Our colleague, Keith Rose, has posted here about the recent British Columbia Supreme Court decision in Mejia v. LaSalle College International Vancouver Inc., 2014 BCSC 1559. The case is a reminder to employers about the importance of explicitly and comprehensively addressing intellectual property rights in employment agreements.
While talks continue, there is no immediate end in sight for the ongoing teachers’ strike. For employees with school-age children, this may mean facing a child care gap starting next week. As an employer, what are your legal obligations and what can you do to make sure work continues while school’s out?
The Legal Framework
First, the Employment Standards Act provides all employees in the province with up to five (5) unpaid days of family responsibility leave each year for the care, health and education of a child in an employee’s care. Employers do not have the discretion to deny the leave, but can and should ask for sufficient information to confirm the employee’s entitlement to it, such as the identity of the person for whom they are caring, the relationship and the reason for the leave. That said, employers should be sensitive when challenging employees’ reasons, particularly in the current circumstances.
Second, the Human Rights Code prohibits discrimination in employment on the basis of family status. While the extent to which child care obligations are protected is still in flux (previously discussed here and here), employers should take a flexible but informed approach to employees’ requests for accommodation due to child care obligations. We recommend that employers ask for sufficient information to determine the nature of the employee’s child care needs and the extent to which they are affected by his or her employment obligations. For example, an employee who is able to arrange adequate child care through family, friends, neighbours or public or private programs in order to attend work should be expected to do so before requesting any accommodations. This is particularly true since the government has offered to pay families $40 per day for each child under 13 years old to cover additional child care expenses. However, if an employee has no alternate child care options, then employers should consider a reasonable accommodation. If there is no workable accommodation that will suit the employer, the employer may provide the employee time off without pay.
Accommodating a Child Care ‘Gap’
The nature and extent of any accommodation will depend on the employer’s requirements and policies, and the employee’s needs, but accommodation may include:
- Working from home or tele-commuting;
- Providing or facilitating group child care at or close to the workplace (employers should get advice before initiating such an option);
- Allowing employees to bring their older children to work for some or all of the day;
- Flexible or reduced work hours;
- Using vacation or other paid personal leave (if provided under the employment contract or collective agreement); and/or
- Unpaid leave.
Finally, it is important to ensure that employees who work off-site continue to accurately record their hours and are reminded not to work any unauthorized overtime.
We will continue to keep you updated on any major developments with respect to the teachers’ strike and its impacts on other employers.
A BC employee has successfully asserted a claim for constructive dismissal after being reassigned to a new position. Younger v. Canadian National Railway Company is a good reminder for employers that the courts may find there has been a constructive dismissal where an employee has been reassigned to a new position involving fewer responsibilities and a reduction in pay.
Younger had been a railway employee since graduating high school in 1973. He started working as a labourer and eventually advanced to a management position at CN. In 2004, CN assigned Younger to the position of Assistant Superintendent Mechanical (“ASM”), which required that he supervise the operations of three major and three minor facilities. The position required Younger to be on call 24/7 and to be responsible for the safety and productivity of approximately 100 employees. In 2005, he was reassigned by CN to a position which only required that he supervise one facility and work a maximum of 40 hours a week. In the new position, Younger would only be responsible for 10 employees and would fall 2 positions on CN’s 12 position pay scale. As part of the reassignment, CN agreed to pay Younger his current salary for a year; at the end of that period, his wage would be reduced to the new position’s lower pay scale.
Younger declined the position transfer, alleging it was demotion, and refused to report to work after the reassignment. Younger found comparable employment five months later.
CN argued that it was entitled to reassign Younger because he was still in an “implied probation period” following Younger’s initial 2004 promotion to the ASM position. The court accepted that there may be cases in which there is an implied probation period following an employee’s promotion, during which time an employer may be able to return the employee to his or her former position without being found to have fundamentally breached the contract. However, this was not one of those cases. At the time of Younger’s 2004 assignment to the ASM position he had been working in a comparable position for about 5 years. As such, the ASM position could not be considered a “promotion” and CN’s reassignment to a lower position could not be considered a “return to a former position”.
The court agreed with Younger that CN’s reassignment was not a lateral transfer but a demotion. This demotion amounted to a fundamental breach of Younger’s employment contract as the differences between the positions “amounted to substantial changes to the employment contract”.
This case stands as a reminder that employers must take care when reassigning their employees and ensure that transfers which are done without an employee’s consent or without reasonable notice are of a lateral nature rather than a demotion. While we have previously discussed here how the Courts will provide some deference to employers, it does not extend to situations where the employee’s new position is a substantial demotion.
Employers may also want to consider making promotions subject to an express probationary period, during which the employee can be returned to his/her previous or a comparable position without a fundamental breach of contract.
CN has applied to appeal the decision.
