Contractor fearing union ‘intimidation’ stonewalls audit, lands in court battle

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An electrical contractor is in court after fears over possible union intimidation led him to refuse to turn over employee records sought as part of a routine audit request.

The case pits a union benefit fund — the Electrical Construction Industry Prefunding Credit Reimbursement Program — against Veterans Electric, a Colgate-based contractor. The fund sued Veterans Electric in November after Scott Flaugher, owner of the company, refused to respond to a request seeking employment records for his nonunion employees. The request came as part of a routine audit conducted in 2016.

Flaugher said his concerns center mostly on the union that’s affiliated with the benefits fund that is seeking the records — the International Brotherhood of Electrical Workers Local 494. Flaugher said he worries Local 494 would use the records to try to recruit his nonunion workers.

“I believe they are trying to make an example of me,” Flaugher said. “Capitulate to us or else. I will not capitulate to their demands. This is my business, not theirs.”

Lawyers for the fund counter in court papers by arguing that the fund has a right to view the company’s records to see if the contractor is meeting its obligations. Reached by phone, Philip R O’Brien, of Reinhart Boerner Van Deuren, who is an attorney for the benefit fund, declined to comment on the case. A representative of IBEW Local 494 asked a reporter to email a list of questions about the case, but did not respond by press time on Tuesday.

The dispute began after an accounting firm for the benefits fund asked in 2016 for records for all of Veterans Electric’s employees, regardless of whether they were members of the union. The records, the plaintiffs argue, were needed in an audit of the company’s contributions to the benefits fund. A collective-bargaining agreement with IBEW Local 494 requires Veterans Electric to make timely payments to the fund.

“Veterans refuses to provide the records due to ‘privacy concerns’ even though the auditor is a certified public accounting firm bound by ethical confidentiality rules,” attorneys for the benefit fund wrote in February.

The audit, which was completed in May 2017, found that Veterans Electric owed about $250 to the benefit fund, a sum the company paid in October of that year, according to the company’s counterclaim.

But Flaugher has still refused to turn over records for his non-union employees, leading to the benefit fund’s lawsuit against him. He said he’s afraid union officials will use the personal information to “intimidate” his nonunion employees in an attempt to get them to join the union.

“I just don’t trust (the union),” Flaugher said. “The stronger issue is the trust that my employees have in me. I’m asking these guys to perform for me every day. I do not want to violate that trust that I have with my employees when it’s being unjustly demanded.”

“This is going to cost me a lot of money over a minor issue,” he added.

Veterans Electric responded to the benefit fund’s lawsuit in December with an answer and countersuit. According to the countersuit, the company employs six workers who aren’t affiliated with IBEW Local 494. Most of them are supervisors. Veterans Electric, meanwhile, employs 16 members of Local 494, seven electricians that are members of other IBEW chapters in Wisconsin and five electricians in Ohio.

Flaugher said a passage in the company’s collective-bargaining agreement with the union gives his company grounds to withhold records for some employees. The passage obliges Veterans Electric to produce, “all necessary employment, personnel or payroll records, and these records only,” for current and former employees covered by the agreement.

The Veterans Electric employees who are covered by the agreement are those who perform internal electrical work. Flaugher’s attorneys argue in their counterclaim that the company has no obligation to turn over records for employees who do other sorts of work.

But lawyers for the benefits fund maintain that they are entitled to a full accounting of the company’s contributions. The benefits fund can’t perform a comprehensive audit, they say, without full access to the company’s employee records. Flaugher’s refusal to give up this information amounts to a violation of the Employee Retirement Income Security Act, they argue.

“Despite this well established ERISA principle, Veterans Electric, an employer bound by a collective bargaining agreement, has refused to allow the funds to conduct a complete and proper audit of its employee records,” lawyers for the benefit funds wrote. “Veterans attempts to undo the applicable history of ERISA case law by asking the court to find that the funds do not have the right to audit all of its employee records.” Follow @natebeck9