MacIver News Service | Oct. 10, 2018
By M.D. Kittle
MADISON – Small businessman Scott Flaugher fought back against big labor – and won.
And the electrician’s win could eventually be a victory for worker liberty nationwide.
The owner of Colgate-based Veterans Electric in large part prevailed in a lawsuit filed against the electrical contractor by administrators of the various trust funds for Veterans Electric’s union employees, represented by the International Brotherhood of Electrical Workers Local 494.
The litigation, filed in the United States District Court for the Eastern District in Milwaukee, was part of a union harassment and intimidation campaign against Veterans Electric, a veteran-owned, disabled-veteran employee business, Flaugher asserts.
Pension overseers demanded Flaugher turn over personal information of all of his employees, including non-union management and staff. Their claim was that the pension funds are, under the labor agreement with the company, entitled to access of Veterans Electric’s “full books and records” to perform an audit to determine the amounts the company owes the funds.
“The funds allege that they have a legal right to inspect all payroll records of the employer, including the records of employees who are not participants in the funds,” court documents state.
But the collective bargaining agreement clearly states that fund administrators are entitled to documents related to employees “covered by this agreement.” Nonunion employees are not covered.
“These additional employees were management, mid-level and upper-level, and administrative people,” Flaugher told MacIver News Service last week on the Jay Weber Show, on NewsTalk 1130 WISN. “Basically, the union wanted to violate their privacy rights and force me to turn over not only their W-2s with all the payroll information, but names, addresses, social security numbers.”
U.S. Magistrate Judge Nancy Joseph in her ruling wrote that the “plain language” of the collective bargaining agreement “limits the trustees’ audit authority to those employees covered by the agreement.”
“Thus, to the extent an employee is not covered by the CBA, the Funds are not entitled to audit his or her records,” the judge wrote, siding with Veterans Electric.
The judge denied the company’s counterclaim charging the funds administrators with breach of contract. Joseph ruled that the IBEW is party to the collective bargaining agreement, not the pension and its overseers, so Veterans Electric did not show a violation of the agreement.
The case has been plodding along for more than a year.
In 2016, the union pension funds overseers requested, through their accounting firm, a routine audit of Veterans Electric’s employee records, according to court documents. The audit was completed on May 30, 2017. Auditors found a minimal underpayment of $252.30 to the union health and welfare plans, and the company “promptly issued payment.”
The company gave fund managers exactly what was required under the collective bargaining agreement with Local 494: records of employees who are members of the union.
But the fund’s administrators wanted more. They sought information on non-union employees – managers and office staff. Flaugher agreed to provide redacted information, removing personally identifiable information from the nonunion employee records. The trust funds demanded a full release, and sued.
They claim, without apparent evidence, that Flaugher is somehow hiding some employee who should be a member of the union and, thus, entitled to benefits contributions by the employer.
Flaugher earlier this year told MacIver News Service that he was concerned that the trust funds, which, for obvious reasons, are closely tied to the union, would turn over the non-union employee information to the IBEW local and it would be used to target and harass the employees through the union’s recruitment efforts.
He said those fears have been realized.
“They have actually acquired the names and addresses of all of the licensed electricians and determined which ones are not union members,” Flaugher said. “And they have sent a two-man crew from the union hall to visit the residences of all these nonunion electricians in an effort to encourage them to join the union.”
The union representatives, Flaugher said, showed up at the home of a Veterans Electric management employee, when the employee was at work.
“He lives in a secluded area, and has got a long driveway. He’s got a sign up that says, ‘No Trespassing.’ That did not stop these union individuals. They had a nice, little chat with the (employee’s) wife while he was not around and working that day,” Flaugher said.
An official from the IBEW Local did not return a call requesting comment. Robert Rayburn, a trustee of the funds, declined to comment on the lawsuit.
In a curious decision, the federal judge rejected Veterans Electric’s motion seeking attorneys’ fees. In her ruling, Joseph described as “a stretch” the pension plan managers’ argument that “it has been long settled in the courts that the Funds have a right to inspect all payroll records of the employer, including the records of employees who are not Fund Participants.” Still, the judge asserts the funds’ “incorrect legal position” was not wholly without merit.
That argument would seem to defy a higher court decision.
Flaugher points to a similar case – Sullivan v. William Randolph Inc. – decided by the U.S. Court of Appeals for the Seventh Circuit. The court upheld a lower court ruling in favor of the defendant, a construction company, awarding it $56,000 in attorney’s fees.
Big labor in the Sullivan case also argued that they had to sue to discover whether the construction company owed contributions to a union pension fund, because the business refused to cooperate with an audit. There was, however, nothing to back up that claim in the court record.
“They have confused assertion with evidence,” the court wrote of the plaintiffs. “One cannot sue, without courting sanctions, unless one has grounds to believe that one has been injured by a wrong committed by the person who wants to sue.”
Worker liberty advocates say unions have been employing such tricks in an effort to tap into personal information. Flaugher’s case could help stop these legal gimmicks in their tracks.
Flaugher said he will appeal to the 7th Circuit. He claims he has spent about $55,000 trying to defend his company from big labor.
The small business owner, a Gulf War veteran, said it’s particularly frustrating that the union and its surrogates would target a company that has taken in so many veterans, many suffering with post-traumatic stress disorder from their service in war.
“The union has always called us (and asked), ‘Would you give this veteran a chance?’ And we’ve always done that,” Flaugher said, adding that the lawsuit is a strange way of saying thanks.
“They’ve sued me for a year and $55,000 over nothing.”