0769-04-PE Group of Employees, Applicants v. Windsor Casino Limited, and National Automobile, Aerospace, Transportation and General Workers Union of Canada (C.A.W. Canada) Local 444, Respondents.
BEFORE: Mary Ellen Cummings, Chair, Margaret Kvetan and Pauline R. Seville Members.
APPEARANCES: Beth Smith and Sue Medved for the Group of Employees; Carolyn Kay and Ken DiFederico for Windsor Casino Limited; Anthony F. Dale and Chris Ouellette for the CAW Canada
CITE AS: Windsor Casino Limited (No. 3) 0769-04-PE, November 14, 2007 (P.E.H.T.)
DECISION OF THE TRIBUNAL; November 14, 2007
Three groups of employees who are part of the bargaining unit represented by the CAW Canada, Local 444, working at Casino Windsor, filed complaints about the pay equity plan that had been negotiated by the employer and the union. At the start of the hearing, two groups of employees (the Resort Cashiers and the Concierge Attendants) entered into settlements with the Employer and the Union, pursuant to section 25.1 of the Pay Equity Act, R.S.O. 1990, c. P7, as amended (“the Act”). As a result, the evidence that the Tribunal heard related only to the pay equity complaints of the Casino Cashiers.
In an Order dated July 27, 2004, a Review Office made three determinations; that tips ought not to have been included in the “compensation” calculation made in respect of any of the job classes; that the Union and the Employer had breached the Act in agreeing that the pay equity plan was effective April 1, 1995, rather than May 1994 when the Casino opened and; that the Union and the Employer breached the Act when they agreed to phase in adjustments from April 1995 rather than September 1994, the date the Union was certified.
The Employer and the Union brought this Application, challenging all three aspects of the Order. However, before the panel, they agreed that they were no longer challenging the second and third determinations. At the direction of the panel, the parties focused their evidence and submissions on four questions:
(a) Are tips included in “compensation” for the purposes of determining “job rate” under the Act?
(b) If tips are to be included in compensation, what standard of review is to be applied to the process undertaken by Casino Windsor and CAW Local 444 to determine the amount of tips received?
(c) Did Casino Windsor and CAW Local 444 meet the standard of review?
(d) If Casino Windsor and the CAW Local 444 engaged in a process that was not adequate, what should the Tribunal do to remedy the situation?
Facts
The relevant facts are, at the end of the day, not much in dispute. Both the CAW Local 444 and Casino Windsor led evidence which set out the process by which they came to a pay equity plan. Since the only issue in dispute relates to the way in which the tipping issue was handled, we will summarize the overall process of arriving at a pay equity plan quite quickly. But we emphasize that the CAW Local 444 and Casino Windsor engaged in a lengthy process of collecting job information through questionnaires and interviewing members of all the relevant job classes. Chris Ouellette, Employment Equity representative for the CAW, and Vince Marcotte, Director of Human Resources for Casino Windsor, devoted much of their total work time to preparing a pay equity plan for posting. But they were not the final decision makers. That fell to Rick Schneider, First Vice President for CAW Local 444 and Richard Mignault, Vice-President of Human Resources for Casino Windsor. They made up the Steering Committee, ultimately responsible for the decision-making around the pay equity plan.
There are two points of decision-making that are relevant to this case. First, the CAW Local 444 and Casino Windsor separately and then together, discussed whether tips should be included in determining job rates under the pay equity plan. It is not disputed that incumbents in many of the job classes covered by this pay equity plan receive tips. The collective agreement between the CAW and Casino Windsor adverts to tips in a variety of ways. The Casino Dealers, for example, have chosen to pool their tips, and have them treated as part of their income, from which the employer deducts income tax and makes other remittances, such as Canada Pension and Employment Insurance. Other jobs are defined under the collective agreement as “tipping eligible”. The CAW has negotiated a higher rate of pension contribution and a higher percentage of income replacement when those employees receive long-term disability benefits. Mr. Schneider testified that the union negotiated those higher rates because certain jobs receive a large part of their wages in tips, and consequently, their hourly rate of pay is lower than other jobs at the Casino. If those who are paid a low hourly rate are not able to work, they lose their tips as well as their hourly wage, so the union negotiated income protection of 90% of their hourly rate for long term disability benefits, in contrast to 66 2/3 % for other employees in the bargaining unit.
In other parts of the collective agreement, the CAW and Casino Windsor have agreed that tips are the property of the employee and the employer plays no role in their monitoring. Tips are excluded from the collective agreement’s definition of wages; and Letter of Understanding 42 indicates that “The Employer will continue its current practices with respect to tips”.
We heard that when the CAW and Casino Windsor were trying to decide whether to include tips in a calculation of compensation for the purposes of pay equity, they sought guidance from decided cases and from the Pay Equity Commission. It is common ground that there were no relevant pay equity decisions when the parties were considering the matter. The CAW and Casino Windsor received and relied on Guideline #11 of the Pay Equity Commission, titled “Determining Job Rate”. Parts of pages 6 and 7, under the title “Commissions bonuses, Tips and Other Incentive Pay” read:
A number of types of cash payments are based more or less on work performance and are not paid automatically per unit of time worked as with wages or salary. Included in this category are sales commissions, bonuses, tips and other kinds of incentive pay……
These cash payments would be included in the job rate if a portion or all of the payment is part of the regular, expected compensation for that job class…
For example, an employer may pay a minimum regular salary to servers in a restaurant with the expectation that tips will provide most of the servers’ incomes. In this case since all of the servers can expect a significant part of their pay to come from tips, at least some portion of the tips will have to be counted into the job rate because at least some portion of the tips is part of their normal pay. This would be particularly obvious where tips were pooled for distribution.
