03: Economic, Social, and Political Environments

How Some Companies Stay Union Free

May 21, 2020 by rmcfadden

The goal of not becoming unionized in an organization is an understandable one. From the perspective of an HR professional, there is flexibility in a non-union work environment; however, being a specialist in HR and LR for over thirty years has led me to the conclusion that management gets the union it deserves. Applying some basic HR practices and programs can be beneficial in reducing the risk of unionization, but it does not guarantee it.

Hebdon Brown, in his book Industrial Relations in Canada, outlines four management responses to a possible unionization drive:

Union Acceptance
Union Resistance
Union Removal
Union Substitution

Most companies will respond in one of the four ways listed above. I am going to focus on strategy number three, Union Removal.

Many of you have heard of the concept of Moore’s Law of Technology, which states that the speed and capability of computers can be expected to double every two years. We have all seen this in action as we made advancements from the large personal computer to the compact processing power of an Apple Watch. These advancements would not have been possible without the concept of Moore’s Law of Technology.

I am going to suggest a new law, with respect to unionization, called, “Rick’s Law of Union Avoidance.” The Law of Union Avoidance is not scientific; in fact, it is very antidotal as the data only has supporting research of n = 2. Nevertheless, his Law of Union Avoidance is the inverse of Moore’s Law of Technology, and shows that as the gig economy increases, the speed of union avoidance will double. My supporting research is as follows:

A Walmart Store was unionized in Jonquière, Quebec in 2004; six months later, the Walmart head office decided to close its operations and shutter the new store.
When Foodora (an app-based food delivery company) was unionized in 2020 in Ontario, their head office decided to shutter its operations after only three months.

As you can see, it took Walmart six months from union certification to close its store and Foodora only three months to close its business after union certification. The speed of a company’s closing down after unionization is speeding up, thus Rick’s Law of Union Avoidance.

Governments, and how they design and enforce labour laws, have a dramatic impact on overall union density rates in the workforce. This can be illustrated easily if we compare unionization rates in Canada and the United States. Canada, which has more positive union certification laws than the US, has a unionization rate of approximately 30% whereas the unionization rates in the US are approximately 10%. Essentially, what companies can and cannot do with respect to accepting or rejecting unions is very jurisdictionally dependent.

Discussion Questions:

1. Research the union certification process in Quebec and compare it to two other Canadian provinces. Create a chart that shows the similarities and differences in the union certification process for all three provinces.

2. Imagine you are an HR employee of an organization that wants to open a new manufacturing plant in Canada. Prepare a presentation that will explain to your VP of HR which provinces would be most susceptible to unionization.

3. Compare and contrast the American concept of a “Right to Work State” versus the union certification process in your local jurisdiction.

Independent versus Dependent

March 10, 2020 by rmcfadden

When HR professionals see the words “independent versus dependent,” it may give many of them vague flashbacks to a psychology or statistics course that they took, but all HR professionals should brush up on these terms, because they are vitally important in the new world of gig employment.

Let’s refresh our memory banks on what an independent versus dependent contractor is in the HR world. According to the Ontario Ministry of Labour (MOL), an “independent contractor” is defined as the following:

“An independent contractor is someone who is in business for themselves. An individual may be considered an independent contractor, and not covered by the [Employment Standards Act], when at least some of the following applies:

the business can end the individual’s contract for services, but cannot discipline the individual
the individual:
- has the opportunity to make a profit and has a risk of losing money from the work
- determines how, when or where the work is performed
- decides whether to subcontract some of the work”

It is important that HR professionals know the status of individuals doing work or providing services for their organization. They need to determine if the employees are independent or dependent contractors, as each category has significant laws and liabilities that pertain to them.

According to the Ontario Labour Relations Act, 1995 (LRA), a “dependent contractor” is defined as:

“A person who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor.”

The key wording to note from the definition above is “more closely resembling the relationship of an employee.” It is that wording that makes all the difference and places legal liabilities on the employers to the employees, such as ensuring minimum wage, vacation pay, and safety.

There was a recent ruling by the Ontario Labour Relations Board (OLRB) that Foodora Workers were to be considered dependent contractors and not independent contractors.

This was a case with a ruling that was precedent setting, similar to the one in California, where Uber drivers were to be considered employees and not independent contractors.

This new OLRB ruling allows Foodora workers the right to unionize, and if the union is successful in organizing Foodora workers, it may drastically change employees’ rights and benefits, not only for Foodora workers but all gig economy workers in Canada.