Since it came into force in 2004, British Columbia’s private sector privacy legislation, the Personal Information Protection Act, has had a significant impact on the way British Columbia employers collect, use and disclose the personal information of their employees and others. The last review of the Act took place in 2008. A Special Committee is currently undertaking a review of the Act, including public consultation. If you or your organization are interested in participating in the consultation, you can do so by:
- Attending a public hearing on September 8 or 9, 2014; or
- Making written submissions to the Committee on or before September 19, 2014.
You can find more information about the review and how to participate here.
Canadian employers have been watching a series of class action claims, with employees claiming hundreds of millions of dollars in unpaid overtime, since 2007. While overtime class action claims are still not possible in British Columbia (for the reasons discussed here), claims can balloon in other provinces when a representative plaintiff claims unpaid overtime for themselves and on behalf of colleagues.
On August 12, 2014, the Ontario Superior Court of Justice approved the settlement of one of these overtime class actions, Fulawka v. The Bank of Nova Scotia. Our colleagues in Calgary have posted about this recent development here.
Cindy Fulawka (Fulawka) was employed at various Bank of Nova Scotia (BNS) branches and held various positions such as Personal Banking Officer and Account Manager. In 2007, Fulawka, acting as a representative plaintiff, claimed $250 million in general damages and a further $100 million in punitive damages on behalf of approximately 15,000 individuals.
On February 19, 2010, the class action was certified by the Ontario Superior Court. BNS appealed the certification to both the Divisional Court and the Court of Appeal of Ontario but was largely unsuccessful. BNS sought leave to appeal to the Supreme Court of Canada but was denied. On August 12, 2014, Justice Belobaba approved the settlement of the action from the bench but has yet to issue a written decision.
BNS has agreed to pay employees for overtime owed to them but the exact settlement value is uncertain. However, Fulawka’s counsel has predicted that class members will receive approximately $95 million.
To assess unpaid overtime, BNS will participate in an informal but binding procedure in which employees can claim overtime without any documentation confirming actual hours worked. If BNS and the employee are unable to agree on the amount owed, an arbitrator will make a final ruling and is empowered to reasonably estimate unpaid overtime.
Lessons for Employers
This case highlights the liability that large employers who operate in other provinces may face if overtime is systematically underpaid or withheld. To avoid exposure for unpaid overtime in any province, employers should take the following steps:
- Make sure your employees are properly classified. For example, ensure that any ‘exempt’ management or other employees who are not paid overtime are truly exempt from overtime under applicable legislation.
- Consider methods to control overtime costs such as averaging agreements, compressed workweeks, or time off in lieu of overtime pay, as permitted by applicable legislation.
- Keep accurate records of hours worked. Without accurate records of hours worked, it is much more difficult and costly to defend overtime claims.
- Enforce policies with respect to overtime and record-keeping. If employees work unauthorized overtime or do not record their hours, respond with appropriate discipline and/or increased supervision.
The B.C. Supreme Court recently decided an application to hear a pastor’s wrongful dismissal claim, which may impact employers both inside and outside of ecclesiastical contexts.
In Kong v Vancouver Chinese Baptist Church, the Vancouver Chinese Baptist Church (“VCBC”) applied to have a claim for wrongful dismissal filed by its former Senior Pastor, the Reverend Alfred Yiu Chuen Kong (“Rev. Kong”), dismissed. Rev. Kong filed the underlying claim after he was dismissed by the VCBC following a long series of VCBC committee meetings and discussions to resolve internal strife involving Rev. Kong.
The VCBC applied to court to have Rev. Kong’s claim dismissed on the following basis:
 The VCBC submits that a church’s removal of its spiritual leader is intrinsically ecclesiastical in nature. It follows, the church argues, that this is an ecclesiastical issue over which the court has no jurisdiction other than to ensure that the church has proceeded in accordance with the principles of natural justice.
VCBC relied on a decision involving the Catholic Church from the Ontario Court of Appeal, which held:
 A second exception [to the jurisdiction of courts to hear wrongful dismissal claims] is where the rules of a self-governing organization, especially a religious organization, provide an internal dispute resolution process. A person who voluntarily chooses to be a member of a self-governing organization and who has been aggrieved by a decision of that organization must seek redress in the internal procedures of the organization: see Levitts Kosher Foods v. Levin(1999), 45 O.R. (3d) 486 (S.C.).
The B.C. Supreme Court denied the VCBC’s application, holding that the question of whether internal church procedures or common law applies to the dispute is governed by the facts giving rise to the dispute. Although the court did not cite the Supreme Court of Canada’s recent decision in McCormick v Fasken Martineau DuMoulin LLP, which we commented on here, it determined that the facts giving rise to Rev. Kong’s wrongful dismissal claim were, in their nature, that of ”employment”. Because the VCBC had the power to select, control, and dismiss Rev. Kong as Senior Pastor, the court found he was a common law employee, notwithstanding he was a “a clergyman claiming against a church”.
