2529-99-ES The Source Shop, Applicant v. Kelly Kavanagh, and Ministry of Labour, Responding Parties.

Employment Practices Branch File No. 32005360

BEFORE: Brian McLean, Vice-Chair.

APPEARANCES: John Razulis, Adrian Goldberg, Louise Nardella, Roberta Spence and Ray Brazeau for the applicant; Kelly A. Kavanagh appearing on her own behalf; Karima Chatur for the Ministry of Labour.

DECISION OF THE BOARD; June 7, 2000

1This is an employer review of an Order to Pay issued by an Employment Standards Officer. A hearing was held in Toronto on May 5, 2000 to consider the appeal.

2Ms. Kavanagh was employed by the Source Shop in August, 1997. She was initially hired as a receptionist and regularly performed some other administrative duties. In addition, she provided certain non-employment-related computer services to the Source Shop and for a related company.

3In late 1998 one of the Source Shop’s sales associates, Ms. Matthews, advised the company that she was resigning. The Source Shop and Ms. Kavanagh agreed that Ms. Kavanagh would replace Ms. Matthews as salesperson for certain of the employer’s product lines.

4In early 1999 the Source Shop advised Ms. Kavanagh that it wished to significantly reduce her salary, then approximately $24,000/yr. to $5,200/yr. but pay commissions. Ms. Kavanagh did not agree with the company’s proposal. Ms. Kavanagh replied to the company’s offer in a letter dated February 4, 1999 and said she was not prepared to accept the new arrangement. Accordingly, Ms. Kavanagh resigned. Following her resignation Ms. Kavanagh made a complaint to the Employment Standards Branch and an Employment Standards Officer made an Order to Pay against the Source Shop.

5The Order to Pay was for unpaid wages, overtime pay and commissions. The employer appealed against the Order to Pay in its entirety. However, during the course of the hearing the Board held that the employer’s arguments with respect to its deduction of $500 for an alleged loan could not possibly succeed. The Board therefore orally dismissed that aspect of the employer’s appeal.

6Before proceeding to the issues which remain in the appeal, it is useful to set out sections 11 and 24(3) of the Employment Standards Act (“the Act”):

11. (1) An employer shall,

(a) make and keep in Ontario or in a place out of Ontario authorized by the Director for a period of twenty-four months after work is performed or services are supplied by an employee complete and accurate records in respect of the employee showing,

(i) the employee's name and address,

(ii) the employee's date of birth, if the employee is a student under eighteen years of age,

(iii) the number of hours worked by the employee in each day and week,

(iv) the employee's wage rate and gross earnings,

(v) the amount of each deduction from the wages of the employee and the purpose for which each deduction is made,

(vi) any living allowance or other payment to which the employee is entitled,

(vii) the net amount of money being paid to the employee, and

(viii) any documents or certificates relating to pregnancy leave under Part XI; and

(b) make and keep in Ontario or in a place out of Ontario authorized by the Director for a period of five years after work is performed by an employee complete and accurate records in respect of the employee showing,

(i) the employee's name and address,

(ii) the date of commencement of employment and the anniversary date thereof, and

(iii) the employee's wages during each pay period and the vacations with pay or payment under section 30.

(2) Subclause (1) (a) (iii) does not apply in respect of the salaried employees of an employer who perform work of a clerical or administrative nature where the employer makes and keeps a record showing the number of hours worked by such employees in excess of eight hours a day and forty-four hours a week.

24. (3) Where an employer has not made and kept complete and accurate records in respect of an employee pursuant to clause 11(1)(a), an employment standards officer may determine the regular rate of and number of hours worked by the employee in each day and week.

7Many referees in deciding cases under these sections of the Act have determined that if an employer fails to keep records in accordance with section 11 of the Act, an employee’s claim to overtime will be deemed to be factual. One referee put it this way:

The failure of an employer to comply with s. 11 does not require an Application for Review to be dismissed automatically. The Application may still be allowed if it is supported by substantial evidence. When, however, there are conflicts of evidence that leave doubts in the mind of the Adjudicator, and the problem is exacerbated by the lack of contemporaneous records, it would be inconsistent with the obligation created by s. 11 to resolve those doubts in favour of the employer.

8In my view, an employer is therefore permitted to establish that the Officer’s calculations are incorrect, even if it did not keep appropriate records in compliance with section 11 of the Act. In this case, there was no evidence that the employer did maintain records of hours worked by the applicant. However, while the employer did not introduce at the hearing any records it was required to keep under section 11, neither of the responding parties argued the application of section 11 in this proceeding.

