1935-99-R International Brotherhood of Electrical Workers, Construction Council of Ontario, Applicant v. Multiservice Electric Ltd., Responding Party.
BEFORE: David A. McKee, Vice-Chair, and Board Members J. G. Knight and A. Haward.
APPEARANCES: Ursula Boylan and Bill Martindale for the applicant; Ronald Ouellette and Robert Smith for the responding party.
DECISION OF THE BOARD; November 27, 2000
This is an application for certification made pursuant to the construction industry provisions of the Labour Relations Act, 1995, S.O. 1995. ch. 1 (the “Act”). The right of four persons who cast ballots in a representation vote is challenged. This decision deals with two of them: Art Smith and Keith Scott. The sole basis for the challenge is that the applicant alleges both of them exercised managerial functions within the meaning of section 1(3)(b) of the Act, and are therefore excluded from the bargaining unit.
Multiservice Electric Ltd. (“MSE”) is a small electrical contractor. Robert Smith (referred to by everyone as Bob Smith) is the majority shareholder and clearly runs most, if not all, of the “business side” of MSE. There are between six and twelve persons performing work for MSE in the field at any one time. We heard evidence of various types of jobs, including a major computer installation, many school projects, and other fairly standard commercial contracts. MSE also performs “service work” on an on-call basis. Some employees are provided with a service truck owned by MSE. MSE does nothing other than electrical work.
Art Smith happens to be Bob Smith’s brother. This fact is irrelevant. The Board’s jurisprudence is clear. Whatever conflict may arise from having persons closely related to managerial persons in a bargaining unit, such conflict is not dealt with by the Act: Hodgson’s Steel and Ironworks Limited, [1976] OLRB Rep. May 312, and Great Lakes Fishermen and Allied Workers Union, [1988] OLRB Rep. Jan. 23. The Act has been amended many times since the first of these decisions and this has never changed. The legislative policy is clear: the fact that even the closest relationship with persons who are clearly managerial has nothing to do with section 1(3)(b) of the Act.
The parties agreed that the legal onus of proving that Art Smith and Keith Scott do exercise managerial functions lies with the applicant.
There is one issue that the Board wishes to deal with before dealing with the rest of the evidence in detail. There was some debate about the significance of certain evidence with respect to both Mr. Smith and Mr. Scott. Both are directors of the corporation. Art Smith is a shareholder: he owns 25% of the outstanding common shares of the company. His brother Bob Smith owns the other 75%. Mr. Scott owns no shares of any sort. Both Art Smith and Keith Scott received payments from what was described as a “profit-sharing” arrangement. The applicant points to these facts as indicia of managerial authority. The responding party asserted that the fact of a directorship, or indeed share-ownership, is not evidence of managerial authority. It cited S.D. Adams Welded Products Limited, [1978] OLRB Rep. April 353 at para. 14; Family Services of Hamilton/Wentworth Inc., [1980] OLRB Rep. Feb. 204 at para. 19, and Great Lakes Fishermen and Allied Workers Union, supra, at paras. 13 and 14. With respect to the profit-sharing arrangement, the responding party asserted that the applicant could have called another former employee to ask that person about whether or not he had received profit-sharing payments. The responding party submitted that, since the onus is on the applicant to establish that section 1(3)(b) applies to these two individuals, the onus lay on the union to demonstrate more than simply the fact of a directorship, shareholder status, or receipt of money under a profit-sharing arrangement.
The responding party’s position overstates the law. The fact that an employee is a director of a corporation is not in and of itself determinative. What is important is why an employee is a director. The Board does focus on the degree to which an individual makes decisions which have a direct impact on the terms and conditions of employment of other employees (or makes effective recommendations to those who do). A director, by virtue of office, does have certain statutory obligations, e.g. with respect to unpaid wages and vacation pay, under both the Employment Standards Act and the Business Corporations Act. Whether an individual director translates that sort of legal liability into an active role in the operations of the company is a question of fact.
However, some facts lie particularly within the knowledge of one party. Only the responding party knows why Art Smith and Keith Scott are directors. The Board may speculate that Art Smith is a director because he is a shareholder. Mr. Scott testified that he did not know why he was a director; he thought it had something to do with insurance and perhaps WSIB coverage as well. The Board is aware that group health and life insurance can be arranged for persons who are not directors of a corporation. In this case the knowledge about why they are directors lies within the exclusive knowledge of one party. Given that most employees are not directors, and that a clearly managerial person (Bob Smith) is a director, there is an evidentiary burden of explanation which is different from the ultimate legal onus. Where a fact lies within the exclusive knowledge of one party with respect to an issue that party is actively contesting, and where such a burden creates no procedural or substantive unfairness (for example in many criminal proceedings), a burden of explanation falls on the party possessing the knowledge. When the party under such an obligation fails to provide an explanation, the Board is entitled to draw an inference that the reason for that failure is that such evidence would not support the position of the party declining to call it. (See Sopinka and Lederman, The Law of Evidence in Canada, (Butterworths, 1999) at pp.77-90). Accordingly, the Board concludes that the fact that Art Smith and Keith Scott were directors suggests that they may have performed managerial functions. This is by no means conclusive, but it does weigh against the responding party’s position.