Both the Union and the Employer sought legal advice. The Union waived solicitor-client privilege on this issue and Ms. Ouellette testified that she contacted the Union’s legal counsel who did some research and then provided advice to Ms. Ouellette. She was advised that the Pay Equity Office had issued Information Bulletin No.11 but that there were no cases on the point. Arbitration cases were reviewed as well. Ms. Ouellette testified she was advised by legal counsel that because it was possible to count the tips received in the tip boxes, the amount of the tips was “ascertainable” and therefore, at the Casino, tips should be included in calculating job rate. Ms. Ouellette said she understood from the advice received that tips should be included in job rate for jobs where tips were expected to be a regular part of compensation. Ms. Ouellette was also cautioned about the risk of attracting the attention of the Canada Revenue Agency in any means used to collect tip information.
Mr. Marcotte testified that his office sent a letter out to senior management asking them to confirm whether employees performing jobs in their areas received tips. The Employer compiled its initial list of jobs that did and did not receive tips based on offer letters. Mr. Mignault testified that the Gaming Control Act, 1992, S.O. 1992, c. 24, as amended, regulates what positions at the Casino are eligible to receive tips. The Employer’s consistent practice has been to indicate in offer letters whether the job is eligible to receive tips. The Employer then revised the list of jobs that receive tips based on the feedback it received from senior management.
The Employer next sought to collect tip information by asking senior management with responsibility for each area of the Casino, to provide Mr. Marcotte’s office with an estimate of the tips each job class received. No direction was given as to how the information was to be collected. Mr. Marcotte testified that when his office reviewed the information, it was not adequate. Some managers provided a single figure, some provided a wide range, some provided a narrow range. A second memo was sent out, emphasizing the importance of the information because of the significant cost of pay equity. Managers were asked to provide an estimate of high and low tip rates for a good shift, and for a bad shift. They were advised not to undervalue the amounts, but not to overvalue them either because the Union would not accept an unrealistic amount.
Mr. Mignault, who wrote the memo, was challenged by the Group of Employees because he told senior management that pay equity could cost the Casino $10 million. The Group of Employees asserted that such information would encourage managers to overstate the value of the tips. Mr. Mignault denied that, noting that he had told the managers the risk of overvaluing was that the Union would not accept the employer’s numbers. Mr. Mignault said that he used the $10 million number, the Casino’s rough estimate of its pay equity liability, to catch the attention of senior managers, many from the United States, who were not knowledgeable about pay equity, but would understand an issue expressed in terms of significant cost.
We accept Mr. Mignault’s explanation, and find that the Employer did not intend to skew the information that it sought to collect about tips.
Mr. Mignault briefly testified that after the information about tips was received, the Steering Committee decided that job classes that received few tips would not be attributed with any tipping rate. One of those jobs was the Security Officer, which ultimately became the male job class comparator for the Casino Cashiers. Mr. Mignault believes that the Steering Committee determined that those whose tips amounted to less than 10% of their hourly rate would be treated as a position that did not receive tips.
Ms. Ouellette testified that the Union was aware of the steps the Employer was taking to collect tip information but was not directly involved, except in respect to an incident when a complaint arose about how information was being collected about the tips of the Casino Cashiers.
At this point, it is necessary to set out a bit about the Casino Cashiers’ workplace and how they receive tips. There have been between 300 and 350 Casino Cashiers in the job class over the years. Typically they work behind a counter, with bars in front, that resembles a bank teller’s cage. They convert cash into tokens when Casino customers come to the casino, and then convert tokens back to cash when patrons leave. Like all Casino employees, they are expected to contribute to the positive and energetic atmosphere at the Casino. Not all Casino Cashiers on all shifts work with the public. Some are assigned to make up bundles of cash for the use of other employees; some are assigned to a window where their only transactions are with other employees. Casino Cashiers are not necessarily rotated between “back of the house” and “front of the house” positions on a shift.
Customers who want to tip a Casino Cashier working at a window can do so in one of two ways. Since sometime after July of 2000, each wicket is equipped with a clear Plexiglas box, located behind the bars, for receiving tips. The customer can place the tip in the box or he or she can place it before the Cashier. If that occurs, the Cashier must hold the tip up in the direction of the surveillance camera, and then place the tip in the tip box. At the end of a shift, the Casino Cashier takes his or her till and the tip box. Once the Casino’s money is reconciled and signed off by the supervisor, the tip box is opened in the presence of the supervisor, and the contents placed in a clear envelope, called a packet, without counting it. The Casino Cashier then leaves work with the packet. Casino Cashiers, like other Casino employees, are required to be scrupulous about segregating tips from the Casino’s money.
