PAY EQUITY HEARINGS TRIBUNAL
0519-94 Anonymous Group of Employees, Applicant -and- Melitta Canada Inc., Respondent
Before: Phyllis Gordon, Chair and Members Bruce Budd and Janet Slone Taylor
Appearance: Peter L. Roy for Melitta Canada Inc. and Michelle Sherwood for the Anonymous Group of Employees
Cite as: Melitta Canada Inc. (September 29, 1995) 0519-94 (P.E.H.T.)
DECISION OF THE TRIBUNAL, SEPTEMBER 29, 1995
- The Applicants, a group of anonymous employees, (the “Employees”) seek an order of the Tribunal directing the Respondent Employer, Melitta Canada Inc. (“Melitta”) to comply with an Order of a Review Officer dated July 13, 1994. The Order directs Melitta to revise and post a pay equity plan in accordance with the Order and to make retroactive payouts to the affected employees. The Order of the Review Officer is set out here.
Order
- I order Melitta Canada Corporation to revise its pay equity plan to reflect the following male comparators and adjustments, and to post the plan as required under subsection 15(1) of the Act for ninety (90) days, and meet the subsequent requirements of subsections 15(6), 15(7) and 15(8) of the Act.
Female Male Comparator Hourly
Job Class Job Class Adjustment
Manu. Supervisor, Day Sales Mgr F.S.D. 1.25
Personnel Supervisor Sales Mgr F.S.D. *
Customer Service Programmer Analyst *
Credit/Collections Programmer Analyst 4.10
Accounting Supervisor Programmer Analyst 5.05
Buyer Programmer Analyst 5.46
Order Desk Supervisor Programmer Analyst 6.80
Import/Export Manager Programmer Analyst 3.98
Planning Supervisor Maintenance Mechanic 0.00
Adm. Asst to C.O.O. Maintenance Mechanic 1.41
Sales Adm. Asst. Maintenance Mechanic 3.58
Adm. Asst. V.P.F.S.D. Maintenance Mechanic 2.58
Admin. Asst. Dir. Mkg Maintenance Mechanic 0.00
Admin. Asst. V.P. Sales Maintenance Mechanic 0.00
Order Desk Clerk Loader 3.47
Lab Loader 6.80
Machine Operator Loader 0.33
Sales Admin. Clerk Loader 0.77
Accounting Asst. Loader 0.00
A/P Inventory Loader 0.00
Warehouse Clerk Palettizer 0.00
Receptionist Palettizer 0.00
Accts. Receivable Palettizer 0.00
Packer Palettizer 0.30
A/F General Ledger Palettizer 0.00
Office Clerk No male Comparator 0.00
- Necessary job rates to determine adjustments not provided by Employer.
I order the adjustments identified for the job classes listed above be paid to all employees employed in those job classes during any period since January 1, 1992. I further order the adjustments be paid out retroactive to January 1, 1992, in accordance with subsections 13(3) and 13(4) of the Act.
I order that the male job class comparator for the job class of Personnel Supervisor is the Sales Manager, F.S.D. and I further order Melitta Canada Corporation to determine any required adjustment, and if necessary, pay the required adjustment according to subsections 13(3) and 13(4) of the Act.
I further order for any female job class, existing at Melitta Canada Corporation as of January 1, 1993, that did not find a male comparator through the job-to-job method, that a proportional value method be used as required by subsection 21.2(1) of the Act to determine the pay equity job rate. If necessary, the pay equity plan is to be amended in accordance with subsections 21.4 and 21.6 of the Act and reposted as per subsection 21.7 of the Act. If any adjustments are due through the proportional value method, I order they be paid out to all affected employees retroactive to January 1, 1993.
If, after 30 days from the date of this Order, I am not satisfied that the Order is being complied with, I may refer it to the Pay Equity Hearings Tribunal for enforcement under subsection 24(5) of the Act.
Dated this Thirteenth day of July, 1994, at the City of Toronto, Ontario.
Mary Jane Slater
Review Officer
Melitta seeks to vary the Order on the basis that the job rate paid to the Programmer Analyst job class in the original pay equity plan resulted from a skills shortage within the meaning of s.8(1)(e) and thus is a difference permitted by the Pay Equity Act, R.S.O. 1990, c.P.7 as amended. Further, Melitta states that the Employees’ application should be denied because the Employees have not sufficiently established their case for enforcement.
Initially, Melitta requested a stay of the Review Services Order because of a change of circumstances to its establishment, and led evidence in this regard. However, at the conclusion of the hearing, Counsel to Melitta advised that he was no longer pursuing this remedy because posting of a plan is necessary before one can proceed with a change of circumstances claim under the Act. It was his view that this remedy was thus not available to his client and, in the circumstances of this case, we agree.
