Controversy in B.C. Employment Standards

If employment 
standards aren’t enforced, will B.C. 
lose its honest employers?

It’s perhaps not surprising that a search for one of Vancouver’s major roofing contractors leads to a less-than-picturesque part of town. Speeding transport trucks rattle the windows of the repair shops and equipment suppliers that line East Kent Avenue North, a two-lane road running directly underneath the Knight Street Bridge. A railway lies to one side, a steam-belching factory next to that, and the Fraser River somewhere beyond. There’s a wicked tang in the air, maybe from the nearby fish plant; it smells like someone’s cooking a few tonnes of seaweed in ammonia.

Richard Skujins, co-owner of Cambie Roofing and Drainage Contractors Ltd., works out of a small spotless office across the road from the railway. He’s spent all his working life in roofing, taking after his father, uncle and grandfather. But while the business has been good to the family, it also has an ugly side. Roofing is intensely competitive, and the sector is rife with fly-by-night operators who flaunt workplace standards to score contracts. And for someone like Skujins, who prides himself on his company’s good relationship with workers, that’s a growing problem.

“I bet you we’re the only company out there that pays overtime,” says the fit, confident 40-year-old, straight-faced under the brim of a ball cap. “It does take a part of our bottom line. Absolutely.”


Cambie Roofing employs between 80 and 130 workers, depending on the season, and treating them right has been part of the corporate culture since his father, Knute, bought the company about 40 years ago, Skujins says. It’s the kind of place where workers can expect Christmas parties and company barbecues. But that kind of tradition can put a financial strain on a company in today’s hyper­competitive marketplace. 


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Where there might have been three or four companies bidding on roofing work a few years ago, today there might be 15, Skujins says. And some of the bids are coming in suspiciously low. As Skujins explains it, there are really only two big costs in roofing: materials and labour, and material costs are roughly the same for everyone. So when he puts in a $400,000 bid and a competitor undercuts him by a full $100,000, it raises some serious questions in his mind about what the competition is paying its workers – and puts him in a tough spot.


“We really have to promote why somebody should use us instead of them,” Skujins says. “There are some people who don’t care; it’s just bottom line.”


Of course, paying overtime shouldn’t even be a business decision in the first place; it’s required by law. But various sectors of the B.C. economy are rife with widespread violations when it comes to employment standards – the provincial laws that spell out such requirements as minimum wage, overtime pay and vacation. The construction industry is a particularly bad example, beset by rogue operators who flaunt labour laws, but similar situations can be found in the restaurant, hotel and agricultural sectors as well. The extent of the problem isn’t fully known because much of what goes on is underground and impossible to measure, but industry insiders and labour experts fear the problem is getting worse as competition in construction (and elsewhere) heats up and government oversight falls further behind. 


Critics of the government’s enforcement efforts point to two significant changes in the past nine years: dramatic cuts to B.C.’s public service and amendments to the Employment Standards Act, starting in 2002, which made the rules more flexible for employers and emphasized self-regulation. 


Enforcement of the act falls on the Employment Standards Branch (ESB), part of the provincial Ministry of Labour. In the 2001 public-service cuts, the ESB lost a third of its staff and half of its offices. Changes to the act affected how the ESB carried out its work, notably with the introduction of Self-Help Kits in 2002. To make a complaint, workers now have to outline their grievances in a nine-page questionnaire and present it to their employer. The ESB only gets involved if the two sides can’t resolve things. The number of complaints to the branch plummeted, dropping 60 per cent between 2002 and 2004. The total in 2009 was still 42 per cent lower than what was reported in 2002, even though the labour force grew by 15 per cent over that time.

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The prevailing wisdom in Victoria in the early 2000s was that reducing government regulation would help employers grow their businesses, create jobs and improve the lot of workers by raising the demand for labour. In May 2002, then minister of labour Graham Bruce put it this way before the B.C. legislature: “Our new era is about liberating our economy and minimizing undue government intervention in people’s lives. It’s about giving employees and employers the tools they need to foster better working relationships and safe, healthy, dynamic workplaces.”


But is this new regime of self-regulation actually working? There are two ways of looking at the drop in complaints to the ESB: either half of the negligent employers in B.C. suddenly wised up and decided to follow the rules, or a lot of violations are going unreported and unenforced. And while there are no empirical data to settle the question, the stories coming out of one industry, construction, do not paint a pretty picture. 


