Class actions can be effective in enforcing rights in employment law

A British Columbia employment lawyer asks why class actions have not been used as much as they could in his province to enforce workplace rights, especially in light of the recent cuts to administrative tribunals.

By Leo McGrady

Leo McGrady 

In British Columbia, the Class Proceedings Act, R.S.B.C. 1996, c. 50, has been overlooked as a tool for enforcing rights for non-union employees. There are four areas of statutory regulation of the workplace where class actions could be effective: employment standards, human rights, privacy rights and, perhaps, workplace safety.

Counsel in jurisdictions other than B.C. have been more active in asserting these rights. In the U.S. we’ve seen a remarkable series of employment class action cases in the past year. On September 13, 2005, employees from a number of countries, including the U.S., China and Indonesia, sued Wal-Mart in the California Superior Court in Los Angeles. Their claim includes complaints over substandard wages, excessive hours, as well as false statements about the company’s human rights practices

Amaral et al v. Cintas Corporation is a noteworthy recent example of the use of class actions to enforce employment rights. In September 2005, in the city of Hayward, California, a court ordered Cintas Corporation to pay 219 workers more than $1 million in back pay. Cintas Corporation had agreed to comply with the city’s living wage ordinance as part of its contract with the city as its official launderer. It did not comply, and in fact paid substantially less to all its employees over a 4-year period (San Francisco Chronicle, September 27, 2005, page B3).

In British Columbia, the provincial government’s budget cuts through the 2002/2003 fiscal year resulted in reductions in the order of 25 per cent to 30 per cent, on average, to some of the administrative tribunals charged with the enforcement of key workplace rights, including employment standards, human rights, workers’ compensation, and privacy/freedom of information. These cuts were imposed at about the same time as we were beginning to realize that many of the new jobs being created in Canada were in fact temporary, part-time, carried no contractual benefits, and generally reflected a significant decline in what economists describe as “employment quality”. See “Quantity: Yes, Quality: Not Yet”, CIBC World Market’s Report (Jan. 30, 2006):

The impact was particularly acute in the Employment Standards Branch, where staffing was reduced by a third – from 151 to 109. The number of branches province-wide was reduced by almost one-half – from 17 to 9 (a 47 per cent reduction): see D. Fairey, Eroding Worker Protections (Vancouver, BC: Canadian Centre for Policy Alternatives, November 2005, page 29).

Thus far, there have not been any British Columbia cases brought under the CPA seeking relief for an employer’s failure to meet Employment Standards Act obligations. This is in contrast to Ontario where there have been at least three cases against employers for failing to provide wages including overtime pay, holiday pay, vacation pay, termination pay and severance pay. The following cases were framed as a breach of implied contractual terms as opposed to a cause of action based on a breach of statute.

In Wicke v. Canadian Occidental Petroleum Ltd., [1998] O.J. No. 2818 (Gen. Div.), the court certified a class of approximately 70 employees with the common issues of entitlement to overtime pay, and punitive and exemplary damages.

Then in Halabi v. The Becker Milk Company Limited et al., [1998] O.J. No. 2662 (Gen. Div.), the court refused certification. It reasoned that since the administrative scheme under the Ontario ESA was quick, cost the employee nothing, and did not require judicial intervention, a class proceeding was not the preferable procedure. It is doubtful whether such a description would apply to the current ESA regime in British Columbia.

Halabi was distinguished in Kumar v. Sharp Business Forms Inc., [2001] O.J. No. 1729 (S.C.). Kumar was a claim by approximately 50 employees for unpaid overtime, holiday and vacation pay. The court in Kumar recognized that the Act expressly provided for civil actions as an alternative to the administrative procedure under the Act. The court noted that one of the purposes of the Ontario CPA was to enhance access to justice and not restrict it. The court certified the action.

In British Columbia, s. 118 of the ESA states that nothing in the ESA affects the right of a person to commence and maintain an action except if there has already been a Director’s decision on the matter. Kumar is persuasive authority for using the CPA as a tool for enforcing employee rights.

The main advantage to bringing an action under the CPA when an employer fails to meet its ESA obligations is the amount of wages to be recovered. If an employee were to proceed through the administrative process of the ESA, they would be limited to the amount of wages payable in a pay period of six months before the earlier of the date of the complaint or the termination of the employment (s. 80). Consequently, if an employee’s entitlement to wages extends beyond this six-month period, the employee would only be able to collect for a maximum of six months under the ESA scheme. As set out in Kumar, the cap on recovery does not apply to a civil action.

A further advantage to using the CPA is that once certified, members of the class are automatically covered by any award unless they decide to “opt out”. In contrast, the ESA has no provision to consolidate complaints through a representative complainant.

Despite the advantages of recovery and consolidation of complaints, the CPA remains under-used for enforcing employee rights when employers have not met their obligations set out in the ESA. The reasons for this appear to be both delay and cost.

In British Columbia, it will take several months, sometimes 6-8 months, simply to have a case management judge assigned. To tackle the delay, British Columbia should assess whether or not to adopt the Ontario model, which uses a handful of judges who specialize in hearing class action cases. This could speed up the process. Motions could be dealt with on an expedited basis with succinct written submissions and no requirement for an oral hearing. Case management through conference calls can also speed the process when a party is making unreasonable demands.

Costs of class actions can be mitigated through the use of advocacy groups being appointed as representative plaintiffs through s. 2(4) of the CPA. Section 2(4) of the CPA allows the court to certify a person who is not a member of the class as the representative plaintiff for the class proceeding in order to avoid a substantial injustice to the class. This section would work particularly well with respect to farm workers and other historically disadvantaged employees.

However, at the moment, delay and cost are stumbling blocks to using the CPA. Strategies to reduce delay are needed to meet the access to justice goal of the CPA. The correction of these deficiencies remains an issue of some concern for employment lawyers generally. That is particularly so for those considering the use of class actions as at least a temporary solution to address the problems created by the under-funding of the four tribunals charged with the enforcement of key workplace rights.

Leo McGrady is an employment law lawyer with McGrady Baugh and Whyte in Vancouver. He has written and spoken extensively on the issue of the enforcement of employment rights.