Melitta’s evidence indicates that the corporate structure of Melitta Canada Inc. has changed. Melitta Canada and Melitta USA have amalgamated. The corporate name used by the Director of Human Resources is Melitta North America. No documentary evidence was filed with respect to the change. For the purposes of this hearing, and the orders we make, the Employer includes Melitta Canada Inc. (as referred to by the Respondent in its pleadings and correspondence), Melitta Canada Corporation (as referred to in the Review Officer Order), and Melitta North America (as referred to by the Employer's witness).
TEMPORARY SKILLS SHORTAGE
The Evidence
- The first witness who testified was Mr. Snyder, the current Director of Human Resources of
Melitta North America. Although Mr. Snyder was not employed by Melitta before 1993, he testified about the prior corporate changes that had taken place at the Canadian offices of Melitta, located in Ontario. As Mr. Snyder does not have first-hand knowledge of the company’s operations, his evidence was on occasion less complete than might have been the case had Melitta called one of its Canadian managers to testify.
Mr. Snyder stated that Melitta moved its Ontario manufacturing operation to Cherry Hill, New Jersey early in 1991. This resulted in the elimination of most of the supervisory and hourly manufacturing jobs. These changes were based on a consultant’s report done for the company which indicated that the Canadian operations were not profitable. In late 1990 there were 111 employees in Canada, all but 6 of whom were located in Ontario. By the end of 1992, there were 44 Canadian employees. At the time of the hearing the Canadian division had approximately 15 employees.
Mr. Snyder stated that an analysis for the Programmer Analyst position had been done in August of 1990 for the pay equity questionnaire. At that time the programming staff included a Manager of Programming, Rick Thornburn; a Programmer Analyst, Jamie Cairns; and a Programmer Operator, Sean Colborne. Mr. Snyder stated that in the pay equity plan developed but not implemented by Melitta, the Programmer Analyst position was the male comparator for several of the female job classes. Mr. Snyder agreed the plan was posted for less than a day.
Mr. Snyder stated that there had been Programmer Analysts at the company during the 1980's, prior to the position being filled by Mr. Cairns. He was not clear when Mr. Cairns had been hired to the position of Programmer Analyst or whether he was hired from within or from outside the company. He said that Mr. Cairns was dismissed from Melitta and that shortly after, Mr. Colborne was promoted to his position. In any event, the position of Programmer Analyst was vacant only briefly. Mr. Snyder was not aware if a competition had been held when Mr. Colborne was promoted. While there was some confusion about the time of Mr. Cairn’s departure, we conclude it was the end of March of 1991.
Mr. Snyder stated Mr. Cairns was paid an annual salary of $43,000.00 in 1990 and $44,000.00 in 1991. Mr. Snyder did not know what Mr. Cairns had been earning in 1988 or 1989. However, when Mr. Colborne took over the position of Programmer Analyst in 1991 he was paid an annual salary of $38,000.00. We heard no evidence about the skills and experience of either individual, nor did we receive any job descriptions or job postings setting out the expectations of the job.
Mr. Snyder stated that the Toronto office had been using an IBM S/36 main frame computer, similar to the computer used in Melitta’s head office, in Cherry Hill, New Jersey. However, the company decided to convert to an AS/400 which would be located in the New Jersey office. As a result, the Toronto office was connected to head office by use of a Wide Area Network and telephone lines. With this conversion, there was also an upgrade in software, from RPG2 to RPG3. The conversion was discussed in 1989 and 1990. The actual linkage with the New Jersey office occurred in 1993 and the two systems ran parallel for a period of time with the former Canadian computer being shut down completely in late 1993 or early 1994. Mr. Snyder referred to some resistance to the conversion which existed in the Canadian office. He stated that Mr. Thornburn, and Mr. Colbourne had the responsibility of carrying out the conversion from the Canadian end.
The employer’s other witness was Mr. Bruce Lloyd-Craig, a personnel search specialist in the field of information technology from 1988 to 1993 in the Toronto area. The Tribunal agreed that Mr. Lloyd-Craig was qualified to provide expert evidence regarding the skills shortage at the relevant time in similar situations. In general, Mr. Lloyd-Craig testified about the impact of technological up-grading in a company, the importance of continuity of technical staff during a period of transition, and provided some clarifying information regarding the kind of computer system changes that occurred at Melitta. He stated that he had no first hand knowledge of what had transpired at Melitta other than what he had heard during Mr. Snyder’s testimony, as well as what he had learned about the company's technical environment when he talked with a departed Programmer Analyst.