Kevin Chrunik, a slim 26-year-old with a close-cropped beard, is dressed in paint-spattered coveralls when he shows up for our meeting at a café on Vancouver’s noisy Oak Street. He’s on a contract job fixing up a duplex just down the road and has little more than a week to get it in good enough condition to be rented out. He’s agreed to take a short break to share his story. 


In late 2007, Chrunik was one of thousands of workers caught up in B.C.’s pre-Olympic construction boom. He was hired to help grind down the concrete floor of the Canada Line tunnels, which needed to be smooth before the tracks were laid down. “It was a miserable job from the get-go,” Chrunik says. “Conditions were awful down there.” The crews spent all day in the dark, freezing tunnels, with dust so thick they sometimes couldn’t see two feet ahead. They were all given respirators against the particulate air, he says, but the filters could clog in a couple of hours and replacements weren’t always available. Chrunik didn’t complain about workplace safety, even as his health deteriorated. After four months in the tunnels, he came down with a bad cold. His doctor advised him to take a week or two off to recover, afraid that he might be developing pneumonia. His boss wouldn’t hear of it, Chrunik says. He lost his job in January 2008 after he didn’t show up for work. Chrunik didn’t complain about wrongful dismissal either.

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What he did complain about, however, was unpaid wages. Chrunik says he’d been promised $25 an hour but only ever got $20 and never got anything for his overtime, and nothing for vacation, stat holidays and sick days. He figured he was owed more than $3,000 and decided to make an employment standards complaint. At the start, it looked like the process might be a breeze. With the help of a former ESB officer who agreed to help him as an advocate, Chrunik says, he filled out the required Self-Help Kit and sent it to his employer, who didn’t respond. The next step in the process was for both parties to attend a hearing with the ESB officer handling the case and an adjudicator, which took place in June 2008, five months after he was let go. Chrunik says his employer didn’t show, and, without any opposing evidence, the case was decided in Chrunik’s favour, with the ESB awarding him the $3,000. That’s when the easy part ended.


Seven months after the first determination, Chrunik got a letter from the ESB revealing that the officer in charge of his case had issued a new decision overriding the original one, awarding Chrunik only $600. Chrunik says his old employer had produced financial records and timesheets to show that Chrunik wasn’t owed what he claimed, all without his knowledge. While he thinks the documentation was suspect, there was little he could do to disprove it. 


Chrunik decided to appeal that decision, and, after another seven months, written statements from both him and his employer were reviewed by the Employment Standards Tribunal. The tribunal agreed with many of his complaints and sent the case back to the ESB. The whole process was restarted. The most recent determination came in early 2010, two years after Chrunik launched his original complaint. It found that his employer was at fault, but it only awarded Chrunik about $300. He still hasn’t seen any money. 


Early on in this process, Chrunik invited his co-workers to join his complaint, which they could do without much paperwork. None accepted. They were all too afraid of being fired and had no appetite for that kind of struggle, Chrunik says. Today, after more than two years of wrangling with the ESB, he sympathizes. He says now that if he ever finds himself in a similar situation, he won’t bother making a complaint. It’s easier to just move on and find another job. 

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Whether it’s filling out the Self-Help Kit, confronting an employer or actually filing a complaint, Chrunik’s story shows how complicated the whole process can be. And according to Graeme Moore, the former ESB staffer who helped Chrunik with his case, many workers experience even greater difficulties. Moore began a career in the Ministry of Labour as an industrial-relations officer in 1982 and was a program adviser at the ESB until 2002. He now works as a staff representative for CUPE 15 and sometimes serves as an advocate for people going through employment standards complaints.


Most employment standards violations involve vulnerable workers, including low-skilled immigrants or youth, Moore says. Considering that many of their disputes might be for just a few hundred dollars, it’s easy to see why an individual might decide that making a complaint isn’t worth the effort. But violations involving a small amount of money might be common throughout an entire industry, adding up to millions in unpaid wages. That’s why the ESB must take an active role in seeking out problems at a broad level, Moore says, instead of relying on complaints from individuals. But since 2002, this proactive approach has been largely abandoned, he says.