In response to the Employer’s request of its managers for more detailed information about tip rates, a manager in the Casino Cashiers’ area decided to require the Casino Cashiers to empty and count their tip boxes in the presence of their supervisors, who would then record the amount of the tips. It is undisputed among the parties that this decision resulted in a complaint that came to the attention of the Union and Mr. Marcotte immediately. Ms. Ouellette testified that she understood that the Casino Cashiers were distressed because they did not want the recording of any information that could get into the hands of the Canada Revenue Agency. Susan McKinnon, who actually made the written complaint to the Union, testified that the concern of the Casino Cashiers was not about the Canada Revenue Agency, but a more generalized concern that no supervisor had ever counted the tip boxes, and as far as the Casino Cashiers were concerned, their tips were a personal concern. She compared the supervisors’ demand to count the tips to asking someone to open their wallet. She did not recall any Casino Cashier specifically mentioning a concern about the Canada Revenue Agency. Ms. McKinnon testified that the Casino Cashiers did not want anyone to know what tips they made, including other Casino Cashiers. In her testimony, Ms. Ouellette went further and said that she did not think that employees generally, would tell the truth about the tips they received, both for reasons of jealousy and not wanting to provide any information that the Canada Revenue Agency could rely upon.
Whether the Canada Revenue Agency was specifically mentioned or not at the time of the complaint, it is not disputed that the supervisors’ efforts to count and record the amounts in the Casino Cashiers’ tip boxes led to a quick complaint to the Union and a speedy directive from the Employer to the supervisors to stop the counting. Mr. Marcotte testified that the complaint was taken seriously by the employer because the counting was not the process for collecting tip information that had been agreed to with the Union. He understood that tips were a sensitive issue to employees generally, and he was concerned that the Union would see the counting by supervisors as a breach of trust; a unilateral action that had not been intended.
John Dufour, the Director of Cage and Coin and the senior manager responsible for collecting the tip information for the Casino Cashiers, testified briefly about how he gathered information. He did not have a strong recollection, which is not that surprising given that the events happened more than five years before he testified about them, and he would have had no particular reason to remember what seemed at the time a fairly routine request for information. He testified that he asked supervisors, some of whom had been Casino Cashiers in the past, to estimate how much the cashiers received in tips, and he passed the information along to Mr. Marcotte’s office. Mr. Dufour did not keep any notes, nor was he able to recall who he had consulted. He could not recall if the supervisors he spoke to covered all shifts, nor if he asked whether there were days when no tips were received.
Rick Schneider, the First Vice President of CAW Local 444 testified about how he went about verifying the tip information that had been collected by the employer. Mr. Schneider was blunt in saying that he did not believe Casino employees would be honest when asked what tips they got. He said that he asked union stewards, and friends and relatives to get an estimate of how much money different jobs would collect in tips. Mr. Schneider kept no notes and the single sheet of paper produced in the hearing setting out who he talked to about the cashiers’ tips was generated only after the complaint that led to this hearing was made. Mr. Schneider testified that his sister-in-law was a cashier and he sought information from her. Mr. Schneider said that the information he received caused him to conclude that the Casino’s estimate of the tips for the Casino Cashiers “fell well within the range the Casino estimated”. Mr. Schneider generally conveyed to the panel that based on the information he had received, the Casino’s estimates of the tips received by the Casino Cashiers were low.
Mr. Schneider acknowledged that the list he prepared of the people he talked to did not include his sister-in-law. He said that there were a lot of members who did not want to talk about their tips because of the tax issue and so, he did not want people to know who he had talked to, so no one would be singled out.
Both Mr. Schneider and Dana Dunphy, a Slot and Casino Cashier, testified that they discussed the tips she had made. Ms. Dunphy recalled telling Mr. Schneider that there are days you make nothing and other days you make $50.00 in tips.
Mr. Schneider testified that he and Mr. Mignault, who comprised the pay equity Steering Committee, had one meeting to determine the final tip rates. In preparation for that meeting, he prepared a bargaining position in response to the Employer’s information for each job class. At that meeting, the Employer proposed that $1.00 an hour in tips be attributed to the Casino Cashiers. The Union’s position was that it should be 50 cents per hour. Ultimately, they agreed on 75 cents per hour, which Mr. Schneider testified was well below the number he had gathered about what tips were actually received. Mr. Schneider kept no notes of that meeting. It appears that no one took notes but ultimately a document was produced setting out what tip rates had been agreed on for each job class.
Mr. Schneider was asked by the Group of Employees why the tip rate for the Slot Cashiers was agreed to be 50 cents per hour, when the Employer’s position had been $1.00, the same rate as for the Casino cashiers. Mr. Schneider responded that it was a matter for negotiation; the Employer was willing to accept 50 cents an hour for the Slot Cashiers, but not for the Casino Cashiers. Mr. Schneider acknowledged that he did not know that both job classes worked in the same area, and he was not particularly familiar with either job.
Mr. Schneider also acknowledged, in response to questions from the Group of Employees, that he was not aware that some Casino Cashiers were assigned to tasks without any access to customers, nor was Mr. Schneider aware of the details of any rotation among tasks. Mr. Schneider said he was told there were some days when the Casino Cashiers received little, but was not told there were days when no tips were received. Mr. Schneider emphasized that there was no way of finding out exactly what people made in tips unless they were counted every day, something that the Union did not want because the members did not want it; they did not want others to know the tips they got.
There was limited evidence led about whether the Casino Cashiers’ male comparator position, the Security Officer, also received tips. Both Mr. Marcotte and Ms. Ouellette testified that it was their understanding that Security Officers occasionally got tips, when, for example, they escorted a jackpot winner to his car, but the tips were infrequent. There was some suggestion that the Security Officers pooled their tips, or maintained a “flower fund”. In any event, it is clear as set out in paragraph 13, that the Steering Committee decided early on that the Security Officer was not a job class that was in a position to receive tips with any frequency and so no detailed information was sought from their managers about the tips they received.
