Thoughts from a Management Lawyer

Hargrove Steps in as Interim Obudsman of NHLPA

The National Hockey League Players' Association (NHLPA) executive board announced  that its new interim ombudsman is Buzz Hargrove, former national president of the CAW-Canada. 

"Say on Pay" Gains Some Ground in Canada

President Obama recently announced executive pay rules and the Globe today reports that "say on pay" where shareholders vote, in a non-binding way, on executive pay has been accepted at 2 Canadian banks with 2 others to vote on the issue shortly.  Shareholders will now be able to vote on "top bankers' compensation".

The article notes that, since 2003, "say on pay" rules have been in effect in the UK for publicly trade companies.  There has also been a push for legislated rules:

The groundswell of support sends a signal to securities regulators that they should adopt mandatory rules requiring companies to hold votes on executive compensation, Mr. Hawton [Gary Hawton, CEO of Kitchener, Ont.-based Meritas Mutual Funds] said.

"I'd hate for shareholders to have to go company by company to ask for say-on-pay votes," he said. "At some point, the onus falls on regulators to make say on pay mandatory."

These are interesting times and, while probably not that surprising that there has been some "groundswell" in this area, we'll have to see whether the regulators decide to move the country in what appears to be the UK direction. 

Obesity and Work

The February 2009 issue of Perspectives on Labour and Income has an interesting article on Obesity on the Job.

The prevalence of obesity in the Canadian workforce has increased over the last decade, from 12.5% in the mid-1990s to 15.7% in 2005.  The article notes that:

More specifically, the implication is that reducing or preventing obesity in the workplace would have multiple potential benefits, including better health and well-being, and higher productivity and better job performance. It may be cost-effective for employers to actively sponsor health promotion initiatives in the workplace, including weight maintenance programs.

This discussion has been kicking around for some time (here, here, here and here).

Provincial or federal - that is the question

The Supreme Court of Canada has reserved on whether a freight forwarder was provincially or federally regulated for purposes of labour relations.  While we wait for the Court to pronounce on this important constitutional issue, have a read of the Court of Appeal judgment.

Family Day Hockey Fun

I rarely post personal stuff on this blog, but thought I'd make an exception (albeit a little delayed).  

Family Day was especially fun for us this year as my youngest son played on a Select team that was put together to play in a tournament on Family Day.  I coach his regular team and was asked to be an assistant coach on this team, so got to spend some quality time with him.  In passing, he commented yesterday that "Dad, you don't really coach, you just walk around behind the bench saying water? anyone need water?"  Nice. 

The team won the Championship in 3 hard fought games and I'm very proud of him and the other kids on the team as they played teams in the division above them.  Anyone who has been to a hockey tournament will know that the off-ice activities (mini-stick games, pizza and general running around and mayhem) are what makes the event so much fun and memorable for the kids.  The organizers,  volunteers  and parents were fantastic.  All in all a great day. 

No shortage of enthusiasm with these guys as this picture shows. My kid's the one on the right side of the scrum facing the camera with his left hand in the air about to "pile-on".

 

 

 

Labour and Employment Law is Recession Proof

An article in the Lawyer's Weekly confirms what we've all been feeling - Boom Time for Labour Lawyers: 

A recent survey by the Towers Perrin consulting firm, released in February, suggests that employers may have only just begun cutting back. Of the 246 Canadian firms polled, 18 percent were considering layoffs.

A UK blog post (Thousands Face Pay Cuts in 2009, BCC Reports) as well as a number of recent studies confirms that this year will see some unprecedented changes and the lawsuits that come in their wake. 

Violence in Healthcare Online Survey

The Occupational Health & Safety Agency for Healthcare in British Columbia has an online Violence in Healthcare Survey that will assist the Provincial Violence Steering Committee.

Ontario Public Elementary Teachers Accept Framework Deal

Grudgingly, according to the news reports, Ontario's 73,000 elementary school teachers have accepted "the provinces final contract offer".  But, we're not out of the woods yet. 

The accepted "framework agreement" doesn't mean that the bargaining is done.  In fact, the Federation and the local boards will go at it and the Federation has indicated that they want the Board's to table their final offers today and be ready to bargain or they will hold strike votes.

According to the Globe and Mail article the president of the Federation has said:

"If they [school boards] choose to waste precious time attempting to negotiate strips into our local collective agreements, our members will be forced to take strike action," he said yesterday.

There are a few other reports available at this point including in the Ottawa Citizen and the Toronto Star.  The London Free Press and Windsor Star emphasize that the framework agreement is only the first step (albeit a big one, to be fair) but that strike action might still result  at the local level if issues can't be sorted out with individual boards. 

Vicarious Liability in Franchise Operations

An interesting non-employment case recently came to my attention that has some important employment law implications.  The central issue in dispute was whether a franchisor was vicariously liable for the actions of one of its franchisees. 