Complaints today are generally handled as mediations, not investigations, Moore says, with workers often pressured to accept settlements worth less than what they might be entitled to. Employers who are found in the wrong are fined, with the fine increasing from $500 to up to $10,000 with subsequent rulings against them. This is supposed to deter bad behaviour. But with low levels of complaints to begin with, and with most complaints ending in settlement, there’s very little incentive for employers to act responsibly, Moore says. 


Moore left the ESB in 2002, disappointed with the direction in which the branch was heading. “The Employment Standards Branch no longer saw itself as enforcing minimum labour standards; it’s gone into the business of resolving wage disputes,” he says. “And with that, we put pay to our responsibility to the free marketplace, which was to protect it from rogue operators.”


Without that protection, a vicious cycle can ensue, he argues. Illegal tactics such as charging construction workers for necessary safety equipment or billing restaurant servers when customers dine and dash become accepted as standard business practice, and companies that try to follow the rules gradually get priced out of the market. 

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A 50-year-old man we’ll call Adam says he fears this is exactly what’s happening in his industry. I meet Adam in the bare-bones boardroom of his company’s offices, nestled in a concrete industrial park that’s largely indistinguishable from hundreds of others scattered across the Lower Mainland. He’s the co-owner of a drywall-and-ceiling-installation business with annual revenues of about $10 million. He spoke to BCBusiness on the condition that his name and that of his company not be published. Adam says he wants to speak openly about the problems he sees in his industry but that doing so could jeopardize his business. Part of the problem lies with the big general contractors that his company relies on for work – contractors, Adam says, who would not look kindly on someone within the industry criticizing their practices. These contractors are partly responsible for falling standards because they don’t hesitate to hire operators who come in quoting suspiciously low prices. You can never be sure how these competitors arrive at their low bids, he says, but – just like in roofing – labour is one of the few big costs.


“From a general-contractor perspective, they can’t ignore those contractors, because the lowest price is the law,” Adam says. “When you put them on the spot and say, ‘You know that that guy was way too low. You know it. Why did you use him?’ This is the quote you’ll hear: ‘If we didn’t, someone else would.’” 


Only a few years ago, when there was more work to go around, there was a good balance in what workers were being paid across the industry, Adam says. But he’s never seen a market drop so suddenly and remain so unpredictable. The number of bidders on a given project has increased dramatically, he says, and the industry has become desperate. There’s no longer consensus as to what constitutes an acceptable working standard, he says: “Where the bottom is, nobody knows.”


It’s sectors like this that need a
comprehensive government enforcement strategy, according to Dave Ages, who held several jobs within the ESB between 1998 and 2002, lastly as the regional manager for the Lower Mainland. Prior to 2002, Ages says, he and his colleagues were striving for a level of enforcement that involved active investigations to ensure consistent standards across whole industries. The ESB has the authority to audit records of any B.C. business, and his team would sometimes go after every company in an entire sector if they suspected widespread violations. 

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Looking back, Ages recalls one particularly successful case his team undertook in the bike-courier business in downtown Vancouver in the mid-’90s. He and a colleague noticed that they were getting a lot of complaints from bike couriers, considering the small size of the industry. So Ages and his partners summoned all of Vancouver’s bike-courier employers to a meeting. Twenty-four heads of companies showed up with their payroll records. They were told that anyone whose records didn’t live up to the standards got a choice: they could either conduct voluntary audits on themselves to find out what they owed or the branch could do it for them. Twenty-two companies were found in violation, and all agreed to audit themselves, saving the Ministry of Labour much time and money. “With half a day’s time from 12 officers, we essentially cleaned up a whole industry,” Ages says.


Many investigations that Ages was a part of were started by complaints from responsible employers who, like Adam and Skujins, were concerned about rogue operators dragging down standards in their sectors. Ages says those meetings could become quite emotional: “I had guys from these companies come to me saying, ‘It kills me to do the things I’m having to do to my employees. It breaks my heart to tell a guy with a family that I have to drop his wages by a couple of bucks, otherwise my company is going to shut down. You’ve got to do something.’”