Although this ruling concerns religious organizations in particular, it is another decision after McCormick in which the court ignores appearances and internal structures and opts to decide for itself whether entities are in a common law employment relationship. In light of recent judicial decisions in this vein, employers that have in the past relied on internal dispute resolution mechanisms with respect to “employees” should pause and consider potentially unforeseen legal consequences prior to making any substantial changes to the roles, terms, remuneration or obligations of individuals they are engaged with.
We will keep a close eye on Rev. Kong’s wrongful dismissal claim and keep you posted on developments.
In most cases, employees who commit misconduct will face the consequences of their actions during their employment, in the form of discipline or even termination for just cause. But, what if the employer only learns of an employee’s misconduct after the employee is dismissed without cause? What recourse does the employer have?
The British Columbia Court of Appeal’s ruling in Van den Boogaard v. Vancouver Pile Driving Ltd affirms that employers can rely on misconduct discovered after an employee’s dismissal to establish “after-acquired” just cause.
Mr. Van den Boogaard was a project manager for Vancouver Pile Driving, a marine contracting company. He was in a supervisory role, which required him to oversee site safety. He was also required to enforce drug prohibition policies. Mr. Van den Boogaard’s employment was eventually terminated without cause. However, he was not happy with the amount of severance offered to him and started a wrongful dismissal claim against the company.
At the time of his dismissal, the company was unaware that Mr. Van den Boogaard had been soliciting drugs from his direct subordinate, including during working hours. After Mr. Van den Boogaard turned in his company cellphone, however, the company discovered suspicious text messages from the phone to another employee. The messages showed that Mr. Van den Boogaard had asked to buy a variety of drugs from a subordinate employee, including some of which were listed under the Controlled Drugs and Substances Act.
Based on this evidence, the company took the position that it had after-acquired just cause to dismiss Mr. Van den Boogaard and was not liable for any further pay in lieu of notice. The Court agreed.
The Court took the same approach to the issue of whether there was after-acquired just cause as for any just cause termination. Using the “contextual approach”, the Court considered whether Mr. Van den Boogaard’s conduct – taking into account all the relevant circumstances of his employment – was objectively and fundamentally incompatible with his continued employment. In light of Mr. Van den Boogaard’s supervisory authority over the subordinate employee, and his employment obligations to ensure safety in the dangerous workplace and to enforce the company’s drug prohibition policies, the Court found that Mr. Van den Boogaard’s conduct justified his termination for just cause.
It was a key part of the decision that the company had no idea Mr. Van den Boogaard had solicited or purchased drugs from other employees before his employment was terminated. The Court made it clear that employers cannot rely on “after-acquired” just cause for termination if they knew about and condoned the conduct before the employee was dismissed (for example, by not investigating and/or disciplining the behaviour).
What does this mean for employers?
If an employee engaged in serious misconduct which was not known or condoned during their employment, employers should consider defending a subsequent claim by alleging after-acquired just cause. Employers may also want to consider a claim or counterclaim against an employee if he/she committed significant theft or fraud against the company. In addition, employers can take the following steps to improve their chances of proving after-acquired just cause:
- Make sure expectations for employees’ conduct are clear and consistently enforced. Although Mr. Van den Boogaard tried to argue that the company had a ‘lax’ approach to drugs in the workplace, the company’s policies helped show that Mr. Van den Boogaard’s misconduct was not acceptable and was serious enough to warrant termination without notice.
- Investigate allegations of misconduct promptly and comprehensively, both during and after employment. A full and prompt investigation will help prevent an argument that the employer ‘condoned’ the conduct, in addition to providing evidence for a subsequent proceeding.
Following on its new complaint and application forms introduced earlier this year, the British Columbia Human Rights Tribunal recently issued new Rules of Practice and Procedure (the “2014 Rules”), replacing its former Rules from January 2008. The 2014 Rules are directed at reducing the number of rules and streamlining and simplifying the complaint resolution process.
