3404-99-ES Derrick Woodman, Applicant v. G.R.M. Contracting Ltd., Betty Ross, B. James Lange, Employment Standards Officer and Ministry of Labour, Responding Parties.

Employment Practices Branch File No. 40010158

BEFORE: Harry Freedman, Vice-Chair.

APPEARANCES: Rebecca Kingdon and Jacquie Chic for the applicant; no one appearing for G.R.M. Contracting Ltd. or Betty Ross; Alicia Gordon-Fagan and B. James Lange for the Ministry of Labour.

DECISION OF THE BOARD; December 21, 2000

1. This is an application under section 68 of the Employment Standards Act, R. S. O. 1990, c. E. 14, as amended (the “Act”) for review of the decision of Employment Standards Officer B. James Lange refusing to issue an order to pay. The hearing in this matter convened before me on December 20, 2000. At the conclusion of the hearing, I delivered the my oral decision in this matter with brief reasons allowing the application for review and finding that the applicant ought to be paid $2,300. My full reasons for my decision are set out below.

2. Employment Standards Officer B. James Lange refused to issue an order to pay on the basis that the applicant was not an employee of either Betty Ross or G.R.M. Contracting Ltd. (G.R.M.). The applicant also addressed a potential argument that even if he was an employee, he was not entitled to the statutory minimum wage because he was paid commissions and therefore Part V of the Act (the minimum wage provisions) did not apply to him by reason of section 3(1)(h) of Regulation 325 under the Act. Thus, the two issues before me were whether the applicant was an employee within the meaning of section 1 of the Act, and if he was an employee, whether he was entitled to receive the minimum wage prescribed under Part V of the Act, or payment for commissions he claims he earned while employed by G.R.M. The applicant was seeking $10,000.00 (the maximum available under the Act) asserting that the commissions he was owed for exceeded that amount.

3. Betty Ross and G.R.M. did not appear at the hearing of this matter although they had been duly served with notice of this hearing. Indeed, they had received the Board’s earlier decision in this matter dated December 7, 2000 with respect to the applicant’s request for an electronic hearing and had filed submissions opposing that request. I am satisfied that both Betty Ross and G.R.M. had actual notice of the date, place and time of this hearing. The Board, following its usual practice when a party does not appear at the scheduled time of a hearing, which in this case was 9:30 a.m., waited for over ½ hour after the scheduled starting time before commencing the hearing. By the time the hearing concluded some two hours later, just after noon, neither Ms. Ross nor G.R.M. had appeared.

4. The applicant testified and was the only witness in this proceeding. The applicant reported for work starting some time in January, 1998 at premises occupied by Ms. Ross to engage in telephone solicitation work on behalf of G.R.M seeking to obtain leads for doing construction work. The applicant contacted potential customers to inquire about their construction needs, and if he was able to obtain a lead, would pass the lead on to Ms. Ross who would meet with the potential customer (or pass the lead on to another employee of G.R.M.) and attempt to negotiate a construction contract on behalf of G.R.M. to perform construction work. The applicant worked in premises which he understood to be the offices of G.R.M., using a telephone, facsimile machine, desk, stationery and all other office supplies that were the property of either Ms. Ross or G.R.M. His work consisted of telephone solicitation and sending G.R.M. promotional material to potential customers by mail or facsimile transmission. The applicant did not pay for the supplies consumed or for postage he used in sending out the material. The applicant did not use any of his own tools or equipment to perform the telephone solicitation and promotional work in which he was engaged. He had regularly scheduled work hours from 10 a.m. to 3 p.m. or 4 p.m., Monday to Friday, with some time off during the day for lunch. Although the applicant was paid a gross amount without deductions for income tax, Canada Pension Plan or employment insurance, it was clear to me from the evidence that the applicant had an employment relationship with G.R.M. The applicant testified that Ms. Ross was an employee of G.R.M. and it had issued the applicant with two cheques for the work he had performed. He engaged in telephone solicitation work exclusively for G.R.M. from its premises, on its behalf using its equipment, stationery and materials working fixed hours five days a week, Monday to Friday.

