The long reach of LOU-8: Toronto-area union contractors’ masonry agreement stretches across the province

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CaDCR staff writer

A local Letter of Understanding (LOU) between unionized masonry contractors in the GTA and the Labourers International Union of North America (LIUNA) Local 183 has evolved into a wide-ranging collective bargaining power shift in favour of the union that is impacting contractors and projects throughout Ontario.

McMillan LLP labour lawyers Patrick Groom and Victor Kim outlined the saga of “LOU 8” between the Masonry Contractors’ Association of Toronto (MCAT) and the union at the Ontario General Contractors’ Association (OGCA) symposium last week.

The agreement, originally intended for several Ontario Labour Relations Board (OLRB) geographical areas within the GTA as well as central and southern Ontario, states that “unions are entitled to direct that an MCAT contractor redeploy its work force away from the project(s) of a ‘non-union builder’ to the projects of a unionized builder.”

In addition, under the LOU 8 agreement:

  • Grievances may be filed against contractors for failure to comply with re-deployment; and
  • Damages of $15,000 for each day the contractor is in breach and $1,000 per day for each worker the contractor has assigned to the job in violation of LOU 8.
McMillan LLP labour lawyers Patrick Groom and Victor Kim
McMillan LLP labour lawyers Patrick Groom and Victor Kim deliver their observations at the OGCA Symposium

The lawyers told the OGCA audience that the union has discovered it can extend its influence far beyond the original LOU 8 scope – and, it seems, the OLRB has limited power to reign in these extensions – causing significant project delays, massive cost overruns, and major legal expenses in markets as far away as Ottawa.

As an example, one case involving the OLRB and LOU 8 involves Baycliffe Homes, with two small residential projects – one in Ajax (Board Area 8 and subject to the LOU) and the second in Wasaga Beach (in Board Area 18, not originally part of the LOU 8 zone).

The builder contracted with a unionized masonry contractor for masonry and brickwork at the Ajax project, but decided to use a non-union contractor in Wasaga Beach.

Unfortunately, the unionized contractor followed the union’s request under LOU 8 to not deploy its workers to the Ajax site. The non-deployment would only be resolved, according to the union, if Baycliffe fired its non-union contractor and hired the unionized contractor to also work at Wasaga Beach.

“LIUNA threatened CJM (the unionized masonry contractor) with a $5,000 fine per day if CJM commenced work at Baycliffe Ajax project,” the lawyers observed in their presentation.

According to the OLRB, the former union representative Cesar Rodrigues “alleged that Baycliffe had given the Wasaga job to a Local 183 masonry contractor, RiverValley Masonry Group Ltd. (RiverValley) but then ‘pulled it’.”

The OLRB also noted that “Mr. Rodrigues wanted RiverValley to replace Mendes (the non-union contractor). Mr. Rodrigues vowed that Baycliffe would not get any Local 183 contractor to work at Ajax unless it ‘fired Mendes’.”

Baycliffe Homes sought OLRB intervention, calling the situation an “illegal strike”.

But the Labour Board declined to agree.

“This is a most unusual case,” the ORLB decision says. “There were not picket lines. There were no employees pulled off the job. There were no flyers, letters or emails given to employees by any union representative. There were no telephone calls or in-person conversations between union representatives and employees either.”

The fact that the labour redeployment under LOU 8 had the same practical effect as an illegal strike didn’t sway the OLRB because:

  • Actions (were) not taken by CJM employees, rather by CJM management;
  • CJM employees did not cease work or refuse work; and
  • CJM management made a business decision to comply with Local 183’s demand to cease performing work on the Ajax project.

Groom and Kim then outlined the story of a second case – involving a non-union EIFS/stucco contractor not bound to any union.

In this situation, builders assigned masonry work to unionized masonry contractors, while subbing out the apparently unrelated EIFS/Stucco work on “a non-union basis”.

