Temp employees - who is the Employer?

Two recent decisions of the Ontario Labour Relations Board addressed the situation of temporary staffing agencies and unionization. In one case, the Board found that the “true employer” was the business contracting with the temp agency. In the second, the Board found that the temp agency and the business with which it contracted were deemed a single employer for labour relations purposes. In both cases, the Labour Board looked behind the corporate veil at the actual relationship to allow workers to establish bargaining rights with respect to the entity that actually controlled their working lives.

The first case concerned an application by the CAW for a unit of drivers and pitchers at National Waste Services Inc. in Stoney Creek. The Stoney Creek yard was established in 2005 following National Waste’s winning of the residential trash contract in nearby Hamilton. At this yard, National Waste chose to engage a personnel agency, Erie Personnel Corporation, to provide labour. National Waste only employed six employees directly (supervisory personnel mostly), the balance of the workforce was provided by Erie.

Here the Board had to look at who the real or true employer was. Generally, the Ontario Labour Relations Board has tended to find that the client (in this case, National) is the true employer. Continuing this trend, the Board found that National Waste was the true employer of the drivers and pitchers. The employees were selected on the basis of criteria set by National, borderline hires were sent to National for approval, National issued discipline and could “blacklist”
employees it did not want. National also supervised the day-to-day work, National kept track of hours worked and supplied the list to Erie for payment, the general wages were set by National and National would approve wages above scale for certain employees and so on. One of the only factors in favour of Erie as the employer were the contracts between Erie and National (setting out the terms of the service contract) and between the employees and Erie (which stated that the employees were employees of Erie).

The Board had reference to the Pointe-Claire case which went all the way to the Supreme Court. In Pointe-Claire, the Court observed that “in a context of collective relations ... it is essential that temporary employees be able to bargain with the party that exercises the greatest control over all aspects of their work.” Thus, apparent contractual arrangements will be set aside in favour of the actual substance of the relationship. The Board also cited another important case, 533670 Ontario Ltd. (c.o.b. Best Personnel Services) to the effect that “the Board is more concerned with substance than with form; that is, the Board will not permit commercial form to obscure labour relations reality.”

This concern led the Board in another recent decision to find that the temp agency and the client were a single employer for the purposes of the Labour Relations Act. In the Fall of 2007, employees working for glass company PPG in Cambridge through Liberty Staffing
Services sought unionization through the United Food and Commercial Workers union. PPG manufactures glass for the auto industry at a number of plants throughout North America. The Cambridge plant was a “satellite” plant producing just-in-time ready-to-install glass parts for the auto industry to clients’ precise specifications. This work used to be done in auto assembly plants unionized by the CAW. However, recently, auto manufacturers have been out-sourcing this work on a just-in-time basis to manufacturers like PPG. Orders for specific pieces are received on a daily basis and shipped to assembly plants immediately, within hours of being ordered by the client.

In order to save money and overhead, PPG has used Liberty to supply its staffing needs at Cambridge since 1999. Liberty supplies 100% of the non-managerial workforce as well as several supervisors. PPG itself only employs 5 managerial employees in Cambridge. The Board discovered a number of things about this relationship. Apparently the wages (which are set by PPG) are so low as to make it difficult for Liberty to find sufficient workers for the plant. Also, Liberty and PPG routinely consulted about almost every aspect of the employment relationship – from day-to-day supervisory matters, through discipline, to handling of the certification application. The Board also found that employees assigned by Liberty to PPG generally
work there (and only there) for periods of months or years. In other words, in spite of the legal characterization of the relationship as temporary, it was not temporary in reality.

These decisions fall within the normal range of decisions of the OLRB. Do you think the recent changes to the ESA with respect to temporary workers will have any impact on future decisions of the OLRB?