5. Also, based on the evidence of the applicant, I am satisfied that the applicant had an arrangement with Ms. Ross and Greg Moffat, a principal of G.R.M. by which he was to receive commissions based on the construction work his leads generated at a rate of 2.5%, (later increased to 5%) of the value of the construction contract G.R.M. secured. The leads he generated that led to the sales of construction services were normally made at G.R.M.’s place of business. As I am satisfied that the applicant was an employee of G.R.M. and was working exclusively at the premises which were held out to be its normal place of business, the exclusion from Parts IV through VIII of the Act found in section 3(1)(h) of Regulation 325 does not apply in this case. Therefore, at a minimum, the applicant was entitled to a payment of $6.85 per hour for each of hour work performed for G.R.M., or such greater amount that he generated through the commissions earned.

6. The applicant testified that he was paid approximately $2,000.00 for the time he worked between January and June 1998. The only specific contracts that the applicant secured to which he testified with any degree of certainty were Desticom that had a value of approximately $21,000 and PCO that had a value of approximately $40,000. The value of the PCO contract, I am satisfied on the evidence was only $40,000, even though the applicant suggested it was much higher. He acknowledged he was speculating about that contract’s higher value based on the length of time to complete the contract. He had been told by Mr. Moffat that the PCO contract was worth $40,000. The applicant also testified that the Desticom contract was worth a little over $21,000 for which he did receive commission. The applicant did not provide any documentary evidence in support of his claims for the value of the contracts he said he had secured for G.R.M.

7. The applicant also asserted that he had been responsible for a $600,000 contract for the construction of an addition at Accentia Components that had been built by either Stacey Construction or Lacey Construction (he was not sure of the name of the construction contractor, but claims that it was his lead that had resulted in the contract going to Stacey or Lacey Construction). In cross-examination by counsel for the Ministry of Labour, the applicant acknowledged that he understood that two bids had been submitted for that Accentia Components construction work and that he was not sure and did not have any proof that G.R.M. or Betty Ross had done or arranged to have done the construction work at Accentia Components. Under those circumstances, I was not prepared to accept that the applicant was entitled to any payment of commissions in respect of the Accentia Components construction project.

8. In my view, the applicant is entitled to the greater of the minimum wage that would have been payable for the approximately 25 weeks he worked for G.R.M. at an average of 25 hours a week, or the 5% commissions on the contracts that emanated from the leads he had secured. The minimum wages he was entitled to receive over that period for those hours worked is approximately $4,300.00, based on 625 hours worked at the rate of $6.85 an hour. He was paid approximately $2,000.00 by G.R.M. during that period. The commissions he earned based on the value of the contracts he secured (approx. $62,000.00) was approximately $3,100.00. Since the applicant is entitled to the greater of the commissions he earned or the minimum wage for the hours worked, he was entitled to be paid $4,3000.00, of which he had already been paid approximately $2,000.00. Therefore, he is entitled to be paid an additional $2,300.00.

Disposition

9. Pursuant to section 68(20) of the Act, this application for review of the Officer’s refusal to issue an order is allowed. The Board under that section may issue an order and in doing so, has, pursuant to section 68(19) of the Act, the powers of an employment standards officer under the Act. Therefore, pursuant to section 65(1.2) of the Act, the Board hereby orders G.R.M. Contracting Limited to pay forthwith to the Director of Employment Standards in trust for the benefit of the applicant the sum of $2,300.00 for wages owing to the applicant together with an additional sum of $230.00 to the Director for administrative costs and in addition directs G.R.M. to pay interest on the amounts it must pay to the Director at the rate and calculated in the manner determined by the Director under section 61.1 of the Act.

“Harry Freedman”

for the Board