However, “LIUNA told the builders that they would ‘lose their bricklayers’ if they did not fire Ras-Con (the non-union EIFS/stucco contractor) from the job and replace Ras-Con with union EIFS/stucco contractors.

Builders were caught between a rock and hard place; either get rid of the non-union contractor (even though it was performing work outside of the LOU-8 scope), or end up without any masonry work being done on the site.

Ras-Con went to the OLRB, saying it was the victim of an “illegal strike” but again, the labour board observed that there wasn’t a strike “because employees had not ceased to work on their own initiative but rather, were directed by their employees to discontinue.”

“Strikes as defined by the Act ‘pertains to the actions of employees, not the action of an employer’ and ‘there can be no strike where the relevant employer directs or permits the employees to stop performing work’.”

Ras-Con won a partial (and effectively meaningless) victory when the labour board ruled that “LIUNA had threatened an unlawful strike or committed acts that would lead others to engage in an unlawful site,” and accordingly violated the Labour Relations Act.

Declaratory remedies were ordered. “This was technically successful,” the lawyers observed.  “But did it force the unions from engaging in similar conduct?”

In a third case reported by Kim and Groom, the story involves one of Canada’s largest general contractors, EllisDon.

In this case, developer Westbank engaged EllisDon as contractor for the Mirvish project in Toronto, a large residential and commercial project. EllisDon also had a contract to work a high rise residential project on the Don Lands, both within the LOU 8 zone.

EllisDon subcontracted masonry work at both of these GTA-area projects to the Limen Group, a unionized masonry contractor, while the developer Westbank “was not bound to any union at the time.”

While these projects were clearly within the scope of LOU 8, and EllisDon properly contracted with a union contractor, LIUNA decided to flex its muscles.

After unionized Limen Group started on its work, Limen Group forwarded a draft Minutes of Settlement (MOS) from Local 183 to EllisDon and Westbank.

The MOS would require EllisDon and Westbank respectively, to subcontract all masonry work in Ontario (including the projects outside of Board Area 8) to MCAT contractors.

“The MOS “restricted self-performing masonry work to ‘level the playing field’ and required ‘payment of a ‘fine’ or ‘premium’ where MCAT contractors are not available locally.”

EllisDon and Westbank refused to sign the MOS, so the union contractor Limen Group ceased its work on both of its GTA projects, saying it had “no choice” in the matter.

“Among the threats made by Local 183 were hefty fines for both contractor and union members and suspension of union members.”

To enforce its position, LIUNA, Local 183 “sent a letter MCAT directing it to inform MCAT contractors not to perform work for EllisDon or Westbank without prior written permission of Local 183.

Groom and Kim said the case with its various complications made its way to the courts and the OLRB. In one situation, EllisDon convinced the unionized contractor to return to the Don Lands Project (as it was a high-profile affordable housing project) but “Local 183 attended the site the same day Limen Group workers returned and directed them to leave.”

“This specific action was found to be an “illegal strike” by the OLRB” – but it took a few weeks for the OLRB to render its decision.

In the end, after plenty of back and forth filings, litigation and arbitration, the matter was resolved with Limen Group returning to the relevant sites.

In a final case reported by the lawyers, the union tried to extend its power to Ottawa with Mattamy Homes, which was building low rise houses there – well outside of the LOU 8 area.

In this case, the OLRB granted an injunction to Mattamy, “considering the urgency of the matter and risk of irreparable harm.”

Kim and Groom suggest that contractors and developers should be well aware of the risks province-wide behind the local union agreement in the GTA and southern/central Ontario contractors.

Their advice includes:

  • Speak to your labour relations counsel before diving in;
  • Consider preventative labour education with your labour relations counsel;
  • Consider engaging another unionized work force if a non-unionized one is not available. (For example, the Carpenters Union has some power to stand up to the LOU 8); and
  • Consider the costs and benefits of redesign (to remove or reduce work within the scope of LOU 8).

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