Friday, July 15, 2011

Unionized Employees: Court isn't for you

This isn't new, but every so often a new case pops up - and is dealt with quite quickly - involving a unionized employee (the technical term is "bargaining unit member") trying to sue his employer.

Under most circumstances, that's impossible. Collective agreements must provide for a grievance process, and for grievance arbitration. So if somebody who is a member of a bargaining unit gets terminated, then he has to go to his union rep to file a grievance; you can't go retain a lawyer to try to sidestep the union and sue the employer directly.

The underlying principle is that, once a group of employees forms a bargaining unit, that group of employees no longer has a direct relationship with the employer. Rather, they have a relationship with the union; the union has the relationship with the employer.

Nor can such an employee sue his union if he isn't happy with the job it has done representing his interests, generally speaking. Under the Labour Relations Act, the Ontario Labour Relations Board has exclusive jurisdiction over most such issues. There is a select number of issues that an employee can raise directly with his employer at the OLRB, but most issues must go through the grievance process, and an employee displeased with the Union must bring a "DFR" (Duty of Fair Representation) application against the Union. The trouble with DFRs is that the Union has a very wide latitude in deciding how best to represent the interests of the bargaining unit on the whole. If it decides that the bargaining unit can best be served on the whole by refusing to advance your overtime grievance in order to not taint the next round of bargaining, then you're pretty much stuck unless you can establish that the Union's actions were "arbitrary, discriminatory, or in bad faith". The exception is with discharge grievances: A Union generally can't refuse to grieve a discharge grievance, because the consequence of that refusal is that the employee is no longer part of the bargaining unit and - following the above example - won't have any of the benefits that may be obtained in the next round of bargaining.

In law, however, every rule has its exceptions. The OLRB's jurisdiction specifically excludes certain types of employee associations, such as fire associations. I have had occasion to opine that a Court proceeding might be instituted by a firefighter against the fire association, under the right circumstances, in a similar fashion to a DFR application. As far as I can tell, however, that hasn't happened. It's peripheral, in any event.

Moving along, consider the recent Paonessa v. Lifemark Health Management Inc. case. Health management companies are essentially external human resources departments working with disabled employees to assist in assessing them and facilitating an accelerated return to work. (Essentially, they track disabled employees, determine the length of treatment, limitations, and accommodations which might be made to phase them back into the workplace asap.)

The Facts

The employee was off work, receiving disability benefits, for three and a half years. At that point, the employer retained Lifemark to conduct a Functional Abilities Evaluation (FAE). The assessor concluded that the employee was not capable of returning to work, and the employer proceeded to discharge the employee.

The employee grieved the discharge, settled it on terms involving a return to work, then was discharged again following an alleged failure on her part to comply with the terms of the settlement. She grieved the second discharge, and settled again with the employer.

Then she proceeded to sue Lifemark, alleging interference with economic relations. Lifemark turned around and claimed for indemnification against the employer.

The Issues

The biggest and most obvious problem with suing Lifemark is this: Any settlement she would have agreed to with the employer would almost certainly have included the execution of a "Full and Final Release" including a clause preventing the employee from initiating proceedings against the employer or any other person who might seek indemnification from the employer.

When I explain these clauses to my clients, I put it this way: Suppose I hire a general contractor to renovate my home, and he subcontracts to an electrician, who performs his work in a negligent manner, causing me damages. Now suppose I sue the electrician for his negligence, and reach a settlement with him.

After settling with the electrician, imagine that I proceed to sue the general contractor in breach of contract, because he didn't provide the renovations I bought in a good and workmanlike manner. What is he going to do? Well, he'll issue a Third Party Claim against the electrician, saying "It's his fault, so he should have to pay me back for anything I'm required to pay." The electrician, already having settled this matter directly with me, won't be pleased with this turn of events...and would point to the release and say, "Sorry, the statement of claim has to be struck because the plaintiff already has his settlement for anything for which I might be responsible." Ultimately, in this case, the judge similarly finds that the plaintiff had her remedy through the grievance process, so the litigation is an abuse of process.

The other issue in whether or not the action is barred because of the fact that she's a bargaining unit employee. The judge's answer is that the subject matter of this law suit (namely, the conduct of the FAE) is squarely the subject matter of the collective agreement, and therefore the action is barred by the Labour Relations Act.


I don't doubt the correctness of this decision, I think the justice of it is in the right place, and I'm impressed by the judge's clarity in explaining his reasoning...but I'm still left with some nagging concerns: In any other circumstance, there would be the potential for a freestanding action against the organization that administered the FAE, and in the occasional circumstance there might be good reason to sue that organization in addition to the employer. That's not possible for bargaining unit members. So what happens if the organization carrying out the FAE does something beyond what the employer could reasonably be held responsible for in the grievance process?

I think the answer to that question is likely that such a scenario can't be permitted to occur. It cements the agency relationship. If an action against the assessor is statute-barred, then this must have the result that everything the assessor does in carrying out the FAE must be considered actions of the employer, for which the employer may be liable. (Of course, there's nothing stopping the employer from suing the assessor, in the right case.)


This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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