Similarly, the evidence about “profit-sharing” arrangements is unclear. The responding party suggests that the applicant could have called yet another employee, who has since left the responding party’s employ, and who might have been able to support the employer’s position that profit-sharing is simply a way of rewarding long-term employees for their commitment to the company. The Board does not accept that proposition. Even if the applicant had called this witness, and had that witness given evidence that he was paid some money as part of a “profit-sharing” plan, the Board would be no further ahead. It is not up to the Board to try to speculate about what some of the pieces of the profit-sharing plan (for instance, did Bob Smith participate in it?) add up to. Again, the burden of explanation falls on a responding party. It has not given the Board any explanation, and the Board must therefore conclude that the explanation tends to support the conclusion that the profit-sharing plan is part of the managerial status of Art Smith and Keith Scott.
One further matter is of less consequence. The responding party urged on the Board the conclusion that the salaries of Art Smith and Keith Scott (including profit-sharing) were not very different from the salary levels of other senior employees whose wages were disclosed (usually in hearsay fashion) in evidence. However, Art Smith is also a shareholder. As owner of 25% of the common shares, he is presumptively entitled to dividends amounting to 25% of the profits which are declared as dividends. No shareholders’ agreement was produced to say otherwise. Similarly, the Board does not know if profits were paid out as dividends or kept as retained earnings. It seems less likely, given the different tax treatment, that profits would have been paid entirely to Bob Smith as employment income. However, it is also true that the applicant could have cross-examined Art Smith on this point and chose not to do so. All we are left with on this issue is the fact that Mr. Scott’s salary appears to be in line with other senior employees. The Board has not been provided with the evidence with respect to Art Smith’s earnings from the company sufficient to allow the Board to draw this conclusion.
In all, seven witnesses were called, including Art Smith and Keith Scott. The responding party called two employees who were, on agreement of the parties, excluded from the voters’ list, Steve Tyson and Scott Stagg. The applicant called three witnesses who were included in the voting constituency: Aaron DeCoe, Derek Matthews, and Derek VanPelt. The discussion below represents the Board’s conclusions about the evidence having regard to all of the testimony of all seven individuals. The Board assessed the probable accuracy of the evidence of the witnesses having regard to the consistency of their evidence, the firmness of their memory, their ability to resist the influence of self-interest, to modify their recollections, their capacity to express clearly their recollections, and their demeanour while testifying both in chief and in cross-examination, and the objective probability of their evidence in the context of the rest of the evidence, both oral and documentary.
Arthur Smith is employed on a salaried, rather than on an hourly basis. He spends an average of 50% of his time in the office and 50% of his time in the field. His office work includes the creation of construction drawings from “whiteprints” and planning jobs in determining the quantities of materials needed. (Mr. DeCoe stated that he believed Art Smith performed estimating work based on his observations from one or two visits to the office. The Board accepts Mr. Smith’s evidence that he did not.) He also performs tasks with respect to the timesheets of other employees discussed below. On job sites he performs service calls, supervises some construction jobs as the senior journeyman, and visits other jobs to monitor the progress of those jobs.
The Board has indicated its general considerations with respect to section 1(3)(b) of the Act in many decisions. Few of them involve employment in the construction industry, but the general considerations in the construction industry are the same as they are in any other work situation (see for example Mike Weber Construction Company Ltd. [1993] OLRD 370] at paragraphs 22 to 25). In The Corporation of the Township of Limerick, [1993] OLRB Rep. July 683, the Board stated:
Generally speaking, and in furtherance of the conflict of interest rationale that underlies this provision, individuals will be found to exercise managerial functions if they fall into either or both of two broad categories. First are those persons whose work impacts only indirectly on the terms and conditions of employment of their fellow employees. Individuals falling within this category will be found to exercise managerial functions if they make independent decisions on important matters of policy or the running of the organization. Effective recommendations, independent situations circumscribed within predetermined limits set by others, or technical or procedural determinations based upon expertise in a limited field will not be sufficient to exclude an individual from the definition of “employee” under the Act. Second are those individuals whose decisions have a more direct and immediate impact upon the day-to-day working lives of their colleagues. The test for managerial status here is whether the individuals make “effective recommendations’, i.e. recommendations that are “so consistently and frequently followed that it could be said that through the recommendations the [individual is] effectively controlling or determining the decisions”: Etobicoke Hydro-Electric Commission, [1981] OLRB Rep. Jan. 38. The onus of establishing that an individual is managerial because he or she falls within either or both of these categories rests with the party seeking the exclusion. (emphasis added)
- In determining whether “first line” managerial staff perform “managerial functions” the Board, in Ottawa General Hospital, [1984] OLRB Rep. Sept. 1199, stated that:
In the case of so-called “first line” managerial employees, an important question is the extent to which they make decisions which affect the economic lives of their fellow employees thereby raising a potential conflict of interest with them. Thus, the right to hire, fire, promote, demote, grant wage increases or discipline employees are all manifestations of managerial authority, and the exercise of such authority is clearly incompatible with participation in trade union activities as an ordinary member of the bargaining unit. (emphasis added)
With respect to Art Smith’s alleged managerial role, the evidence could be clearer. He testified that he did not “participate in discussions about the direction MSE takes”. He stated that MSE has no management meetings. No evidence was offered or sought about what, if anything, happens at annual shareholders’ and directors’ meetings. Keith Scott said he did not attend them. We have no evidence from Art Smith. However, it is not without significance that the day the applicant’s organizers appeared on certain job sites, Bob Smith telephoned Art Smith saying that Local 353 organizers were on the site. He told Art Smith who he thought had signed up with the union. Art Smith described that day as “a disturbing morning” and the fact that some employees had signed union cards was “shocking”.
