Which Side Are You On

“WHICH SIDE ARE YOU ON?”:

LOYALTY AND CONFLICT OF INTEREST AS CRITERIA

IN DETERMINING EMPLOYEE STATUS

Beth Bilson

College of Law

University of Saskatchewan

Workshop on the Rights to Organize and Bargain Collectively

in Canada and the United States

Toronto, Ontario

February 1-2, 2001

Introduction

One of the most critical determinations which is made by legislatures and by labour tribunals interpreting collective bargaining legislation is that of which persons should be included within the definition of “employee” for the purposes of collective bargaining. By legislative enactment or by statutory interpretation, certain categories of person have been denied access to collective bargaining, or have been included in the collective bargaining process on special conditions. There are various justifications offered for these exclusions and distinctions, but in a general sense the explanations have largely to do with maintaining a clear line between the identities of the parties to collective bargaining.

In this brief presentation, I will be dealing with three of these specialized groups - first line or “middle” managers, professionals and RCMP officers. Because of the complexities in the Canadian environment created by the assignment of the major responsibility for collective bargaining legislation to provincial governments, it is difficult to generalize about the approach which has been taken to these issues in this country.[1] In this presentation, I will not attempt a comprehensive survey of the legislative provisions or findings of labour relations boards concerning these groups. I will be trying to identify some major common themes, and to provide examples of their manifestation in selected jurisdictions.

The criteria which I have alluded to in the title - loyalty and conflict of interest - offer clues to these major themes, and constitute a somewhat fragile thread which ties together the three groups of persons whose status I will be addressing here.

The Odyssey of the Middle Manager

Under the system of collective bargaining adopted in North America, it has been crucial to distinguish between those who are employees and those who employ employees, in order to establish clearly the identity of the parties whose interests are represented at the bargaining table. The North American system, first outlined in the Wagner Act, and later elaborated in numerous Canadian jurisdictions, contemplates the creation of an arms’ length relationship in which employees, represented by a trade union independent of employer influence, can freely contest the terms of employment offered by their employer.

In the modern enterprise, the responsibilities traditionally performed by a small cohort closely identified with the provider of capital - the “employer” - have been broken down, diffused and redistributed to an increasingly wide range of persons, loosely referred to as “management.” Though most people at the executive level no longer have any direct connection with the provision of capital to the enterprise, the choice has been made to consign those in such positions to the “employer” side of the collective bargaining equation.

The classic and much-quoted explanation of this was articulated by the british Columbia Labour Relations Board in the case of Canadian Union of Public Employees v. Corporation ofthe District of Burnaby:[2]

The explanation for this management exemption is not hard to find. The point of the statute is to foster collective bargaining between employers and unions. True bargaining requires an arms’ length relationship between the two sides, each of which is organized in a manner which will best achieve its interests. For the more efficient operation of the enterprise, the employer establishes a hierarchy in which some people at the top have the authority to direct the efforts of those nearer the bottom. To achieve countervailing power to that of the employer, employees organize themselves into unions in which the bargaining power of all is shared and exercised in the way the majority directs. Somewhere in between these competing groups are those in management - on the one hand an employee equally dependent on the enterprise for his livelihood, but on the other hand wielding substantial power over the working life of those employees under him. The British Columbia Legislature, following the path of all other labour legislation in North America, has decided that in the tug of these two competing forces, management must be assigned to the side of the employer.

As this decision suggests, the choice of legislators across Canada has been to assign those performing management functions to the side of the employer for collective bargaining purposes, and thus to deny them access to representation of their own interests through trade unions. As the District of Burnaby decision went on to say:

The rationale for that decision is obvious as far as the employer is concerned. It wants to have the undivided loyalty of its senior people who are responsible for seeing that the work gets done and the terms of the collective agreement are adhered to. Their decisions can have important effects on the economic lives of employees, e.g. individuals who may be disciplined for ‘cause’ or passed over for promotion on the grounds of their ‘ability’. The employer does not want management’s identification with its interests diluted by participation in the activities of the employee’s union.

The exclusion from the definition of those performing managerial functions from the definition of “employee” in collective bargaining legislation has forced labour relations boards to spend considerable time considering what kinds of responsibilities constitute managerial functions, and to reconsider the rationale for placing any particular position in the excluded category. This has become particularly complicated in the complex structures of large organizations, where a huge range of reporting relationships and decision-making systems may exist. Among the criteria which labour relations boards commonly examine in making the determination as to whether someone is an employee are authority to make independent decisions, to impose discipline, to hire or fire employees, to direct the work of employees, and to make decisions which have consequences in the industrial relations context. In addition, boards often consider whether the responsibilities associated with a position include assisting with the setting of general policy in the institution, or with the determination of fiscal direction and budgetary allocations.