All HR professionals should brush up on the legal definitions of “employee,” “independent contractor,” and “dependent contractor” in their jurisdiction, and conduct an audit to see if there could be potential liabilities in the near future for their organization.

Discussion Questions:

1. Research the Labour Relations laws in your jurisdiction. Identify the definitions of “employee,” “independent contractor,” and “dependent contractor.” Prepare a three-minute presentation, which highlights the differences.

2. Imagine you have just been hired by Uber to review the latest OLRB ruling on Foodora workers. What recommendations would you make to the senior leadership HR team at Uber to help them reduce their legal HR liabilities?

Politics & Progress in BC

November 4, 2019 by esoostar

The influence of provincial politics on the labour relations agenda appears to be highly active in the current legislative landscape across Canada. Ontario and Alberta have experienced multiple changes impacting legislation and workers through recent governing party changes. British Columbia has now entered the scene through the recent introduction of amendments to its Labour Relations Code.

In the spring of 2019, the NDP government in British Columbia announced significant changes to this particular piece of legislation, which had not been amended since 1992. The provincial labour minister, Harry Bains, spoke to the upcoming changes as noted through various news outlets and media campaigns.

Click here to read the CBC’s update on the Labour Relations Code changes in BC.

Out of all of the proposed changes, it is interesting to note that the ruling government in BC is looking to remove the ‘essential service’ status of public education in the province. This means that the teachers’ union in the province would, once again, have the right to strike as part of the collective bargaining process. The history between previous governments and the BC Teachers’ Federation, has been bitter and acrimonious, to say the least. For over 15 years, the two parties were locked in several collective bargaining disputes, including the longest strike in the province’s history in 2014, which went all the way to the Supreme Court of Canada.

Click here for information on the nature of the disputes and 15 year timeline.

As noted in the timeline summary, the current collective agreement between the government and the federation is due to expire in 2019. The government’s proposed changes should allow the parties to have more freedom to bargain through the removal of the essential services designation for public education sector workers. While the right to strike may be curtailed (as noted in the proposed changes – the Teachers’ Federation would still need to ‘meet a test through the provincial labour board in order to take strike action’), the removal of the designation does not seem to be a mere coincidence. As the parties are set to begin the bargaining process, the changes to the legislation impacting the right to bargain and the right to strike seem to be lining up at the same time. Whether or not all of these pieces will merge and result in harmonious labour relations between historically bitter parties, remains to be seen.

Discussion Questions:

Which services are designated as ‘essential’ under provincial and federal labour legislation across Canada?
What is the standard for a service to be designated as ‘essential’?
Why is the right to strike curtailed for ‘essential services’?
Do you agree or disagree that public education should be declared an essential service? Explain your rationale.

Socialism in the U.S.A.

October 25, 2019 by rmcfadden

Disney is the model for capitalism, but is it becoming socialistic?

Since the rise of the 1% social movements, the growing trend of income inequality and the new economic reality is perplexing economists (very low unemployment rates but very little average workers’ wage increases). Now the granddaughter of Walter Disney, Abigail, is trying to get Disney’s executives to see the light and share the wealth.

According to a Fortune magazine article, Disney’s CEO makes over $65 million a year – which is 1,400 times the wage of an average Disney workers’ wage. To quote one of Abigail Disney’s tweets:

“By any objective measure a pay ratio over a thousand is insane.”

Abigail Disney is urging all Disney executives to redistribute 50% of their performance bonuses to the some of the lowest paid workers at Disney.

If that is not an affront to U.S. capitalist systems, I do not know what is.

However, this may be a wake-up call for the U.S. to rethink its position on executive pay. An oppressed group will always rise up against their oppressor. It may come quickly or it may take 800 years like it did to overthrow the Roman Empire.

Some think the U.S. is on the verge of a social democratic uprising, particularity with the new political leaders such as Ilhan Omar and Alexandria Ocasio-Cortez.

Perhaps it is not about a political and economic revolution, perhaps it is about fairness – specifically wage fairness. HR departments could take a lead role in developing fair compensation packages that are reflective of the needs of workers, executives, and shareholders.

When will that happen? Will Disney be the new leader of the Social Democrat movement in the U.S.? Will they take on capitalism and convince those who have more of the wealth to share the wealth with those who don’t?

Discussion questions

What are your thoughts on the gap between executive pay and the average worker’s pay?

Should governments get involved and create legislation that limits the income gap between executives and average workers? Discuss the pros and cons of such legislation.

What should HR departments do to help address the income gap issue?