There was no evidence that Art Smith was involved in hiring or firing of employees, the scheduling of overtime (apparently there was no overtime paid regardless of the number of hours worked in any one day) or arranging time-off. He testified that he simply collated the timesheets and examined them only for accuracy and completeness. He did agree that he called employees with respect to the contents of timecards. Aaron DeCoe testified that on one occasion he claimed mileage for transporting material. Art Smith called him and asked for an explanation. Upon being given that explanation, Art Smith informed Mr. DeCoe that he would not be paid for that claim. Derek VanPelt testified that at one time Art Smith permitted the practice of working through the lunch hour and being paid for that time. When he discovered apparent abuse by one or more employees, Art Smith told all employees that the practice was to cease. He refused to pay for one half-hour claimed by Mr. VanPelt and others in his crew on one occasion when they did work through their lunch break, notwithstanding this directive. This evidence was not put to Art Smith in cross-examination. However, the responding party would certainly have had the right to call him in response, and chose not to do so. Therefore, we accept the evidence of Mr. DeCoe and Mr. VanPelt.
Art Smith visited job sites to review the progress of the work. That is, he did not perform hands-on work on such sites, and indeed visited them only briefly. His presence was purely to monitor and supervise. Derek VanPelt testified that he often told him and others working with him to pick up the speed of their work or to work past their normal quitting time to get a job finished. While only three of the five employees called to testify said that they perceived Art Smith to be a member of management, this evidence does provide some objective basis for this perception.
The fact that Art Smith had contact with school principals and custodians on projects on school properties is not indicative of managerial authority. Evidence of his apparent ability to decide whether an item could be added to an existing work order or required a new work order is not so strong as to indicate that Art Smith held managerial authority over other employees, which is, after all the focus of section 1(3) (b).
One incident is less clear. The three witnesses called by the applicant stated that Art Smith had advised them that a “subcontractor”, Peter Hughes, was no longer desired by the company. He advised the employees that Mr. Hughes would slowly be cut off work rather than terminated. He instructed the employees not to communicate anything to Mr. Hughes about the availability of work. Art Smith could not confirm or deny this evidence. However, the evidence is equally consistent with the relaying of instructions from Bob Smith as it is with implementing his own instructions.
The bulk of Art Smith’s duties are not managerial. However, included in his duties are a number of duties which are performed on a regular basis which indicate control and authority over the employment status of others, and over the economic remuneration for employees’ work. These directly impact on the terms and conditions of employment of certain employees. Accordingly, we find that Art Smith exercises managerial functions and is therefore excluded from the bargaining unit by virtue of section 1(3)(b).
Little needs to be said of Keith Scott. Although his directorship and participation in a profit sharing scheme are unexplained, they are the only factors which distinguish him from a working foreman. The applicant led evidence that, after Wayne Thomas had been terminated, Keith Scott boasted that he had been the cause of his “downfall”. Derek VanPelt testified that Keith Scott stated to him that he (Mr. Scott) had more influence than Mr. VanPelt realized in the company and could get him terminated. It is not clear whether this was statement was intended seriously, said jokingly, or said in anger. In any event, there is no evidence to suggest this was anything other than an empty boast. While Mr. Scott did appear to monitor the progress of certain jobs in the same manner as Art Smith, his performance of this function was quantitatively much smaller. In addition, he performed none of the other functions which the Board finds significant in the performance of duties by Art Smith. Accordingly, we conclude that there is no significant evidence of the exercise of managerial authority by Keith Scott and therefore he is an employee in the bargaining unit.
The parties are directed to advise the Registrar on or before Friday, December 8, 2000 of what they wish to do with respect to the remaining two challenged individuals. This panel remains seized of this application.
“David A. McKee”
for the Board