1443-11-PE Touchstone Youth Centre, Applicant v. Ann-Marie George and employees not represented by a Bargaining Agent, Responding Parties.
BEFORE: Patrick Kelly, Vice-Chair.
APPEARANCES: Craig R. Lawrence, Susette Clunis, Lisa Khan and Len Wechsler appeared on behalf of the applicant; Harriet Vangalis, Desmond Rowley and Joanne Lewis appeared on behalf of the responding parties.
DECISION OF THE TRIBUNAL: May 31, 2012
1. Tribunal File No. 1443-11-PE is an application by Touchstone Youth Centre under section 25(6) of the Pay Equity Act, R.S.O. 1990, Chapter P.7 (“the Act”) in respect of a Review Officer’s Order dated October 18, 2010 (“the Order”).
Background
2. The Order followed previous Orders over a very lengthy period of time. In 1995, the Pay Equity Commission issued a Proxy Order to TYC to prepare a non-union pay equity plan using the proxy method of comparison. Apparently, no such pay equity plan was prepared. Thus an Order dated July 11, 2007 was issued by the Review Officer requiring TYC to prepare, post and implement a non-union pay equity plan effective January 1, 1994. Eventually, TYC committed to a process that would result in the posting of a pay equity plan by July 2008. However, the plan was not posted until January 12, 2010. And TYC did not implement its terms. Thus the determination by the Review Officer to issue the Order which is now before me. The Review Officer required TYC to do the following:
I order Touchstone Youth Centre to calculate the pay equity adjustments required for implementation on January 1, 2009 and January 1, 2010 for each of its female job classes that have not achieved pay equity in those years. I further order the Employer to provide me with the calculations and the supporting data by Fourteen (14) days as of the date of issue of this Order.
I order Touchstone Youth Centre to begin paying to every employee in a female job class that has not achieved pay equity the pay equity adjusted pay rate for the job class incorporating 1994 to 2010 pay equity adjustments by Thirty (30) days as of the date of issue of this Order.
I order the Employer to purchase a quarter-page advertisement in the Metro free daily newspaper. I order that the advertisement be titled “Notice to Former Employees of Touchstone Youth Centre Regarding Payment of Pay Equity” and that at minimum the body of the advertisement request former employees who worked for Touchstone Youth Centre between the years 1994 and 2009 to contact Touchstone to determine whether any pay equity retroactivity is owed to them. I further order that the same advertisement be run in the Metro Newspaper on three consecutive Wednesdays. I order that the third advertisement must have appeared in the newspaper by 45 days as of the date of this Order.
I order the Employer to pay all outstanding pay equity retroactivity amounts to all employees and former employees named in Schedule A which is attached to and forms part of this Order by Ninety (90) days as of the date of this Order.
I further order the Employer to pay interest on all retroactive adjustments in accordance with the calculation process established in Halowell House Ltd., [1980] OLRB Rep. Jan. 35, which has been followed and applied by the Tribunal (see, for example Peterborough (Claw) (No. 3) (1996), 7 P.E.R. 33). The amount owed to each person in Schedule A is divided in half and the rate of interest as prescribed in section 127 of the Courts of Justice Act, R.SO, 1990, c.C43 for January 1, 1994 is to be applied to the amount. For this calculation the date January 1, 1994 is used as that is the date when the first pay equity adjustments should have been implemented.
3. TYC complied with the first three points in the Order. It has yet to fully comply with items 4 and 5. Most of the retroactive payments have not been made at this point. The basis of this application is TYC’s request that it be given more time to comply given what it describes as its precarious financial situation. That request is opposed by the responding party employees who attended the hearing.
The Facts
4. Established in 1991, TYC is a non-profit organization consisting of about 32 employees providing emergency shelter, counselling and support to homeless and at-risk youth in Toronto. It relies on funding from a number of public bodies, including the City of Toronto (which provides about 70 per cent of TYC’s funding), and, to a far lesser extent, private individual donations.
5. Susette Clunis, TYC’s Executive Director for the last six years and the only witness who was called to give testimony in this matter, testified mainly about the financial difficulties TYC has been facing lately. Quite simply, TYC has had to face the harsh reality that it is no longer bringing in enough money to cover its costs. In response, its Board of Directors earlier this year ordered the cutting of expenses, including labour costs, resulting in layoffs and reduced hours of work, particularly in the management ranks. For example, Ms. Clunis herself is working part-time hours. As things stand now, TYC needs a minimum of $300,000 annually in order to operate in this diminished state. Should TYC some day return to full capacity, its annual need would be around $500,000. Currently, TYC is operating with a $26,000 deficit.