One evidentiary challenge for all parties and the Tribunal is the span of time involved. The interim casino was opened in 1994. The job class of Casino Cashier, an amalgam of a number of cashier positions, did not exist until the permanent Casino was opened in 1998. Many changes have taken place that have had a significant effect on the Casino generally, and on tipping specifically. The pay equity plan was posted in February 2001. The building of casinos in Michigan and the September 11, 2001 events followed by increased border security have drastically reduced the number of Americans visiting Casino Windsor. The introduction of machines to convert money into tokens means fewer people interact with Casino Cashiers, but with shorter lines, the interaction may be more pleasant, thus increasing the chances of a tip. There was some dispute about when the Casino Cashiers’ request for Plexiglas tip boxes was honoured, but all the witnesses suggest that it occurred later in 1998. The absence of tip boxes at the permanent Casino for some period of time likely reduced the possibility of receiving tips, but on the other hand, the request for tip boxes suggest some expectation in the Casino Cashiers that the potential for tips existed. In all those circumstances, it would not be surprising that people would have widely varying perceptions of the tips Casino Cashiers received, depending on whether they were considering 1998, 2001 or maybe 2003 or 2006, when the evidence was being introduced.
Submissions of the parties
Are tips included in “compensation” for the purposes of determining “job rate” under the Act?
The parties organized their submissions around the questions we asked them to address, and so we are organizing the presentation of the arguments in the same way.
The Employer, in submissions adopted by the Union, argued that the Act permits the inclusion of tips in “compensation” for the purposes of determining job rate. The definition of “compensation” requires the inclusion of all elements that are “ascertainable”. The Employer does not argue that tips are fixed, or capable of exact quantification, but tips can be ascertained. Dictionary definitions of “ascertain” speak to observing, inquiring, and determining by reasonable means, suggesting that parties are obliged to go out and determine by reasonable means what, in this case, the tip rate for each job should be. Counsel for the Union added that the tips of the Casino Cashiers are particularly ascertainable because all of their tips must go in a tip box, which is then opened, and moved to a packet at the end of a shift. The contents of each packet could be readily ascertained, every day for every member of the job class. Counsel for the Union added that its preference is that the tips not be counted each day, because that is not what its members want, but that does not diminish the fact that the tips are readily ascertainable.
Excluding tips, counsel for the Employer argued, from the job rate for female job classes, would not be appropriate because in the hospitality industry, many hourly rates are low, in the expectation that tips will make up a large portion of compensation. Excluding tips from a consideration of compensation would distort the real compensation picture. Counsel for the Union added that a failure to consider tips could result in pay equity adjustments that were very high for job classes who received a significant portion of their compensation in tips, creating unnecessary internal inequity that was unrelated to the goals of the Act.
The Union and the Employer argued that the use of the term “ascertainable” in the definition of compensation, is a signal that the legislature envisioned a range of means to determine the amount. There are many aspects of compensation that could be valued in a variety of ways. Dental care, extended health care, car allowances and retiree benefits are just some elements of compensation, whose value could be calculated in different ways. The Legislature, counsel argued, intended to give workplace parties the latitude to agree on a valuation that best serves their needs. The need to determine the values for the whole of a job class, rather than for individuals who comprise the job class, makes the task of value determination more complex, and hence, demanding some flexibility. Negotiating parties have been given, counsel argued, the latitude to determine the value of ascertainable elements in compensation as they think appropriate, so long as they are reasonable.
The Group of Employees challenge a number of aspects of the process. First, they submit that it was not reasonable to exclude the tips available to their male job class comparator, the Security Officer, and that to consider both job classes fairly would have required inclusion of tips available to both. Second, they argued that tips ought not to be considered part of their compensation, because they are not reliable or predictable and they come from customers, not their employer, who is ultimately responsible for ensuring pay equity is achieved. Their review of dictionary definitions of “ascertainable” reveal that one element is the ability to determine “with certainty”. They submit that the process followed by the Union and the Employer did not allow them to determine the tip rate of the Casino Cashiers with certainty, a significant failure in the context of meeting important obligations under the Act.
While the Group of Employees agree that Casino Cashiers have the potential to receive a tip, that is not the same as a guarantee of a tip. Some jobs in the Casino, like servers, resemble typical jobs in hospitality industry that attract tips. Other jobs in the Casino, like Cashiers, are not like typical jobs in the hospitality industry, so no practice exists of tipping those jobs. The Casino Cashiers compared their jobs to those of bank tellers, who do not commonly receive tips. In addition, there is a physical barrier between the Casino Cashier and the customer which lessens the likelihood of tipping.
The Group of Employees submitted that they had established through the evidence that not all members of the pay equity committee understood the Casino Cashiers’ job, and particularly, did not know that some Casino Cashiers work in areas away from the public, with no opportunity to receive a tip. Since Guideline #11 suggests that tips should only be included in “compensation” when tips are “regular and recurring”, the work situation of Casino Cashiers does not meet that criterion, and so their tips should not be counted as “compensation”.
If tips are to be included in compensation, what standard of review is to be applied to the process undertaken by Casino Windsor and CAW Local 444 to determine the amount of tips received?