Labour relations boards have generally made it clear that the mere fact that a person has been assigned minor supervisory duties or authority to impose trivial disciplinary sanctions, or has been entrusted with sensitive information or asked to exercise judgment based on professional expertise, does not warrant the exclusion of the position from the bargaining unit. In complex organizations, it has proved difficult to determine where managerial characteristics begin and end. Labour relations boards have concentrated on scrutinizing those functions which have the most direct impact on labour relations issues - hiring, firing, discipline and involvement in collective bargaining - as the most reliable clues as to whether a person should be excluded as a manager.[3]

Though labour relations boards have alluded to a long list of factual indicators which may assist in the determination as to whether someone is an employee, they have continued to keep in sight the overall rationale for the exclusions, which has been seen primarily in terms of the concept of conflict of interest. The District of Burnaby decision provides an example of the articulation of this concept: if the duties associated with a position could have a significant impact on the terms and conditions of employment of other employees, it would create a conflict of interest to include the person holding the position in the same bargaining unit with those other employees. From the point of view of the employer, it would excessively test the loyalty to the interests of the enterprise of the person holding the position.

Though these ideas have largely been connected with duties specifically bearing on terms and conditions of employment, labour relations boards have also applied the managerial exclusion in situations where the position at issues has a significant policy-making component. In Vancouver General Hospital v. British Columbia Nurses’ Union,[4] the British Columbia board considered the status of members of the “management team”. Even where these persons might have no direct involvement in industrial relations issues, the board concluded that it was necessary, for the reasons set out in the District of Burnaby case, for an employer to have confidence in their loyalty.

The dilemma noted by the board in the District of Burnaby decision continued to trouble commentators on collective bargaining. Though people in modern bureaucratic organizations may have supervisory, disciplinary or co-ordinating responsibilities, many of them are no more able than the employees they supervise to bargain effectively with the employer on an individual basis. This concern has led labour relations boards to be cautious about interpreting job descriptions as being indicative of true management status, and it has led, in some jurisdictions to legislative formulations which require that someone “primarily” perform managerial functions.[5]

In the 1960's, the Government of Canada established the Woods Task Force to consider a range of industrial relations issues in the federal jurisdiction. In addition to providing the basis for significant legislative change at the federal level, the Woods Task Force left a lasting legacy of influential commentary on many issues. In the course of their work the Task Force considered the situation of supervisors and middle managers, and made recommendations concerning the legislative approach which should be taken to resolving the dilemma referred to above. In their report, the Task Force commented as follows:[6]

In some industries extensive exclusions from bargaining units have been made on the ground that individuals were exercising management functions of were in a confidential capacity respecting labour relations. Some exclusions may be justified to avoid conflicts of interest which are implicit in a situation were a union bargains with management respecting a unit that include managerial as well as non-managerial personnel. Nevertheless, the exclusions deny these persons access to the normal processes of collective bargaining. In our view, the exclusions should be held to a minimum.

Employees appropriately excluded on these grounds are effectively denied access to any form of collective bargaining. This is unjust in the case of supervisory and junior managerial employees. We recommend, therefore, that the statutory right of collective bargaining be extended to these employees, subject to their being placed in separate bargaining units and in separate unions, and provided further that these unions not be permitted to affiliate with other unions or labour organizations except those composed exclusively of similar types of employees. We would not extend these formal collective bargaining rights to middle and senior levels of management, on the ground that the extension would be incompatible with efficient management and the economic welfare of the country.

In subsequent discussion of these issues by legislators and labour relations boards, there has been variation in the terms used, and in the significance accorded to those terms. Essentially the pattern which was accepted in many jurisdictions in the 1970's was to recognise the appropriateness of bargaining units composed of or containing persons whose duties were, in whole or in part, of a supervisory nature. This was accomplished either by legislative amendment specifically providing for this, as was the case with the Canada Labour Code, or through the exercise by labour relations boards of their general jurisdiction to determine the appropriateness of bargaining units. Notwithstanding the careful differentiation made in the report of the Woods Task Force between “junior” managers and “middle” managers, bargaining units which have been created in this way have generally been referred to as “middle management” bargaining units.

The general rationale offered for the acceptance of such bargaining units has been that suggested in the Woods report - that there is a stratum of employees whose presence in a bargaining unit composed of other employees may give rise to a conflict of interest, but whose own statue vis à vis the employer may be characterized by the same imbalance of bargaining power which is the premise for the creation of the collective bargaining system.

