry stabilization fund. The fund is intended to help unionized companies compete with non-union. The applicant, through its members' contributions, subsidizes the wages paid to employees in unionized companies. Sentinel had applied for and been given a wage subsidy in the amount of $12,000 to enable it to compete on a job at Clouson School in York. Ironically, it was the Clouson School job where Sentinel was found to be employing non-union employees. As Mr. Bourne put it, the applicant did not take well to its members subsidizing the employment of non-union employees. Mr. Bourne said that Mr. Doerrsam was told that the Union would not grieve the matter, given Sentinel's assurances that it had made a mistake. According to Mr. Bourne, Mr. Doerrsam was also told that his entitlement to the wage subsidy was in jeopardy as a result of his actions, and they would have to see how things went in future.
Mr. Doerrsam testified that the applicant told him at that meeting that it was withdrawing the wage subsidy. Mr. Doerrsam relies on that withdrawal to justify his future actions. As he sees it, from that point on the Union "owed" him $12,000.
But, in fact Sentinel's violations of the collective agreement pre-dated the events of October 1998. From the time of signing the voluntary recognition agreement, Sentinel has made no remittances on account of benefits, pensions etc. as required under the collective agreement. Although it has deducted union dues for the union members it did employ, it has never remitted them.
Mr. Doerrsam testified that the "mistake" he made was in employing Dave Peckham, who had applied for apprenticeship with the applicant, but did not meet its minimum educational requirements. But that explanation does nothing to justify the employment of other non-union employees. And from the limited payroll records produced, it does not appear that Sentinel ever paid Mr. Peckham the apprenticeship wage under the collective agreement. It appears Sentinel engaged in the common practice of employing some Union members, at proper rates, and non- union workers, who were paid around $10.00 an hour.
It is undisputed that Union officials made more site visits, to Military Trail School, Havergal College, and back to Clouson School right up to the end of March 1999, and on each occasion, some non-union employees were found. Mr. Doerrsam did not deny the evidence. In his view, once the Union "pulled" "his" $12,000 wage subsidy, he was entitled to act as he wished. Even if I accept Mr. Doerrsam's evidence that he was told categorically he had lost the subsidy when the first incident of non-union employees was discovered by the applicant, Sentinel was not then entitled to ignore its collective agreement obligations. And frankly, it was a catastrophic error in judgement to use non-union employees on the very job that the applicant's members were subsidizing. The union's response was quite measured, in the circumstances.
On the evidence, there is no doubt that Sentinel hired non-union employees to work on the three school jobs, in violation of the collective agreement. In addition, there is no doubt that Sentinel failed to make the remittances required under the collective agreement for any employees. All that remains to be determined are the remedies that flow from those breaches.
Starting first with the damages for failure to make the required remittances, the applicant is entitled to the amounts of the remittances that should have been made on behalf of the union members who did work for Sentinel. Mr. Bourne testified that the applicant obtained the pay stubs of Mike Szabo, a journeyman, and from the list of hours worked, calculated the remittances due. The applicant also used Mr. Szabo's pay stubs (the only information it had) to calculate the amounts due on account of Anthony Nardi, an apprentice, who had been un-cooperative with the Union (perhaps because he is the brother of Chris Nardi, one of Sentinel's principals). The applicant reasoned that since Mr. Nardi as an apprentice, would always have to work with Mr. Szabo, the journeyman, their hours of work would be the same. Sentinel did not challenge this reasoning.
Based on this information, the applicant's benefits administrator prepared benefits reports from June 1998 to January 1999. I have reviewed the reports and compared them to the remittance obligations under the collective agreement, and the applicant's calculations are accurate. Again, Sentinel did not challenge them.
I find that the applicant is entitled to damages for unpaid remittances, surcharges, and legal costs, as required under the collective agreement, in the period June 1998 to January 1999, in the amount of $16,312.45.
Turning now to the claim for damages for the use of non-union labour, Mr. Bourne testified that he believed there was 1400 hours of work in the job at Clouson School. Mr. Bourne based that estimate on the information supplied in writing by Sentinel on its request for subsidy. In answer to the question "Total hours for insulation only", Sentinel wrote "1400 mhrs". Mr. Bourne said that since Mr. Szabo' pay stubs, combined with his recollection, indicated he worked 514 hours on the job, to which he added 514 hours for Mr. Nardi, results in the conclusion that 374 hours were performed by non-union labour.