Counsel for the Employer submitted that the standard to be applied is reasonableness, not correctness. Counsel noted that in a number of cases, the Tribunal has held that where the Act sets a minimum standard or an exact requirement in Part 1, the parties are required to get it right. But where the provision that the parties are applying contemplates a range or a variety of options, then parties will be given discretion in their decision-making, provided they have exercised that discretion in a reasonable manner. That distinction, counsel argued, was first made in Ottawa Board of Education (No. 2 )(1996), 7 PE.R. 9.
The Employer, joined by the Union, argued that the definition of “compensation” requires a consideration not only of elements that are fixed, but also those that are “ascertainable”. Given that the word “ascertainable” attracts a process of inquiry and discovery, there is no single correct answer or minimum standard. Counsel for the Employer returned to the example of “ascertaining” the value of a car allowance, highlighting that there are a range of ways to determine its value. So long as parties are reasonable in this decision-making, the value they select should be upheld. Determining “compensation” requires the calculation and valuing of a number of elements from wages, to benefits, to uniform allowances. When workplace parties have the added challenge of comparing packages of disparate benefits offered to different job classes, the complexity is increased. In some cases, it might be entirely appropriate for a union and an employer to “bundle” the benefits, value them. Because “compensation” is made up of so many elements, applying an exact standard of correctness would be impractical and inappropriate.
The Group of Employees argued that as members of the bargaining unit, they had the right to challenge the deemed approved plan because it breached the minimum standards in Part 1 of the Act; the Union and the Employer failed to accurately determine the “compensation” for Casino Cashiers, with the result that their determination of “job rate” was incorrect. Alternatively, they argued that the process followed by the Union and the Employer was flawed with the result that the outcome was not reasonable.
Did Casino Windsor and CAW Local 444 meet the standard of review?
In this case counsel for the Employer argued, there is no serious doubt that the job class Casino Cashier receives tips. It may be that on some shifts, in some locations, a particular incumbent will not receive tips on a given day, but the job class, of which there are approximately 300 incumbents, receives tips.
The method chosen by the Employer and the Union to collect information about tip rates was reasonable, counsel argued. Counsel submitted that the methodology met the standard set out in Guideline No. 11, which was adopted from the Tribunal’s decision in Ontario Northland (1992) 3 P.E.R. 166:
(a) Calculations are to be as accurate as possible;
(b) job rate is to be calculated in a manner the least disruptive to the collective agreement and the compensation practices already in place;
(c) calculations must conform to the purposes and scheme of the Act.
The Employer and the Union wanted to collect information in a way that was sensitive to the reality that employees did not want information about their tips shared, and in fact, the collective agreement indicated an intention to take a “hands off” approach to employee tips. The parties identified positions in the bargaining unit that received tips, based on letters of employment that identified which were tipping positions. No one has taken issue with the accuracy of that information. The next step the parties took was to ascertain the tipping classifications, which jobs actually received tips, and how much? The evidence before the Tribunal, counsel argued, establishes that employees could not be counted on to accurately self-report their tips; management could not just ask employees and the Union agreed it would not be a reliable source. Ms. McKinnon, testifying for the Group of Employees, acknowledged that the Casino Cashiers wanted no one to know the tips they made, so asking the employees was not a reasonable option.
Counsel for the Employer submitted that there is no evidence to suggest that the tip information collected by the Employer was inaccurate. Mr. Dufour talked to three or four supervisors who had worked as Casino Cashiers, and in all the circumstances, that was a reasonable basis on which to found the Employer’s position. The Employer went a step further, collecting ranges for good and bad shifts, in an effort to meet its obligation to be as accurate as possible. The Employer then took out of consideration those job classes whose tips comprised less than 10% of their hourly rate, thus removing the Security Officers’ tips from consideration. Again that was reasonable, because the Pay Equity Commission Guideline #11 suggested only including tips where they were an expected part of compensation.
The next step in the process was sharing the Employer’s information with the Union, providing another opportunity to verify its accuracy. Mr. Schneider, counsel argued, pursued a process of checking out the information by talking to a number of people. Again, given that employees were not likely to accurately self-report, Mr. Schneider’s methodology was appropriate. Moreover, we know that he talked to Ms. Dunphy, a Casino Cashier, whose information was not inconsistent with what the Employer had collected.
That the final step in the process was a negotiation between Mr. Mignault and Mr. Schneider does not, counsel urged, affront the Act. The statute expressly contemplates the negotiation of all aspects of a pay equity plan by bargaining agents and employers. An end result that sees different categories of cashiers having different tips rates attributed to them does not demonstrate that the process was flawed. In all the circumstances, counsel argued, we should conclude that the parties’ methodology ascertained the tipping rates as accurately as possible.
Ontario Northland (above) also said that the method of calculation chosen should be the least disruptive to the compensation practices and collective agreement. Counsel acknowledged that management could have more accurately collected information about the Casino Cashiers’ tips, as it set out to do when supervisors asked to count and record the Casino Cashiers’ tip box contents at the end of the shift. But, the testimony before the Board showed that the Union did not want a formal method of tracking, because their members did not want it, and the Employer was unwilling to affect morale and take a more intrusive role in tip tracking, understanding the sensitivities. If the Casino decided to track tips, it would be in a position to provide information to the Canada Revenue Agency. A more formal method of information collecting, and the consequences that could flow from it, the Employer asserted, would be an unnecessary disruption of existing compensation practices, and arguably a breach of the collective agreement. Letter of Understanding 27 obliges the employer to continue existing practices in respect of tips. A more formal tracking and recording could be seen as a violation of that obligation.
