MADISON, Wisconsin—A small businessman who employs fellow veterans fought back against big labor and won.
Scott Flaugher’s win in court eventually could be a victory for the freedom of workers and the right to work movement nationwide.
Flaugher, owner of Colgate-based Veterans Electric, in large part prevailed in a lawsuit against the electrical contractor brought by administrators of various trust funds for union employees of his company.
The lawsuit, filed in U.S. District Court for the Eastern District in Milwaukee, was part of a union harassment and intimidation campaign against Veterans Electric and its nonunion employees, Flaugher says.
“Basically,” he said last week, “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.”
The company’s union employees are represented by International Brotherhood of Electrical Workers Local 494.
Pension overseers demanded that Flaugher turn over personal information about all of his employees, including nonunion management and staff.
Twenty of Veterans Electric’s 28 employees belong to the union. Most are veterans, Flaugher said. As a veteran of the Gulf War, he wanted to build a business model focused not only on employing veterans but those disabled during their service.
The pension administrators claimed that, under the labor agreement with the company, they are entitled to access to Veterans Electric’s “full books and records” to perform an audit determining how much 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, midlevel and upper level, and administrative people,” Flaugher, 54, told MacIver News Service last week on “The Jay Weber Show” on WISN-AM in Milwaukee.
In her ruling, U.S. Magistrate Judge Nancy Joseph 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 [collective bargaining agreement], the Funds are not entitled to audit his or her records,” the judge wrote, siding with Veterans Electric.
The judge, however, denied the company’s counterclaim charging 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 overseers of the union pension funds 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 Flaugher’s company “promptly issued payment.”
According to court documents, the company gave fund managers 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 sought information on nonunion employees—managers and office staff. Flaugher agreed to provide redacted information, removing personally identifiable information from the records of nonunion employees. The overseers of the trust funds demanded a full release, and sued.
Administrators of the funds claimed that Flaugher was hiding some employees who should be members of the union and, thus, entitled to benefits contributions by the employer.
Earlier this year, Flaugher, told MacIver News Service that he was concerned that the trust funds, which are closely tied to the union, would turn over the information on nonunion employees 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, he said, showed up at the home of a Veterans Electric management employee while he 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.
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 asserted that the funds’ “incorrect legal position” was not wholly without merit.
That argument apparently conflicts with a decision by a higher court.
Flaugher points to a similar case, Sullivan v. William Randolph Inc., decided by the U.S. Court of Appeals for the 7th Circuit. The court upheld a lower court ruling in favor of the defendant, a construction company, awarding it $56,000 in attorneys’ fees.
Union leaders 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. Nothing in the court record appears to back up that claim, however.
“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.”
Advocates of worker freedom 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 says he has spent about $55,000 trying to defend his company from big labor.
The small business owner said it’s particularly frustrating that the union and its surrogates would target a company that has taken in so many veterans, many of whom suffer from post-traumatic stress disorder.
“The union has always called us [and asked], ‘Would you give this veteran a chance?’ And we’ve always done that,” Flaugher said.
The lawsuit, he said, was a strange way of saying thanks.
“They’ve sued me for a year and $55,000 over nothing.”