In United Steelworkers of America v. Cominco,[7] the Canada Labour Relations Board, made the following comment:

In this context, it is no longer apposite to view the conflict of interest rationale for the managerial exclusion in terms of sworn oaths of membership in unions and unswerving loyalty to the brotherhood of membership. These terms are clearly outdated. The potential conflict of interest to be considered is one between employment responsibilities and the union as an instrument for collective bargaining in a climate where there is legal protection for the individual in his relationship to the union both as bargaining agent and organization. To say because a person is the sole supervisor present at a time or place creates a conflict because he must be the “management presence” is to think of conflicting loyalties in a outdated framework. Many employees in innumerable circumstances act alone and perform responsible tasks. The fact that they also engage in collective bargaining has no impact on their loyalty to their employer or dedication to their job. Supervision by its nature has always required persons to act as the final on-the-site authority.

Throughout the 1970's middle management bargaining units were certified in a number of Canadian jurisdictions, and were particularly popular in the context of large-scale public sector employment - the federal and provincial public service, municipal government, health care, police and fire services, universities or Crown corporations.

Though the formation of middle management bargaining units seemed to stagnate in the 1980's, there seemed to be a reawakening of interest in them in the 1990's, perhaps because of the reconfiguration of public services during this period, and the further flattening and diffusion of institutional decision-making authority.

Despite the evidence in legislative provisions and in the jurisprudence of labour relations boards of a continued acceptance of the basic rationale for these units, [8] there continues to be some uncertainty about the precise nature of the decision which boards are making when they recognize the legitimacy of such a bargaining unit. It is unclear whether it is necessary to make a definitive finding as to whether the incumbent of a particular position is or is not an “employee” in order to permit the creation of a middle management bargaining unit, or whether such persons have a dual status - as managers for some purposes and employees for others.

Examination of several decisions of the Canada Labour Relations Board provides an interesting illustration of the debate over this question. In Telephone Supervisors’ Association of British Columbia v. British Columbia Telephone Company, [9] the comments of the board illustrate the difficulty of pinning down the nature of the determination which is being made:

Since 1973, the Canada Labour Code expressly provides that

125(4) Where a trade union applies for certification as the bargaining agent for a unit comprised of or including employees whose duties include the supervision of other employees, the Board may, subject tp subsection (2), determine that the unit proposed in the application

is appropriate for collective bargaining.

At the very least, this provision indicates that an employee “whose duties include the supervision of other employees” does not necessarily perform management functions, and may be an “employee”. This provision goes further, however. It expressly empowers the Board to take into consideration, when determining a unit appropriate for collective bargaining, the fact that some employees may not be “ordinary employees” because their duties may include the supervision of other employees. In so doing, the Code accommodates what is now a familiar reality. Particularly in a large enterprise, many persons may wield some measure of authority over other employees without necessarily performing management functions such as would warrant their being excluded from the protection and benefits of the Code. Yet, in some cases, the nature of their work may be such that they cannot and should not be included in the same bargaining unit as the employees they supervise. To include them in the same unit might make it difficult if not impossible for them to continue to perform their job effectively. Their presence in a bargaining unit of employees they supervise might also inhibit the employees in the exercise of their right under the Code. These are undoubtedly important considerations. Yet, they need not only be resolved by a ruling that a person is not an “employee” with resulting deprivation of the protection of the Code. As long as the persons involved do not truly perform “management functions” these legitimate interests can be accommodated by the creation, where this is appropriate, of separate “supervisory” units.

In the last two sentences of this passage, the board intimates that the determination of whether someone is an “employee” and an examination of whether they “truly perform management functions” are two different things. Yet, under circumstances where the creation of a middle management unit is not at issue, the question of whether someone “truly perform[s] management functions” is the essential inquiry which will lead to a conclusion as to whether someone is an “employee.”

In a other decision, in International Longshoremen’s and Warehousemen’s Union, Ship and Dock Foremen v. Western Stevedoring Company Limited,[10] the board appeared to focus on this idea in a slightly different way - not by applying the yardstick of whether someone “truly performs management functions,” but by suggesting that there are variations of nuance and balance to be considered in deciding whether someone is a manager.[11] In this decision, the board said:

The Board therefore wishes to emphasize that although it agrees in part with the Argument of Counsel for the Respondent that a key to resolving this case is in a very close analysis of the degree of performance of management functions by the persons sought to be represented by the Applicant, degree meaning both “intensity” and “frequency,” intensity in any one function and also in the nature of the overall functions performed, this is only one of the elements of the solution.