Where are we now?
It has been nearly nine years since the Ontario Court of Appeal’s unpaid overtime class action certification trilogy (Fulawka v. Bank of Nova Scotia; Fresco v. Canadian Imperial Bank of Commerce; and McCracken v. Canadian National Railway Company) was released, settling the law regarding certification of unpaid overtime and employment misclassification class actions. With the benefit of the intervening years, what can be said now about the state of employment class actions in Ontario?
The starting point is that any initial skepticism regarding the viability of misclassification class actions post-McCracken has been dispelled. These cases have flourished, and become commonplace. While not all such cases have been successful (see McCracken, as well as Brown v. Canadian Imperial Bank of Commerce and Azar v. Strada Crush Limited), Ontario courts have now certified misclassification claims in a wide range of industries and contexts, including with regard to:
- the misclassification of investment advisors as overtime-exempt managers;
- the misclassification of salespeople as independent contractors;
- the misclassification of document reviewers as independent contractors;
- the misclassification of cable and internet installers as independent contractors;
- the misclassification of teachers as independent contractors;
- the misclassification of major junior hockey players as amateur student athletes, interns/trainees or independent contractors; and
- the misclassification of “trip leaders” on student vacation packages as volunteers.
As employment class actions continue to expand in Ontario, they have increasingly involved an array of complex issues, such as directors’ liability, and common employer claims against multiple defendants, (see Berg v Canadian Hockey League, certified on additional common issues in Berg et al. v. Canadian Hockey League et al.; Horner v Primary Response Inc. et al. (unreported, December 15, 2020), including claims arising in the context of franchise relationships and sales of businesses (Horner v Primary Response Inc. et al. (unreported, December 15, 2020). These developments suggest that the class action vehicle has proven adaptable to seek recovery across a spectrum of circumstances.
Speaking qualitatively, employment class actions have been an effective and workable method for the resolution of unpaid wage and overtime claims. As a primary matter, given the settled state of the law, these claims are increasingly being certified on full or partial consent. After certification, recent settlements have distributed millions of dollars to classes of workers (see Rosen v BMO Nesbitt Burns Inc.; Walmsley v. 2016169 Ontario Inc.; Eklund v. Goodlife Fitness Centres Inc.; Aps v. Flight Centre Travel Group. This is particularly significant given the low rate of individual complaint filing and the dismal record of the Ontario Ministry of Labour, Training and Skills Development (the “Ministry”) in enforcing employment standards, discussed further below.
What does the future hold for employment class actions in Ontario?
Employment class actions are here to stay and will continue to expand in Ontario. Given the significant barriers that individual non-unionized workers face in enforcing their rights under the Employment Standards Act, 2000, and the understandable reluctance of employees to file ESA complaints against their current employers, employment class actions are in many cases the only viable method for these workers to enforce their rights. The preferability of class proceedings to enforce unpaid wage and overtime claims is clear. As Justice Belobaba observed in Rosen:
A class proceeding in overtime-claim cases will generally be more effective than individual claims under the ESA, where there are strict time-limits and caps on recovery. A class proceeding also provides class members with a less expensive and more efficient litigation vehicle and the advantage of anonymity, which in turn avoids employees’ fear of reprisals.
The preferability analysis for these types of cases should not be altered by the new superiority and predominance requirements. Once commonality is established, there is no question that the core questions predominate over the individual issues. Further, given the well-documented reluctance of current, non-unionized employees in Ontario to file a complaint, the choice is often better understood as between a class proceeding and no claim at all.
The role of class actions in employment standards enforcement should only be expected to increase in light of the current state of ESA enforcement by the Ministry. While ESA enforcement has never been particularly robust, the Ministry has—under the current government—substantially scaled back proactive enforcement of the ESA. For example, proactive inspections for the 2019/20 fiscal year were down 29% from the 2017/2018 fiscal year.
The Ministry’s abdication of responsibility for enforcing the law proactively must be understood as a de facto downloading of enforcement responsibility to the private bar when viewed coupled with the rise of unpaid wage and overtime class actions in Ontario. This trend is most pronounced with respect to prominent and highly visible employers such as Amazon and Uber who face proposed employment misclassification class actions, but whose allegedly substandard staffing practices have gone virtually unchallenged by the Ministry’s Employment Standards Branch.
Even where the Ministry has investigated claims, there are real questions regarding the extent to which it is leaving money on the table. For instance, the Ministry conducted an expanded investigation of the employment practices of GoodLife Fitness with respect to its group fitness instructors, and issued a Compliance Order on October 12, 2012. The Ministry concluded that the company’s payment practices with respect to group fitness instructors failed to compensate them for pre- and post-fitness-class duties, in violation of s. 11 of the ESA. The Compliance Order ultimately resulted in a self audit of records and the retroactive payment of in excess of $588,000 in back pay to the group fitness instructors for the period spanning July 1, 2012, to February 27, 2013, as well as a change in the company’s payment practices with respect to group fitness instructors on a go-forward basis. The Ministry apparently failed, however, to undertake any expanded investigation of the company’s employment practices with respect to its other employees at that time, and in particular its personal trainers. Claims on behalf of these other employees ended up being advanced in the Eklund v. GoodLife Fitness Centres Inc. class action, which resolved with an $8.5 million settlement, the bulk of which was directed to the company’s personal trainers.
Similarly, the issues raised in the Horner v. Primary Response Inc. class action were the subject of roughly a dozen employment standards complaints and Orders to Pay issued by the Ministry months prior to the filing of the class action. Inexplicably, the Ministry failed to expand its investigation and make any orders on a company-wide basis. Horner ultimately settled for $2.9 million.
These examples suggest a pattern of the Ministry leaving significant money on the table for working people, even when it does get involved in enforcing minimum employment standards.
The success that has been achieved via employment class actions at certification and settlement approval in recent years, combined with the Ministry’s ongoing failures to enforce the law robustly, suggest that employment class actions in Ontario are here to stay as a preferable and efficient means of resolution of unpaid wage and overtime disputes.
This article was originally published for the OBA Class Actions Section.