Employment and Labour Lawyers for Management

The Supreme Court of Canada (”SCC”) recently weighed in on an interesting point of law: to what extent can the courts force a business to stay open? 

The business in this case was the famous Wal-Mart store located in Jonquiere, Quebec that was the first Wal-Mart to unionize in North America.  Five months after certification, the company decided to shut down its store and terminate the employment of 190 workers on the same day the parties’ first collective agreement dispute was referred to arbitration by Quebec’s labour minister.

The workers complained that the company’s decision amounted to union busting and sought reinstatement under provisions of the Quebec Labour Code (the “Code”).

In two concurrent judgments (Plourde v. Wal-Mart Canada Corp., [2009] S.C.J. No. 54 and Desbiens v. Wal-Mart Canada Corp., [2009] S.C.J. 55), the SCC found in the company’s favour, mainly on a technicality. 

The dismissed employees argued that their right to freedom of association in the Charter of Rights and Freedoms (”Charter”) was violated when Wal-Mart decided to close the store.  Under the Code, as with other provincial labour statutes, employers have the onus of proving that their actions were not motivated by anti-union animus (i.e. reverse onus).  In this case, however, since the store no longer existed, the SCC determined that the reverse onus provision of the Code did not apply and consequently, there was no possibility of reinstatement. The workers had other remedies, including financial, if they could prove that the company had engaged in unfair labour practices.

While this case raised several interesting issues relating to the Code and labour relations in Quebec, it did not consider whether Wal-Mart’s decision to close its doors was tainted in any way. Therefore, it will have little impact in the rest of Canada.

On January 1, 2010 the rules governing civil actions in Ontario are to undergo sweeping changes. One notable change is the expansion of the small claims court jurisdiction from $10,000 to $25,000. The changes are supposed to improve access to justice and reduce the cost of litigation for all parties.

Initial opinions from employment counsel acting for both employers and employees have suggested the changes could lead to an increase in litigation. A recent decision at the Ontario Superior Court of Justice suggests the increase may be more conservative - and for unexpected reasons.

The new rules add a concept of “proportionality” to the provisions that guide judges’ assessments of what amount of costs should be awarded to a successful party in litigation. Parties often decide whether or not to bring a claim, or whether to settle instead of going to trial, based upon their estimations as to the potential costs they may be awarded (or that may be awarded against them). This is especially the case in claims of $50,000 or less, where legal costs can often rival the claim if the trial is lengthy or complex.

Pitney Bowes of Canada v. Noia, 2009 CanLII 63372 (ON S.C.) sheds some light on how this new concept of proportionality may be implemented. The Plaintiff claimed almost $23,500, but obtained judgement for only $13,400. The trial lasted two days. The Plaintiff’s lawyer had 16 years experience and claimed 62 hours were spent overall on the file. With legal fees and disbursements at partial indemnity (meaning typically around 40% of actual costs) that added up to $13,340 in costs claimed.

Applying the concept of “proportionality” as if the new rules were in place, the Court awarded only $1,600 for costs and disbursements. The Court found that the number of hours claimed was excessive and disproportionate to the complexity and value of the claim. However, certainly the decision cannot be taken to mean that a two-day trial could be tried for $1,600 in legal fees and disbursements.

The silver lining for employers: Employees may think twice before going to trial with the prospect of recovering so little in costs that they end up in the hole to their lawyer even in victory.

Jeremy Schwartz - jschwartz@sbhlawyers.com

The Canadian Federation of Independent Business (”CFIB”) appears to have ruffled the feathers of the WSIB.  In a combative September 3, 2009 press release, the CFIB blasted the WSIB for recent financial market losses and called for an independent review of the Board as a result of what the CFIB called “…blatant mismanagement and monopolistic complacency“.   The CFIB even compared the WSIB’s situation to the recent high profile public scandals involving E-Health and the Ontario Lottery and Gaming Corporation.