The action was commenced in Small Claims Court where the Judge concluded that the franchisor was, indeed, vicariously liable and awarded damages against the franchisor.  This decision was appealed.  The Court summarized the background:

This action arises out of a fire that occurred in the ...  franchise owned by [the franchisee] located on Kingston Road in Toronto on December 12, 2004. Smoke from the fire entered the neighbouring premises in which the plaintiff...  operated a restaurant, .....  As a result of the fire, the restaurant was required to close for three days to repair smoke damage. The cost of the repairs, amounting to $5,964.18, was covered by [the plaintiff's] insurance less a $2,500.00 deductible.  [The plaintiff] also claimed damages for lost business during its closure in the amount of $1,877.00.

The first question to be considered in this appeal is whether the trial judge erred in finding that the franchisee (corporation) was an employee of the franchisor. 

According to the Court:

The trial judge examined the relationship between the franchisee and the franchisor as evidenced by the franchise agreement, and concluded that the franchise agreement was “riddled with controls over the activities” of the franchisee and that these controls “point unmistakably in the direction of a relationship…which can only be characterized as one of employer and employee.”

Although the Judge set out the proper test for distinguishing between an employee and independent contractor as set out by the Supreme Court of Canada in Sagaz, he arrived at the wrong conclusion.  The Court commented:

Inevitably, there are some provisions of the franchise agreement according to which [the franchisor] exercises control over the franchisee. Such provisions are regular and expected inclusions in a franchise agreement. Franchise agreements by nature “entail some degree of control by the franchisor, even though the franchisee is generally an independent business person operating the franchise”.

The Court considered the "form" of the agreement and the fact that:

The franchise agreement in this case is clear: there is no agency relationship between the franchisor and the franchisee; the franchisee is an independent contractor completely separate from the franchisor; the franchisee hires and fires its own employees, handles its own finances, maintains its own accounting and business records, financial statements and tax returns; maintains its own insurance on the premises and the property; exercises its own business judgment in the operation of the business; and is the owner of the assets. Jolin was clearly a franchisee and not an employee.

There was no evidence that the franchisor exercised substantial control over the day-to-day operations of the franchisee, and at none of the material times was the franchisor  in physical control of the premises in which the franchise was located.   The policy reasons behind vicarious liability were not satisfied. 

In the franchisor-franchisee context, vicarious liability can also attach where:

.... a franchisor may be vicariously liable for the negligent acts of its franchisees where a third party believed that he or she was dealing with the franchisor, or relied on a representation by the franchisee to this effect, in adopting a certain course of conduct, which ultimately led to loss or injury.

The Court found that "clearly not those in which vicariously liability" could attach on this basis.

The case is important as, in a franchisor-franchisee context, the employment issues are always swimming just below the surface.

BC Court of Appeal Dismisses Freedom of Expression Challenge

In a decision handed down on February 4, 2009, the BC Court of Appeal dismissed a Charter challenge brought by the B.C. Teachers’ Federation and the Hospital Employees’ Union to the definition of "strike" contained in the BC Labour Relations Code.  While the Court found that the definition of "strike" infringed the freedom of expression in 2(b) of the Charter, the infringement was justified under section 1.

Strike is defined as follows:

"strike" includes a cessation of work, a refusal to work or to continue to work by employees in combination or in concert or in accordance with a common understanding, or a slowdown or other concerted activity on the part of employees that is designed to or does restrict or limit production or services, but does not include

(a) a cessation of work permitted under section 63(3), or

(b) a cessation, refusal, omission or act of an employee that occurs as the direct result of and for no other reason than picketing that is permitted under this Code,

and "to strike" has a similar meaning.

The Union's staged work stoppages to protest legislation that they suggested interfered with their conditions of employment.  They argued that this was not a "strike" and defined a "protest work stoppage as one directed at government action, in these instances legislation, as distinguished from collective bargaining work stoppages aimed at their direct public sector employers."

The Court considered the section 2(b) of the Charter analysis and held that: .

.. the strike exerts pressure directed beyond the formal public sector employers to the governments that are their masters.  It is a form of effective expression that is curtailed by its inclusion within the strike definition.  In my view, the effect of the mid-contract strike prohibition is a restriction on an effective means of expressive action and for that reason alone, it trenches on the s. 2(b) guarantee of free expression.

The Court then considered whether the limitation was "demonstrably justified in a free and democratic society" under section 1 of the Charter and concluded that:

The object of the prohibition is the prevention of disruption of services or production.  That objective is pressing and substantial; the mid-contract prohibition is rationally connected to that objective.  The prohibition extends a limit that is non-controversial in a collective bargaining context to a political protest context.  Means of free expression other than through work stoppages remain unimpaired.  The mid-contract prohibition meets the standard of minimal impairment and is proportionate to the balance between free expression and harmful impact.  The indeterminate and politically charged dimensions of a Charter guarantee of limited protest strike action reinforces the validity of the Legislature’s imposition of a clear standard.

There is an earlier discussion/analysis of the Charter and "political protest" actions by the Ontario Labour Relations Board in Ontario Hospital Association which discussed, among others, General Motors [1996] OLRB Rep. May/June 409.