Counsel for the Employer urged us to find that the parties’ methodology also met the third component in Ontario Northland (above); it conforms to the scheme and purposes of the Act. It is important to remember, counsel argued, that at the time tip information was being collected and the parties were agreeing on the tip rate for each job class, no one knew which job classes would be comparators and no one knew the result of the evaluation. The information was collected specifically so the parties could meet their obligations under the Act but at a point where no one was in a position to “gerrymander” the results to generate a particular outcome.
In summary, both the Employer and the Union asked us to conclude that the parties were correct to include tips, that they made reasonable decisions in collecting tip information, and properly applied the discretion available to them in deciding the tipping rate that would form part of the calculation of job rate for the Casino Cashiers.
The Group of Employees were highly critical of the way the Union and Employer collected information about the tip rates. To meet the test of accuracy, the committee should have documented its collection efforts and used a sample size larger than a few supervisors. Mr. Schneider should have told the people he talked to that he was collecting the information for the purposes of pay equity and he should have been more systematic, and made notes of the information he collected. To achieve accuracy, the Union should have collected information from the employees who perform the work now, not those who may have performed it years ago. The Group of Employees submit that there should be documents to explain and justify why the Union agreed to a higher tip rate for Casino Cashiers than for other cashiers; and more important the Union should have negotiated the same rate for both.
If Casino Windsor and the CAW Local 444 engaged in a process that was not adequate, what should the Tribunal do to remedy the situation?
- Both the Employer and the Union made alternative arguments about remedy in the event that we concluded the process they followed was flawed. But they did not agree on the appropriate remedy. The Employer proposed the introduction of a tipping tracking system for all job classes in the Casino, except for the dealers, who already have a system in place. The Employer submitted that if the methodology used is faulty, then it was faulty for all employees and so the remedy should be applied to all jobs. The Employer proposed:
(a) all employees would be required to deposit any tip into a tip box, and failure to do so would attract disciplinary action.
(b) The tip box would be opened at the end of a shift by the supervisor, who would count and record the amount in a log book. The employee and supervisor would sign off on the accuracy of the amount and the employee would take the tips
(c) The employer would seek advice from the Canada Revenue Agency with respect to its reporting obligations for any tip tracking it did
(d) Collection of tip information would take place three times a year, for a month at a time, to take account of seasonal variations in tipping patterns
(e) The employer and the union would use the log book information acquired to determine if tipping rates for the purpose of maintaining the pay equity plan, should be implemented
(f) Any change in the appropriate tipping rate for any job class would only take effect from the date of the Tribunal’s decision, because it is not possible to turn back the clock and determine what tipping rates would have been in the past had this method of tracking been imposed.
The Union is agreeable to a tracking method for tips, but only in respect of the Casino Cashiers’ job class. Counsel noted that the evidence before the Tribunal showed that such tracking is simple for that job. The Union argued that it was not necessary for the Tribunal to spell out the method of tracking that should be used in the future; the matter should be remitted back to the Union and the Employer. The Union submitted that the Casino Cashiers are the only job class that maintained a complaint to the Tribunal, so we must infer that the other affected employees are content with the results. Imposing Casino-wide tracking as the Employer proposes would be unnecessarily disruptive to the work force. The Union also opposed the suggestion that failure to put tips in the box should attract discipline. If the Tribunal were to make such an order, counsel for the Union argued, it would be exceeding its jurisdiction and going beyond what is necessary to remedy any breach of the Act. The Union did agree with the Employer’s submission that any tracking and change in tipping rates as a result should only have a prospective effect. Otherwise, pay equity adjustment made many years ago would have to be recalculated with the spectre of some people having to re-pay amounts they received.
Although the Casino Cashiers believe that the Employer and the Union should not have attributed any tips to them, what they believe would be fair at this point is to be attributed with the same amount as the Slot Cashiers, which is 50 cents an hour, instead of the 75 cents attributed to the Casino cashiers. They do not agree with the remedies proposed by either the Union or the Employer. They do not think it would be fair to have tip tracking for just the Casino Cashiers, because it would put them in a different position from others. But they are also reluctant to endorse the proposal of the Employer, that the tips of all job classes would be tracked, because that would affect all of the employees and might have difficult repercussions for many.
Analysis and decision
Are tips included in “compensation” for the purposes of determining “job rate” under the Act?
- Somewhat surprisingly, this is the first case to come before the Tribunal that has raised the issue about whether tips should be included in “compensation” as an element of “job rate”. Those terms are defined in section 1 of the Act as follows:
“compensation” means all payments and benefits paid or provided to or for the benefit of a person who performs functions that entitle the person to be paid a fixed or ascertainable amount; (“rétribution”)
“job rate” means the highest rate of compensation for a job class; (“taux de catégorie”)
Ultimately, there is a policy choice to be made. Tips are certainly “provided for the benefit of a person”. Patrons tip servers and drivers and housekeepers and other hospitality staff in the expectation that the tip will benefit the person to whom the tip is given, so tips can fit within the first part of the definition of “compensation”. The middle part of the definition “…performs functions that entitle the person to be paid” was not specifically addressed by the parties. We believe that part was meant to exclude volunteer relationships where there is no entitlement to be paid, even though useful functions may be performed. In other words, that part of the definition is intended to make clear that “compensation” refers only to payments that are made because of a contractual or statutory obligation to pay a person for work performed.