9In the absence of records, the employer adduced oral evidence regarding Ms. Kavanagh’s alleged hours of work. On balance, the employer’s witnesses were of limited assistance in establishing Ms. Kavanagh’s actual hours of work and whether she worked overtime Two of the witnesses were only employed with the company for a short period of time prior to the termination of Ms. Kavanagh’s employment with the company, and one of the witnesses was frequently out of the country for weeks at a time. Even the witness who was employed for the same period as Ms. Kavanagh and was, as Ms. Kavanagh was, employed in the office always arrived later in the morning than the applicant and was busy enough that it was difficult for her to determine, with any certainty, what time Ms. Kavanagh left in the evening. I therefore cannot accept the applicant’s primary contention which is that Ms. Kavanagh regularly worked only seven or eight hours a day (excluding lunch) because there is virtually no evidence in support of that position.

10Based on the evidence that Ms. Kavanagh presented regarding her hours of work I find that Ms. Kavanagh worked some overtime. I am also satisfied, however, that the Officer’s determination of the hours the applicant worked was deficient. It became clear at the hearing that the Officer merely accepted at face value the final calculation of overtime put forward by the applicant. While the applicant claimed to have calendars on which she recorded her hours of work, only one of these was provided to the Officer at the fact-finding conference and before me at the hearing.

11The one calendar that to applicant produced does not leave the Board with confidence about the applicant’s overtime claims. All of the notations written in the calendar were in the same pen, and in the same style of handwriting. It did not appear that the notations were written on a daily basis as claimed by Ms. Kavanagh. Moreover, certain notations were whited out and written over; the applicant’s explanation for these “mistakes” was not entirely credible. As an example, the notation for December 24, 1998 initially read “S: 8:00 am F:5:00 pm”. However, the “5” had been whited out and replaced by a “1”. The applicant’s explanation was that at 1:00 p.m., when she was about to go home for the day (it being Christmas Eve), she wrote 5 p.m. and immediately realized her mistake and changed the “5” to a “1”.

12It also appears that the applicant’s calculations were wrong on many occasions. The employer pointed out at least two occasions where the applicant had rounded up hours in her favour. In addition, in the week of December 14, 1998, the applicant claims to have worked 47 hours. The company did not pay overtime after hours worked in excess of 8 hours in a day. For that, she claimed 9½ hours overtime, when it should have been 3 hours, even accepting her figures.

13Based on all of these factors, I am satisfied that the applicant’s overtime claim is exaggerated, and therefore the Order to Pay was excessive. In my view, the applicant worked no more than one-half of the overtime claimed; I therefore reduce the Order to Pay accordingly.

Commission

14Ms. Kavanagh’s claim for commission, arises out of the applicant’s assertion that in November, 1998 she was made a sales employee (the employer agrees) and at that point the applicant was placed on the employer’s commission plan (the employee disagrees). The applicant asserts that she was entitled to commission of 10% of sales.

15The employer’s witnesses each testified that the applicant was never placed on the employer’s commission plan. They agreed that her sales were identified in the company’s computer, but asserted that all employees were so identified, whether they earned commission on sales or not. The employer also relied on the fact that the employee whom the applicant had replaced in the sales position was not entitled to commission.

16The applicant asserted that she had been advised by Adner Goldberg, the company’s President, in November 1998 when she assumed the sales position, that she was entitled to commission. She also relied on the fact that she received a cheque for $500 in January 1999, on which was written for “sales commission and bonus”. However, the applicant testified that she was “surprised” to get the $500 cheque as she “had not been expecting it”.

17The company’s reply was that the cheque in question was a gratuitous bonus offered to the applicant for her hard work (although presumably not so hard that she worked overtime). The employer admitted that part of the amount of the “bonus” had been determined taking into consideration 7.5% of the applicant’s sales.

18Under these circumstances, I find that the applicant was not entitled to be paid commission on her sales. If the applicant genuinely believed that she was entitled to commission, she would not have been surprised that she received a cheque which, on its face, was in respect of commission.

19I also find support for my conclusion in the series of correspondence between Ms. Kavanagh and the company in February 1999 which was introduced as evidence at the hearing. In her letter dated February 4, 1999, Ms. Kavanagh stated:

“… I maintained a majority of my Administrative duties while still continuing to take care of Apparel Department, not having any increase in monetary monies while I had more responsibilities and I was performing more duties on a daily basis (one would even consider it two jobs)…”.

She went on later to say:

“… I have maintained an Administrative position throughout my time spent working with this company and took on added responsibilities on numerous occasions without any short term or long term increase”.

Ms. Kavanagh is clear in this correspondence that she never received an increase when she assumed the sales duties in November, 1998, although she claimed before me that she became entitled to commissions, plus her former base salary, at that time. I also find it not credible, under the circumstances, that the company would agree to pay Ms. Kavanagh commissions when it had not paid her predecessor commissions for doing more sales work. Accordingly, based on all of the evidence before me, I do not accept that Ms. Kavanagh was entitled to commissions.

Disposition

20Accordingly, for all of the foregoing reasons, I hereby order:

(a) to the paid to the employer $1,641.54

(b) to be paid to the employee $1,632.76

(c) to be retained by the Government of

Ontario Consolidated Trust Fund $ 356.24

“Brian McLean”

for the Board