The WSIB replied aggressively (particularly by the ordinarily reserved standards of a public agency) in a responding press release and accused the CFIB of “distorting the facts” and suggested that the independent business lobby group was engaging in “sabre rattling“.  The Board pointed out that CFIB has been actively participating in various WSIB consultations and argued that the Board’s financial performance compared favourably to large Canadian pension funds over the course of the economic downturn.  The Board ramped up the rhetoric and stated that it was rejecting the “armageddon approach” and suggested that the CFIB ought not to issue “…unwarranted accusations and rhetoric at a time when we need to work together.”

The tone of both press releases closely resembled the approach typically taken by political parties in the heat of an election campaign.  It will be interesting to see what the next salvo in the PR battle brings.

Ryan Conlin: rconlin@sbhlawyers.com

An Employment Insurance Board of Referees has decided that both parents of newborn twins qualified separately for 35 weeks of employment insurance parental benefits.

Christian Martin’s wife gave birth twin girls who were premature, underweight and required constant care and attention. The Board heard evidence that the parents were overwhelmed and exhausted caring for the babies and as a result of complications during the pregnancy. The added complications required Mr. Martin to assist with the ongoing care, and would keep him out of work for approximately 35 weeks.

The parents each applied for 35 weeks of parental benefits. The mother received the full benefits for one infant, while Mr. Martin was denied benefits for the other. Mr. Martin appealed the decision. The Board focussed on the fact that Mr. Martin had to take time off work to care for the twins and allowed his appeal.

While this decision has no precedential value, Boards of Referees tend to be relatively deferential to one another. As such, it is likely that this decision will impact and increase future claims for parental benefits in the case of multiple births.

The EI Commission has 60 days to appeal the decision to the Federal Court. In the event that the decision stands, employers should be prepared for an increase in parental leave requests where an employee’s wife gives birth to multiple babies.

A copy of the decision can be found at http://www.scribd.com/doc/19865129/EI-Board-of-Referees-Decision-on-twins.

Ryan Conacher - rconacher@sbhlawyers.com

Employees who engage in medical dishonesty may find themselves disentitled to ESA termination and severance pay.

The ESA provides that employees who are guilty of “willful misconduct” or “willful neglect of duty” are not entitled to statutory notice of termination or severance pay.  These are typically treated as very high standards.  The key is that the conduct must be serious, and it must be willful.  In other words, failing to meet production standards will not usually be sufficient to disentitle an employee from statutory notice and severance pay, unless the employee was failing intentionally.

In Gray v. Springfield Hotels Airport Inc. (Hampton Inn & Suites Toronto Airport) (July 31, 2009), an employee provided her employer with a doctor’s note indicating that she would be off work for three weeks “due to medical reasons.”  In fact, during that three-week period she continued to work for another inn providing essentially the same services.  When her employer learned of her dishonesty she was fired without notice.  (She was not entitled to ESA severance pay because she had been employed for less than five years).

The Ontario Labour Relations Board held that the employee’s conduct constituted willful neglect of duty.  As such, she was not entitled to notice of termination under the ESA.  Notably, the Board rejected the employee’s argument that a problem she alleged was occurring at work excused her misconduct. 

To view the entire case, visit the following link:
 http://www.canlii.org/en/on/onlrb/doc/2009/2009canlii41186/2009canlii41186.html
 
Jeremy D. Schwartz - jschwartz@sbhlawyers.com

In a recent SBH Update we discussed a case where a $600 million class action lawsuit against CIBC for unpaid overtime was denied certification.  Not surprisingly, this decision is being appealed to the Ontario Divisional Court. 
 
In a judgment issued in June 2009, Justice Lax of the Superior Court of Justice decided that this case should not proceed because it lacked the required commonality of issues to warrant certification as a class action. 
 
If Justice Lax’s decision holds up to appellate court scrutiny, it will deal substantial blow unpaid overtime cases of a similar nature.  However, as we discussed in our Update, there is another type of overtime class action and other employment related class actions lurking for employers to be mindful of. 
 
The plaintiffs’ lawyers will file material supporting the appeal by the end of August and CIBC will have 60 days to respond.  We would not be surprised to see this case ultimately end up before the Supreme Court of Canada.