With respect to Military Trail School, Mr. Bourne relied again on Mr. Szabo's pay stubs and his recollection, combined with the applicant's observation of the number of non-union employees at its site visits. Mr. Bourne's estimated that one third of the hours, 365 hours, were performed by non-union labour (which is close to the percentage at Clouson). Mr. Bourne was careful to indicate that the applicant's estimate of hours at Military Trail was an educated guess. Mr. McCabe had been asked to leave the work site, and was not able to fully examine the work.
On the Havergal College job, Mr. Bourne agreed that the job had been recently started. He estimated, based on a site visit, that 180 hours had been worked so far. Tony Nardi and Mr. Szabo were the only union members. Three site visits found three non-union employees. On the basis of that information the union concluded that three fifths of the job had been done by non-union employees. Consequently, the Union is claiming for 108 hours.
Mr. Doerrsam vigorously disagreed with the Union's estimate. He asked the Board to rely on the amounts he included in his official bid for each job, and assume that half the cost was for labour (a division between labour and materials with which Mr. Bourne agreed). But accepting that evidence in preference to the Union's estimate would require me to assume that Sentinel bid for the work with plans to pay wages and benefits and other remittances in accordance with the terms of the collective agreement. Mr. Doerrsam claims to have factored in a composite rate of $32.50 an hour. There is no reliable evidence to support such an assumption, and the evidence of what Sentinel actually did is to the contrary. It used some union workers on each job, and some non-union as well. And the non-union employees were paid wages well under those in the collective agreement. Further, I did not hear evidence from Chris Nardi, who actually prepares the bids. Finally, Mr. Bourne suggested, in cross-examination, that Sentinel had seriously underbid on the Clouson School job, indicating both that the bid may not be a reliable source of information, and providing some explanation for Sentinel's conduct.
Counsel for the applicant had obtained copies of all the pay stubs for all of Sentinel's employees, union and non-union during the relevant time. They show 994 hours were paid to non-union employees, more than the 847 that the applicant is claiming. When this figure was put to Mr. Doerrsam in cross-examination, he quickly indicated that Sentinel had other jobs going on, and that employees worked on these other jobs. Mr. Doerrsam failed, although asked, to provide any information about these other jobs. His evidence that there were other jobs directly contradicts an answer to a question posed by the Board, before cross-examination started. I specifically asked Mr. Doerrsam if Sentinel had work other than the three school jobs the Union had found, and he said no. I conclude that Mr. Doerrsam was not being truthful when he indicated that the non-union employees had worked other jobs. Although the pay stubs showing a total of 994 hours worked by non-union employees is the most accurate estimate, counsel for the applicant said that her client would be content to be awarded damages based on its estimate.
The applicant has established that 847 hours were worked by non-union employees. Under the collective agreement, the wage, benefit and other remittances amount to an hourly rate of $36.19. Consequently the applicant is entitled to damages in the amount of $30,652.93 for failing to use union members.
Finally, the Union also seeks the application of the following provision of the collective agreement:
6.05 Any contractor who knowingly violates this collective agreement (excluding asbestos removal) by employing non union workers and/or subcontracts work to non union workers will be assessed additional fines/penalties beyond those imposed by the Ontario Labour Relations Board (O.L.R.B.). Or if early settlement is reached the following fines/penalties shall apply in addition to nay settlement damages:
A $25,000.00 Minimum and Maximum fine per investigation.
Counsel for the applicant argued that this clause is a provision agreed to by the applicant and the employers with whom it has contractual relations to discourage an undermining of the agreement, and the whole industry, through the use of non-union workers or sub trades. Mr. Doerrsam characterized the applicant's request as outrageous.
This type of clause has become more common in the construction industry. These clauses are designed to ensure that all unionized contractors compete on a level playing field, because the penalty for non-compliance is a serious disincentive to cheating. The Board sees no reason we should fail to apply such clauses, where the criteria are met. The parties expect arbitrators, whether the Board, or others, to apply the agreement they have negotiated.
In this case, the criteria for application have been met. Even if one could accept Mr. Doerrsam's story that the first time non-union persons were found on the site, it was due to a mistake, the meeting with the applicant's officials after that would have made it abundantly clear what Sentinel's obligations were. When Sentinel continued to use non-union workers at Clouson, then at Havergal and at Military Trail, I have no hesitation in concluding that the responding party "knowingly violated" the collective agreement. The facts as found in this case is precisely the kind of behaviour that this clause was intended to discourage. Sentinel was not discouraged. Consequently, it faces the consequences. As a result of the terms of Article 6.06, the applicant is entitled to a further $25,000.00 in damages.
Order
- For all the reasons outlined above, the applicant is entitled to damages in the amount of $71,965.38 from the responding party. The responding party is directed to pay the amounts to the applicant forthwith.