He helped co-ordinate random audits in problem sectors all across B.C. Officers would audit all the electricians in Prince George, all the plumbers in Nanaimo and so on. The plan was to switch up the sectors and regions over the years so no employer could know whether they would be next. They were trying to develop a template for future enforcement strategies, Ages says. “But that stuff doesn’t happen anymore.” 


After the election of the BC Liberals (which Ages describes as “the new regime of non-investigation and non-enforcement”) and the ensuing government service cuts, many of the ESB’s investigations came to an end. “Then suddenly my job became deciding which third of my staff were going to lose their jobs,” Ages says. He stayed on to carry out the downsizing of his office, then resigned in May 2002. 

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However, the current director of the ESB, Pat Cullinane, emphasizes that the changes implemented in 2002 have made real improvements to employment standards enforcement. For instance, the ESB has increased its efforts in educating both employers about their responsibilities and workers about how they can protect their own rights. The mediation process has also been greatly improved, he says, with an emphasis on getting both parties to present their cases at hearings together. This avoids protracted requests for information that used to drag on for months. The self-help process has probably also helped to clear up complaints that never needed bureaucratic intervention in the first place, he says. “If it was something that was very obvious and straightforward, it could have been rectified with a quick phone call to the employer by the employee.”


The ESB still carries out investigations that don’t originate from a complaint, Cullinane says. However, he says these mainly target individual companies and not broad sectors. The one exception is an ongoing project targeting agriculture, which has involved some 80 payroll audits a year for several years (the ESB conducts about 150 such audits annually). Other examples of active enforcement involve individual companies. In one example provided by Ministry of Labour staff, the branch was getting several complaints from an employment agency accused of charging unfair fees to staff and decided to conduct audits on behalf of all 14 employees; the employer was ultimately required to reimburse them a total of $26,000 and pay a $500 penalty. Another case involved a logging company that had failed to provide severance pay; the branch took up the case on behalf of 78 workers, awarding them about $100,000. 


When asked why the number of complaints to the ESB is down by more than 40 per cent since 2002, Cullinane says he can’t explain exactly what the reason for the drop is. He emphasizes that the number of complaints received by the branch is actually trending up. (Complaints hit a low in 2004 of about 5,000 and have steadily risen since then to about 7,000 in 2009 – still significantly lower than the 12,000 received in 2002.) Cullinane cautions that there have been changes in data-collecting methods that might explain some of the changes in the complaint counts. Changing economic conditions might also be a factor, he says.


“The other possibility of looking at it is, since that time, with the introduction of mandatory penalties, employers are becoming more compliant, therefore there wouldn’t be a need for employees to complain,” he says. “But there’s no way to empirically go in and assess that.”

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The legislative changes brought about in 2002 were based on the idea that workers and employers could assume much of the responsibility for enforcing standards in their own workplaces, and that the role of government could be reduced without negative consequences. And perhaps in some sectors this might be true. In construction, however, those in a position to know are doubtful. 


When Richard Skujins is asked what it would take to get the rest of the roofing industry to follow the same kinds of standards as Cambie Roofing, he says simply, “I think it’s impossible. No one monitors it, and no one makes a big enough stink about it.” While Skujins thinks there will always be clients who will opt for a reputable company rather than a fly-by-night contractor quoting a lower price, he says the sector would be a much better place if everyone followed the same rules – even if it means government has to step in to enforce them. “I think it would be a more profitable business for everybody.”


Adam, the owner of the drywall-ceiling business, agrees that the current self-help process won’t clean up his industry on its own: “I would say that’s extremely unlikely because there are just too many people out of work; they can be replaced quite easily.” He’s hopeful that if the market picks up and the demand for labour grows, workers will start to abandon the less-reputable industry players. But if that doesn’t happen, and soon, he fears his own company might have to start operating at a lower standard in order to compete. 


Of course, he has his own moral standards as well. If he had to start paying a worker who used to make $30 an hour only $15 an hour – something he hears is going on now – he says he’d rather not be in this business. “They can’t feed their families on $15 an hour.”


So what’s the solution then? It’s a tough question for Adam. 


“I don’t like more government regulation. Most of us don’t,” he says. “But realistically, the workers don’t have anywhere else to go, and there’s no way for people who are trying to operate above the line to counter that kind of operation.” 


Does that mean the government has to step in?


“Nobody else is going to do it.”