Surprise, your business is unionized! This is the sort of notification that many employers would be concerned to read, leaving them wondering – what just happened?
Generally, unionizing efforts are apparent to the employer. Unionization only occurs after all relevant workers have had a chance to vote on whether they want to be unionized or sign cards confirming that they want to be unionized.
However, a non-union employer can become unionized without any vote and without any organizing campaign if the Ontario Labour Relations Board determines that it is a related employer or a successor to a unionized business. This does not necessarily require bad intent. It often arises out of structure, history, or overlap that the employer did not view as legally significant.
There are two common paths to this kind of exposure.
The first is successor liability. If a unionized business is sold, transferred, or restructured, bargaining rights can follow the business — even if there is no formal asset sale. The Board looks at whether the core business continues, not how the transaction is labelled. Employers are often surprised to learn that continuing the same work, with the same people or operations, can be enough.
The second is related employer liability. This comes up where two entities operate in related lines of business and the Board concludes they are under common control or direction. The Board has established that the test for common control or direction involves examining several factors, none of which are determinative on their own. These factors include common ownership or financial control, common management, integration of operations, representation to the public as a single integrated enterprise, and centralized control of labour relations.
This risk for sudden unionization was front and centre in the recent decision of
Carpenters’ District Council of Ontario, United Brotherhood of Carpenters and Joiners of America on its own behalf and on behalf of its Local 27, Applicant v Direct Construction Company Limited, and Green Square Inc.
In that case, the union sought to have a non-union general contractor declared unionized because of its relationship with a unionized subcontractor. The union alleged that the two companies were, in substance, operating as one.
Over the course of the 23-day hearing, the union pointed to several facts in support of their application. The general contractor and the subcontractor operated in related lines of work. The owner of the general contractor and the owner of the subcontractor were married. The subcontractor operated out of a location immediately adjacent to the general contractor’s premises, in space owned by the general contractor’s holding company. And the subcontractor received the majority of its work from the general contractor.
From the union’s perspective, this raised concerns that the arrangement allowed the general contractor to benefit from unionized labour while remaining non-union itself, and that bargaining rights were being undermined through corporate structure rather than open avoidance.
If the union had been successful, the consequences would have been significant. The general contractor would have been deemed unionized by operation of law. It would have been bound to the collective agreement, required to hire through the union, pay union wages and benefits, deduct dues — all without any employee vote and without ever agreeing to be unionized.
The Board rejected the union’s argument.
What mattered was who actually ran each business, who controlled labour relations, and whether union bargaining rights had truly been undermined. While the relationship between the general contractor and the subcontractor was close — including family ties, adjacent premises, and a heavy flow of work — the evidence showed that each company was independently run and controlled its own labour relations. The Board also found there was no erosion of bargaining rights. In review, the Board emphasized the Act is not to be used to pull a non-union employer into a bargaining relationship simply because the union would prefer it. As such, the general contractor remained a non-unionized employer.
Christine Ashton, a labour lawyer and partner with our firm, acted for the successful general contractor in this case.
The practical takeaway for business owners in review of this case is straightforward. If you operate multiple entities, have a history with a unionized business, or are considering restructuring, you need to be mindful of how those entities actually function day-to-day. Informal overlap, blurred decision-making, or poorly documented separation can create a risk.
For strategic advice on addressing the above, including handling a potential successor or related employer certification application, please contact our firm.