Mr. Lloyd-Craig testified that information technologists, as a group of professionals, do not demonstrate a great deal of corporate loyalty and are quite ready to job-hop. Thus, in many situations, companies would pay their employees at an inflated rate in order to keep them on staff. This could be important during a period of transition because at such times there are significant advantages in retaining staff familiar with the old system and the company’s needs.
Mr. Lloyd-Craig stated that there are three ways of recruiting information technology professionals: word of mouth; newspaper ads; and retaining personnel search specialists, or “head hunters”, as he referred to them. He indicated that during the late 1980's and early 1990's the major head hunters in the field were very busy. He pointed out that head hunters were not popular with employers because of their cost and that it was common for small companies such as Melitta to try the less expensive methods of recruiting before retaining a head hunter. He agreed under cross-examination that companies might seek the services of a head-hunter for reasons other than recruitment, including the time efficiencies provided to the hiring company. He clarified that he did not know whether Melitta had advertised prior to using the head hunter when it hired Mr. Colborne as Programmer Operator.
Mr. Lloyd-Craig testified that generally in late 1989 the salary range in the market for a junior level programmer analyst was about $32,000.00-$35,000.00 and that the same position might earn up to $38,000.00 or $39,000.00 in 1990, due to a boom in the economy. If, in addition, the programmer analyst had AS/400 expertise or LAN knowledge, there would be a premium to the salary of about $3,000.00-$5,000.00. He added that in 1991 the economy became stagnant and that in 1992 there was a significant downturn with a noticeable loss of work and closure of plants.
It was Mr. Lloyd-Craig's opinion that in the early 1990's there were very few operators of the AS/400 computer. In particular, it was his view that there had been a shortage of skilled people between 1989-1991 who had experience in both the S/36 and the AS/400 systems.
Argument and Analysis
The position advanced by Melitta is that the rate paid to the Programmer Analyst should not be used as the job rate for comparison with several female job classes. The Review Officer rejected this position. The Order therefore includes the Programmer Analyst position as a comparator for six female job classes. The use of the position resulted in various pay equity adjustments to the job rates in the comparable female job classes.
Counsel for Melitta submitted that the appropriate job rate for the Programmer Analyst was $38,000.00, the salary at which the job was filled in April of 1991 when Mr. Colbourne was promoted to replace Mr. Cairns. He says that the higher salary of $43,000.00 which was paid to Mr. Cairns in 1990 of $43,000.00 reflects the differential attributable to a skills shortage. He relies on the evidence of Mr. Lloyd-Craig to establish that a general skills shortage existed at the time the job rate was determined. He suggests that, as this evidence was the only evidence respecting skills shortage, we must conclude that a skills shortage has been established.
Counsel for the Employees urged us to strictly apply and narrowly construe s.8(1)(e), because it is an exception to a proactive and remedial statute. She submits that Melitta failed to show there had been difficulty in recruitment, as required by the Act. Counsel relied on Welland County General Hospital (1994), 5 P.E.R. 12. where the Tribunal held that the employer bears the onus to establish the exception.
The Tribunal's evaluation of whether an exception is appropriate is guided by the very specific language of section 8(1)(e):
8.-(1) This Act does not apply so as to prevent differences in compensation between a female job class and a male job class if the employer is able to show that the difference is the result of,
(e) a skills shortage that is causing a temporary inflation in compensation because the employer is encountering difficulties in recruiting employees with the requisite skills for positions in the job class.
Section 13(2)(c) of the Act requires that the pay equity plan indicate the reasons for the claimed exceptions:
13.-(2) If both female job classes and male job classes exist in an establishment, every pay equity plan for the establishment,
(c) shall identify all positions and job classes in which differences in compensation are permitted by subsection 8 (1) or (3) and give the reasons for relying on such subsection;
An employer is required to show that the difference in compensation is a result of difficulties it experienced in recruitment of employees with the requisite skills for the position. It is not entitled to rely on general market trends if it has not itself encountered the difficulties anticipated in the subsection. The employer is also required to show that the inflation in compensation is temporary. For the reasons which follow, we find that Melitta has not established that the exemption for job rate paid to the Programmer Analyst position is justified and we therefore decline to vary the Order.
It appears that Melitta has relied on market trends throughout. At the time of posting the company indicated its position in a note to the pay equity plan which read as follows:
Permissible difference is based on a "skills shortage" as per Section 8(1)(e) of the Pay Equity Act. Melitta Canada Inc. has evidence on hand to indicate that the difference in wages of $\hr is what is necessary to attract employees in current market.