Landon P. Young - lyoung@sbhlawyers.com

Ryan M. Conacher - rconacher@sbhlawyers.com

In a case that can only be described as a cautionary tale, an employer was ordered to pay 5 months pay in lieu of notice to an employee to whom it had intended to pay only 3 weeks ESA termination pay.  This case should serve as a reminder to employers to carefully review termination letters before they go to employees.
 
In Stowar v. Telehop Communications Inc., an employer mistakenly provided an employee with an offer of 5 months pay in lieu of notice in a termination letter, instead of the 3 weeks of ESA termination pay it had intended to provide.  The letter was poorly worded, and did not establish a possible demarcation between ESA termination pay and pay in lieu of notice at common law.
 
The court ruled that, once signed, the termination letter constituted a valid and binding contract that the employee could enforce against the employer. 
 
The lesson: when drafting termination letters, make sure you get it right the first time.
 
To view the entire case, visit the following link:
 
http://www.canlii.org/en/on/onsc/doc/2009/2009canlii32253/2009canlii32253.html
 
Jeremy D. Schwartz - jschwartz@sbhlawyers.com

Ontario has passed legislation amending the Employment Standards Act, 2000 to provide up to 13 weeks of leave of absence without pay for employees who undergo surgery in order to donate organs to other persons.  The new leave will come into force upon proclamation on a future date.
 
To read the Ministry’s press release, see
http://ogov.newswire.ca/ontario/GPOE/2009/05/27/c8217.html?lmatch=〈=_e.html 
 
Ryan Conacher - rconacher@sbhlawyers.com

 
A new month, a new blitz!  In keeping with its practice of conducting new health and safety “blitzes” every month, the Ministry of Labour has announced that its inspectors will be focussing on the protection of young and new workers during the month of June.

During such blitzes, Ministry inspectors are to take a “zero tolerance” approach to violations of the Occupational Health and Safety Act and its regulations.  The goal is to promote compliance and reduce injuries.   These blitzes are part of the Ministry’s broader “Safe at Work Ontario” program aimed at improving compliance and reducing injuries.

This blitz is to focus on workers aged between 14 to 24 years and new workers older than 24 who have been on the job less than six months or who have been reassigned to a new job.   According to the Ministry’s press release, its inspectors will give special emphasis to retail stores, wholesalers, restaurants, vehicle sales, service outlets and businesses involved in tourism, such as golf courses.  Municipal work sites, farming operations and construction sites are not to be targetted.

Under the Safe at Work Ontario program, employers with a history of non-compliance with health and safety laws and convictions or those in industries with high injury rates are more likely to be targetted.

To avoid the risk of costly charges and disruptive orders from Ministry inspectors that can be issued on the spot, employers with young workers should take some time to ensure that they are compliant with the Occupational Health and Safety Act and its regulations.  Some of the more common areas of non-compliance that result in orders and fines from inspectors include a lack of proper guarding on machinery, personal protective equipment and fall arrest equipment and procedures.

Employers should also make sure their workers meet the minimum age requirements for their industry.  These age requirements vary from 18 years of age for underground mining and window cleaning, 16 for mining plants and construction and logging, 15 for factory operations and repair shops and 14 for other industrial establishments.  The Ontario Employment Standards Act, 2000 does not contain minimum age requirements.  However, it does require employers to keep a record of an employee’s date of birth if the employee is under 18.

To read the Ministry’s press release, see http://www.news.ontario.ca/mol/en/2009/05/ontario-protecting-young-and-new-workers.html.

Landon Young - lyoung@sbhlawyers.com

Welcome to SBH’s new website!  Our goal is to provide a useful resource for employers to keep up to date on legal developments.  You may also register online for our seminars through this site.

In addition to our regular legal updates, this blog will provide a more informal discussion of legal developments.   The topics covered will be wide ranging and the points of view expressed will (unapologetically) come from our perspective as management side lawyers acting for employers.   We welcome any feedback you may have on our posts or our new website.