But even though servers and others in the hospitality industry are entitled to be paid at least a minimum wage, the tips are not provided by employers, who are the ones typically responsible for determining the level and nature of compensation, and are certainly the entities responsible for meeting the obligations under the Act. So leaving aside for the moment the question of whether tips in any given situation are “ascertainable”, does the definition of compensation include those payments made by clients or customers who are not obliged to make the payments, have no obligation to meet the requirements of the Act and are essentially strangers to the employment relationship?
When we consider the factors set out in Ontario Northland (above), a categorical exclusion of tips for the purposes of calculating “compensation” and “job rate” would be a significant intrusion into the parties’ existing compensation practices. If for example, a female job class receives a significant amount of money in tips (at the Casino, for example, the Employer and the Union agreed that the female dominated job class of Slot Attendant received an average of $23.00 an hour in tips) and that amount was excluded from the calculation of compensation and job rate, any pay equity adjustment would vault the female job class ahead of her male job class comparator, when you look at the money each takes home at the end of the day. That seems to be an unexpected result that really does not advance the underlying purposes and scheme of the Act. The Legislature does not intend the Act to be interpreted in a manner that does not take account of the practical realities of everyday life. In North America, unlike other countries, a culture of tipping certain types of work has become commonplace and both employers and the Legislature itself have created pay structures that anticipate a significant part of the take home pay of those employees will be comprised of tips. The Employment Standards Act 2000, S.O. 2000, c. 41, as amended (“the Act”), for example set a minimum wage for servers, which is lower than the minimum wage for other jobs, in the knowledge and expectation that part of the take home pay for those employees will consist of tips.
Looking again to the criteria in Ontario Northland (above), inclusion of tips in “compensation” does not inherently fail to promote the scheme of the Act. In the Windsor Casino for example, both male and female dominated job classes were found by the Union and the Employer to receive tips. It cannot be said that female job classes were disproportionately attributed with high rates of tips to lower the likelihood that a pay equity adjustment would be made. Similarly, many male job classes were attributed with a high rate of tips, meaning that if they were comparators for female job classes who receive no tips, or a low rate of tips, the inclusion of tips for the male job class increased the rate to which the female job class would be adjusted.
If, in other circumstances, evidence indicated that the inclusion of tip amounts artificially manipulated the compensation and then the job rate of a job class, with a negative pay equity result, then the Tribunal might well exclude the tip amount, but that is not this case. We conclude that it can be appropriate to include tips in “compensation” for the purposes of determining “job rate” under the Act.
We must then consider whether the tip rate that would be attributed to the employees at the Casino, and in particular, the Casino Cashiers, is “ascertainable”? The answer is yes. Because the Casino generally has strict practices and policies about the handling of money and the separation of tips from the Casino’s money, it is easy to accurately count the amount of tips Casino Cashiers receive in every shift and use that information to calculate a tipping rate for the job class. The Employer’s aborted attempt to count and track the Casino Cashiers’ tips demonstrates how easily it can be done. The employees empty their tip box into a packet at the end of a shift, under supervision. All that needs to be done to track the amount is to count it and enter the information in a log. Regardless of the methodology used by the Employer and the Union in this case, the evidence shows that in this workplace, the tips received by this job class are easily “ascertainable”.
We agree with the submission of the Employer that the focus must be on determining a tip rate for the whole of the job class. The data collected from individuals will inform that tip rate, but it is not necessary that each employee earn the same amount, every day, at every position, for the tip rate to be determined. Put another way, the tip rate has to take into account, for example, that some proportion of employees will be, for some shifts, assigned to tasks with no opportunity for a tip, but the fact that some may get nothing on a given day does not mean the tip rate is zero. All employees may have, for example, access to the benefit of a drug plan but a failure to use the benefit in a particular month does not mean that it has zero value for some employees; the value of the drug plan to all of the employees in the job class over a period of time has to be determined. The Tribunal made a similar determination in Ontario Northland (above) where it said that an increased vacation pay benefit should be valued even though it was only available to members of the job class after five years of service was achieved.
If tips are to be included in compensation, what standard of review is to be applied to the process undertaken by Casino Windsor and CAW Local 444 to determine the amount of tips received?
- The Tribunal’s decision in Ottawa Board of Education (No. 2) (above) said that parties had to be correct in determining the “job rate” for each job class. We agree. But we also agree with the submission of the Employer in this case that not all of the elements that comprise “compensation” which is a component of “job rate” will be capable of a precise or definitive calculation. For example, one component of “job rate” would be an hourly or annual wage rate. That amount is capable of an exact calculation, and there is no excuse or legitimate reason for workplace parties to get it wrong. The Tribunal would hold parties to a standard of correctness to the calculation of a wage rate. But other aspects of compensation are not capable of such a precise or definite calculation; there might be a range of acceptable ways to value a uniform allowance, an employee purchase discount, a pregnancy and parental leave top-up benefit or an adoption expenses benefit. The Tribunal will closely examine the choices that workplace parties make in valuing elements of compensation, but where there is discretion to be exercised, holding parties to a standard of correctness is not practical or appropriate. As the Tribunal said at paragraph 46 of Ontario Northland (above), in calculating benefits we will look at what is most reasonable and accurate in the circumstances.