The note, as quoted here, is without a dollar figure indicating what the differential claimed actually was. There is no reference to recruitment difficulties in the note. If the company had difficulties in its recruitment of Mr. Cairns, it did not attempt to establish this at the hearing.
As we have noted, a general skills shortage in the market, along with a proven differential in the salary levels of Mr. Cairns and Mr. Colbourne, is insufficient to fulfil the requirements of s. 8(1)(e). However, even if Melitta was entitled to rely on market trends generally, we would be unable to conclude that Mr. Cairns' salary level was based on the skills shortage which the expert testified existed in the market. Mr. Lloyd-Craig's evidence deals with the lack of qualified people with experience in operating the AS/400 computer and the difficulties in finding and retaining such employees. While this may have been the general situation, we do not know that it applied at Melitta. While the company started discussing the possibility of the computer and systems conversion in 1989 and 1990, the actual conversion in 1993 and 1994, occurred after Mr. Cairns' departure. There is no evidence justifying a conclusion that Mr. Cairns had AS/400 expertise, that his salary was based on such expertise or that the skills shortage market conditions affected his job rate.
Mr. Snyder, the Human Resources Director, did not know when the position was filled by Mr. Cairns or what he had been paid prior to 1990. We therefore do not know the time frame during which the job rate for the Programmer Analyst position was at the higher salary. In any event, Melitta must show both that it was encountering difficulties in recruiting employees with the requisite skills, and also that there was a temporary inflation in compensation. As the company has not established the recruitment aspect required in s. 8(1)(e), it is not necessary for us to consider the meaning of "temporary" in order to decide this matter.
SUFFICIENCY OF THE EMPLOYEES’ CASE
Counsel for Melitta submits that the Employees have not sufficiently proven their case. In his view, the Employees must establish at the hearing all aspects of the Order before we can order compliance with it. He relied on two early decisions of the Tribunal where the de novo character of our hearings was described. New Liskeard Board of Police Commissioners (No.1) (1991) 2 P.E.R. 39 at paragraphs 36 and 37; Cybermedix (1990) 1 P.E.R. 41 at paragraph 17. He argued that we are unable to rely on the content of the Review Officer’s Order and that it should be irrelevant to the Tribunal’s decision.
Counsel for the Employees submits that the practice of the Tribunal has been to hear evidence on the matters in dispute and not to require positive proof about every aspect of an order. She referred to the Scarborough (No. 1)(1994), 5 P.E.R. 45 decision of the Tribunal which said in paragraph 17 that while " the Tribunal can deal with anything that was at Review Services, this does not mean that we always hear evidence about and inquire into everything that was before the Officer." Counsel suggests that the result in that case indicates that it is not necessary to litigate all aspects of an order before the Tribunal, but only those aspects which have been put in issue by one or other of the parties. Counsel points out that it is Melitta, and not the Employees who have put aspects of the Order in issue.
It is our view that when a party disputes a conclusion of a Review Officer, and has properly brought that matter to the Tribunal, the Tribunal deliberates on the questions raised by that dispute, after a hearing on the issue. In this sense, our hearings are de novo. It is the parties that identify the issues they want resolved. Not all the conclusions of the Review Officer are reconsidered as a matter of course. In this case, the substantive challenges to the Order have been raised by Melitta. It has not asserted that the Order was otherwise invalid, or denied that it had an obligation to post a plan, or to implement pay equity either at Review Services, or at the Tribunal. As the Order has not been successfully challenged and the order has not been varied, the remaining question is whether we should Order compliance with it.
We are only able to order compliance with the Order if the Employees have proven their case. The Tribunal considered what must be established by a party requesting that the Tribunal order compliance with an order in Peterborough (June 9, 1995) 0505-94,0515-94 (P.E.H.T.). In that case the issue was whether an application for enforcement of an order established a prima facie case for enforcement of the order. The application in that case contained allegations that a complaint had been made to Review Services, that it was investigated, that an order was made and that the Employer had not complied with it. The Tribunal found that these allegations were sufficient in an application seeking enforcement of a Review Officer’s order.
In this case the following was established. Mr. Snyder, confirmed that the Melitta pay equity plan was posted for less than a day. Gisela Zimmermann, a former employee of Melitta who held various positions including Administrative Assistant to the President, Import-Export Manager and Office Manager, testified that management had said not to do anything further with the completed job evaluations. She also testified that the President of Melitta North America, Mr. Radtke, had told her that he was not going to do anything regarding pay equity. She stated that she advised him pay equity was the law in Ontario and that he replied that he lived in the United States and that it didn’t concern him. She testified that she had not received pay equity adjustments and she doesn't believe other employees have. She was not cross-examined with respect to this evidence and no one was called by Melitta to refute it.