6. TYC’s audited financial statements for the year ending March 31, 2011 indicate that its pay equity liability was $297,918. The financial statements contain the following note in respect of the pay equity liability:
Pay equity liability/Going concern
The organization was served with an order from the Pay Equity Commission on July 11, 2007 to comply with subsection 7(1) of the Pay Equity Act, which requires the organization to maintain pay equity. The order covers a]l years since the enactment of the legislation in January 1994. As a result of the instructions from the Pay Equity Commission, the management has conducted a full review of all affected pay periods. The resulting calculation is reflected as a current liability and includes interest to March 31, 2011. The Pay Equity Commission clarified in October 2010 that the liability is due immediately. The organization is currently taking steps to hire a fund-raiser specifically for this undertaking, but management feels that it cannot pay the liability immediately unless a large bank loan or government funding program is obtained. A hearing with the Pay Equity Tribunal has been requested to ask for payment of the liability over the next four years. If this request is denied and the loan or government funding cannot be arranged, the organization faces closure.
7. Ms. Clunis testified that she agrees with the conclusion of the auditor that TYC faces closure if the Tribunal upholds the Order and no loan or government funding is arranged. Ms. Clunis testified further that, since 2007, she has made every effort to solicit assistance from every level of government and all past funders, as well as from existing and potential donors, but that no one has expressed any willingness to contribute to the underwriting of the pay equity liability. Ms. Clunis has gone so far as to ask employees and former employees if they might forego their retroactive pay equity payments, and some have agreed to do so, as has Ms. Clunis herself, who was entitled to more than $4,000 in retroactivity. Still, the outstanding liability is well over $200,000, and Ms. Clunis was quite adamant she has done all that she can to get the pay equity liability off the books. She opined that the balance might be paid if TYC were given “significant time” and willing funders emerge. But she also expressed the view that the pay equity liability itself deters donors from supporting the organization financially. In other words, fund raising generally has become more difficult for TYC. Moreover, the efforts to address the pay equity issue have come at a cost in terms of attention to operational priorities of the organization.
Analysis and Conclusions
8. Subsection 25(2) of the Act contemplates that the Tribunal may confirm, vary or revoke orders of Review Officers. TYC wants a variance in the Order with respect to the time by which it must pay the retroactive wages to existing and former employees. It argues that the purpose of the Act – to redress systemic gender discrimination in compensation for work performed by employees in female job classes (subsection 4(1)) – will be defeated if, as a result of a Tribunal decision ordering it to comply immediately with its pay equity obligations - it will have to end operations and effectively deprive its employees and former employees of any chance to recover retroactive wages (not to mention deprive clients of TYC’s services).
9. I have no doubt that TYC provides a valuable service in the community, and that its staff are dedicated to the service of at-risk youth, and that management has worked long and hard to find a way to deal with its pay equity liability. However, there are good reasons not to vary the Order.
10. First of all, the liability issue has been allowed to fester and worsen for a very long period of time. Fifteen years passed from when TYC was ordered to prepare a pay equity plan to the point in time that it finally did so. By that stage, TYC found itself in a new era of fiscal restraint and reduced operating grants. Therefore, to the extent that TYC’s future is threatened by escalating pay equity liability, it must take a large share of the responsibility for that.
11. Second, I am not satisfied that the evidence adduced in this matter is sufficient to conclude that TYC will necessarily cease to operate if it is not given more time to comply with the Order. TYC’s auditor was not called as a witness in this proceeding to explain the basis for the prediction that the organization might have to shut down under the weight of its pay equity liability. Furthermore, I note that the auditor’s comment refers to a bank loan as a possible means of satisfying TYC’s pay equity obligations. That option was not addressed in the evidence. Therefore, I think it remains an open question whether TYC will be able to continue offering its services in the shadow of an order requiring it to make its retroactive pay equity payments now.
12. Third, and in any event, I am not at all convinced that more time will fix the problem. A lot of time has passed already. Since the Order issued, not a great deal has changed. The pay equity debt remains large and unwieldy. Ms. Clunis was not exactly optimistic about the chances of finding funders or donors to eliminate that problem. In fact, no particular time frame was advanced by Ms. Clunis or argued by counsel for TYC in the course of the hearing for when compliance might be achieved.
13. Fourth, the Tribunal has previously ruled that lack of funding is not a defense to an employer’s obligation to comply with a pay equity plan or the Act: see Kensington Village (2000 – 01), 11 P.E.R. 1, ¶15 to 23. In that matter, the Tribunal noted “there is no provision in the legislation which addresses issues of funding or financial hardship on the part of an employer with obligations under a pay equity plan” (¶20).
14. For these reasons I decline to vary the Order.
15. TYC is to comply fully with the Order within thirty days of the date of this decision.
“Patrick Kelly”
Vice-Chair