Did Casino Windsor and CAW Local 444 meet the standard of review?
We have concluded that the Union and the Employer did not exercise sufficient care in calculating the tip rate for the job class of Casino Cashier. We find that the Employer and the Union were so aware of employees’ sensitivities around disclosure of their tips that the parties went out of their way to avoid formalized tracking and recording that would have been disruptive to the workplace, but would have provided more accurate information for the purposes of collecting tip rate information for pay equity.
Since we know that this workplace is subject to stringent polices around the handling of cash generally and tips in particular, it would have been a simple matter to track and log tips for many of the job classes, and certainly for the Casino Cashiers, as the Employer’s brief attempt at tracking showed. In our view, where the circumstances in the workplace offer the opportunity to easily calculate the tip aspect of compensation, a choice to do something different must be otherwise compelling. We understand that the Employer and the Union concluded that self-reporting was unreliable, and there is no evidence to suggest otherwise. We also understand that the Union and the Employer wanted to avoid creating morale issues or developing records that might attract the interest of the Canadian Revenue Agency, but, with respect, we do not find those reasons compelling enough to justify a decision not to choose a more reliable method of collecting tip information which was readily available.
We are not suggesting that the tip information collected by the Employer and verified by the Union was wrong, although Mr. Schneider certainly left the impression that he believed the Employer had underestimated the tips received by the Casino Cashiers. Instead, we are saying that where the Employer and the Union had the means to accurately collect tip information (at least for the period around 2000) the decision to rely on second hand impressions from supervisors and Mr. Schneider’s admittedly casual conversations with a couple of Casino Cashiers was not reasonable. The Group of Employees led evidence that Mr. Schneider and Mr. Marcotte were not aware that some Casino Cashiers on some shifts had no access to the public, nor how regularly they were rotated through different positions. That would have been useful information to have taken into account and would have become obvious if tip tracking had been performed.
We conclude therefore, that the Employer and the Union’s process for determining the tip rate for the Casino Cashier was not reasonable, with the result that we are not satisfied they accurately determined their “job rate”.
Remedy
The Employer asks us to order tip tracking in respect of all job classes. Counsel argued that if if the methodology relied on is flawed, then it is flawed for all of the job classes affected by the negotiated pay equity plan. The Union asks us to direct tip tracking of only the Casino Cashiers, and the Group of Employees ask us to do neither, and instead, alter the tip rate to attribute 50 cents to them, the same as the Slot Cashiers.
It is difficult to determine the appropriate remedy. It is, perhaps, easiest to start with what we do not think is appropriate. We reject the Group of Employees’ request that we simply alter the tip rate of the Casino Cashiers to that of the Slot Cashiers. We heard no evidence to suggest that figure was any more reliable than the one attributed to the Casino Cashiers. It also seems counterintuitive, having listened to the Group of Employees challenge and criticize every step the Employer and the Union took in determining the tip rates, for the Tribunal to impose a tip rate that came out of the same process. We realize that the Group of Employees find the other remedial options unpalatable, but that is not reason enough to implement their choice.
We appreciate that the Employer’s proposed remedy arises out of a concern that other unhappy employees may choose to launch their own complaints about the tip process, and so to avoid that, it is preferable if all job classes become subject to tip tracking. With respect, we believe that would be an overreaction. Given that this plan was posted in 2001 and no further complaints have come forward in the intervening years, it is unlikely that any group of employees could successfully bring a new complaint at this time. If the Union and the Employer think that tracking the tips of all employees would be useful for future maintenance, then they are free to pursue that option, but we will not direct it.
Instead, we direct that the tips of the Casino Cashiers and their male job class comparator, Security Officer, be tracked to permit the Union and the Employer to accurately determine the tip rate for both. We remit the question of how to track the tips and over what period to track them, to the Union and the Employer. Because it is not practicable to collect reliable information for the period of time that has elapsed since the pay equity plan was posted, we direct that any tracking commence within 90 calendar days of this decision. Any amendment to the job rate shall be implemented as of 90 calendar days from this decision.
In this case, we have not ordered retroactive relief between the time period of the effective date in 1994 and the Tribunal’s decision in 2007. As set out in paragraph 27, this workplace has seen a number of dramatic changes that have had a significant effect on the Casino generally and on tipping specifically. We are not confident that information collected about tipping rates in 2008 would be reflective of tipping practices between 1994 and 2007. For that reason, in the unusual circumstances of this case, we are not requiring the parties to give retroactive effect to the tipping information they collect as a result of our order.
The panel will remain seized in the event that the Union and the Employer are not able to agree on how to implement our direction. If the hearing is reconvened, either in person or by conference call, the Group of Employees will be included and given the opportunity to make submissions. However, since the Employer and the Union remain responsible for the establishment and maintenance of pay equity for the bargaining unit, we do not require them to consult with the Group of Employees about the implementation of tip tracking for the Casino Cashiers and the Security Officers. It might be prudent for the Employer and Union to keep the representatives of the Group of Employees updated about progress.
For the reasons set out above, the Review Officer’s Order of July 27, 2004 is revoked.
Dated at Toronto, Ontario this 14th day of November, 2007.
“Mary Ellen Cummings”
Mary Ellen Cummings, Chair
“Margaret Kvetan”
Margaret Kvetan, Member
“Pauline R .Seville”
Pauline R. Seville, Member