We are able to conclude from the existence of the Order and the pleadings of both parties that a complaint was made to Review Services, was investigated, and resulted in the Order which is before us. From the evidence we conclude that the plan which was posted by Melitta for less than a day was never implemented. It is not necessary to rely on the factual background or reasoning of the Review Officer's order in arriving at this conclusion. We also conclude from the evidence that the plan was not posted in accordance with the statutory scheme, that no pay equity adjustments have ever been made, and that the Employer has not complied with the Review Officer Order.
We therefore find that the Employees have established the minimum necessary for the Tribunal to order that the Employer comply with the Review Officer Order of July 13, 1994 and so order. We also find that it is reasonable that the plan be posted within 30 days of the date of this decision. Thus, we order that Melitta post its pay equity plan as directed in the Review Officer’s Order, paying strict attention to the time frames set out in s. 15 of the Act and referenced in the Order. Thus, the plan is to be posted by October 31, 1995. We expect that in the normal course of events, the first payouts will occur no later than February 8, 1996.
The evidence indicates that Melitta has down-sized its Canadian operation significantly over recent years. It is likely that many of its employees who will become entitled to pay equity adjustments under the pay equity plan are no longer employed at the company. We therefore order Melitta, in addition to the posting of the plan at the worksite, and pursuant to our power under s. 25(2)(g) of the Act, to mail a copy of the posted plan and this decision to all former employees who were employed in female job classes any time after January 1, 1992. The company is to mail these by ordinary pre-paid mail to the last address it has on record for the former employees, the postage date to be no later than October 31, 1995. We remain seized to consider any problems which may arise regarding the determination of the amounts payable to individuals pursuant to the posted plan.
INTEREST
The Employees seek an order that Melitta pay interest on the outstanding payments due under the Review Officer's Order of July 13, 1994. Because this is a new issue at the Tribunal we asked that counsel provide additional submissions regarding our jurisdiction to make such an order. We received brief submissions regarding jurisdiction.
During our deliberations we have realized that even if the jurisdiction to award interest exists under the Act, several additional issues arise which have not been addressed by either party. We are not ready to determine these questions in the absence of sufficient evidence or argument. Moreover, as the implementation of the Order has several stages, it is not necessary to immediately decide whether or how interest is payable. As the following concerns indicate, it is our view that additional information may be necessary before we can consider whether to make an order for interest. Once the plan is posted, there may be other issues relating to the interest question that the parties may wish to raise. The issues, as we currently see them, are as follows.
If there is jurisdiction to award interest (Counsel may wish to revisit this issue), the power to so order is discretionary. What circumstances would commend an order of interest, in general, and in the circumstances of this case? If an order to pay interest were to be made, at what point in time does the entitlement to interest crystallize in the context of Melitta employees? If the power to award interest exists, how should the rate of interest be determined?
In light of these comments, if the Employees wish to continue their claim for interest on the Review Officer's Order, they are to do so by providing additional written submissions to the Tribunal, responsive to the issues we have set out. This is to be on notice to Melitta, after the plan has been posted and the calculations regarding amounts payable to individuals are capable of being made. Upon receipt of the Employees’ submissions, Melitta will have two weeks to respond, with one week for the Employees’ reply.
SUMMARY OF ISSUES AND ORDERS
The first issue is whether the compensation level of the Programmer Analyst job class in the original pay equity plan is a permissible difference within the meaning of s.8(1)(e) of the Act, due to a skills shortage. We find that it is not and the Review Officer Order is not varied.
The second issue is whether the Employees have sufficiently proven their case that the Review Officer Order be enforced. We find that they have and that Melitta is to comply with the Order and post the pay equity plan by October 31, 1995. It is to make the first payments pursuant to the plan in accordance with the time-frames of the Act, referenced in the Order. Melitta is further ordered to send to all former employees employed in female job classes at any time after January 1, 1992, a copy of the posted plan and this decision by ordinary pre-paid mail, to the last address the company has on record for the former employees, the postage date to be not later than October 31, 1995.
The third issue is a request that the Tribunal order that Melitta be ordered to pay interest on the outstanding payments due under the Review Officer's Order. The Tribunal declines to grant this order at the present time. If the Employees wish to pursue this claim they are to provide additional analysis and submissions in the context of the posted plan, as set out above, with the opportunity for Melitta to respond.