Some of the changes in the Tribunal’s 2014 Rules that employers should take note of include the following:
- The Tribunal has done away with its previous “complaint stream” process;
- The Tribunal has better articulated resources under the new Rules to defer complaints or adopt alternate processes to resolve complaints. For example, Rule 16 permits the Tribunal to defer a complaint if 1) another proceeding is capable of appropriately dealing with the subject matter of the complaint; OR 2) it is fair and reasonable in all of the circumstances to do so (both of which require an application to the Tribunal, which can now be filed prior to the filing of a response to complaint). Rule 17 expands the flexibility for the Tribunal to address complaints, permitting it to use “expedited or alternate” processes or timelines to facilitate the just and timely resolution of a complaint. Rule 17 replaces former Rule 25, which required all parties to consent to an expedited hearing, and is intended to be a flexible rule that can be initiated by the parties, or the Tribunal itself;
- The Tribunal has increased the time limits and streamlined the process for filing an application to dismiss a complaint. Rule 19 extends the time limit for filing an application to dismiss a complaint to 70 days following the filing of a response to complaint (previously, a respondent had to file an application within 70 days of the Tribunal’s letter advising it had accepted a complaint, or at the same time as its response following an early settlement meeting), or 35 days from the date on which new information to substantiate an application to dismiss is known (which was 30 days under the previous Rules). In addition, if a respondent wishes to file an application to dismiss on the basis that it extended a reasonable settlement offer that was not accepted by a complainant, a respondent must apply at least four months prior to the date set for a hearing;
- Parties’ disclosure obligations under Rule 20 are more clearly tied to the steps in the proceeding, such as the filing of the response to complaint; and
- Rule 21 requires parties to file an expert report 90 days before the start of a hearing (previously 60 days).
More information about all of the changes in the Tribunal’s 2014 Rules can be found here.
We’ll be sure to keep you updated as to how the 2014 Rules function in practice.
Our colleagues in Québec have produced a helpful summary of the recent Supreme Court of Canada decision involving a Wal-Mart in Jonquière, Québec, found to have breached its statutory duties during the freeze period following certification of a bargaining unit.
After negotiations for a collective agreement reached a standstill, the Wal-Mart in question decided to close its doors, for what it alleged to be legitimate business reasons. The arbitrator appointed to decide the Union’s grievance of the closure concluded that Wal-Mart’s decision to close the store was not in the course of the company’s ordinary business and therefore breached section 59 of Quebec’s Labour Code (the “Code“), which prohibits any changes to “conditions of employment” during the statutory freeze period.
The arbitrator’s decision was upheld by the Quebec Superior Court, but reversed in the decision of the Québec Court of Appeal on the basis that the arbitrator did not properly have jurisdiction over the closure grievance, which involved termination of employment and, as such, did not involve “conditions of employment”. In effect, the Court of Appeal held that the closure of a business rules out the possibility that an employer can be found to have breached its statutory duties. The Court of Appeal relied in part on an earlier decision by the Supreme Court of Canada in the labour relations saga regarding the Jonquière Wal-Mart, concluding that, because the arbitrator did not have jurisdiction to compel Wal-Mart to continue its operations, no remedy was available for any alleged breach and therefore the grievance was not appropriate for arbitration under the Code.
The Supreme Court of Canada disagreed and reversed the Court of Appeal’s decision. In doing so, the Court held, firstly, that termination of employment in connection with the closure of a business does not fall outside of the Code‘s prohibition on altering “conditions of employment”:
 … Like any other condition of employment, maintenance of the employment relationship remains a condition but is nevertheless subject to the employer’s exercise of its management power. Therefore, in the words of Deschamps J.A., as she then was, [translation] “although dismissal is not, strictly speaking, a condition of employment, the condition of continued employment, and thus the protection against dismissal without a good and sufficient reason, can be included in the conditions of employment covered by section 59 L.C.”: Automobiles Canbec Inc., per Deschamps J.A., at p. 13.
Secondly, regarding remedial authority, the Court held that even though an arbitrator cannot compel an employer to stay in business:
…In appropriate circumstances…an arbitrator can order reparation in kind, such as the reinstatement of a condition of employment. Where the circumstances do not lend themselves to such a remedy, however, the arbitrator can order reparation by equivalence. The latter remedy will be appropriate where the employer goes out of business either in part or completely, at least insofar as it is impossible to reinstate the employees dismissed in contravention of s. 59.
Finding that the closure of a store may properly engage s. 59 of the Code and that an arbitrator has remedial authority to decide a grievance under that section, the Court concluded as follows regarding the essential question to be analyzed:
…An arbitrator hearing a case in such a context must, as in any other case concerning a decision that results in a change in conditions of employment, determine whether the employer’s decision — to resiliate all the contracts of employment in this instance — is consistent with its past management practices or with those of a reasonable employer in the same circumstances.
To resolve this question, the Court makes it clear that an employer must be able to show that the decision to close a store was an authentic decision, not a “simulation” and consistent with its ordinary practice. The Court put it this way:
 If the employer wishes to avoid having the arbitrator accept the complaint filed under s. 59, therefore, it must show that the change in conditions of employment is not one prohibited by that section. To do so, it must prove that its decision was consistent with its normal management practices or, in other words, that it would have proceeded as it did even if there had been no petition for certification. Given that going out of business either in part or completely is not something that occurs frequently in any company, the arbitrator often has to ask whether a reasonable employer would, in the same circumstances, have closed its establishment: see Syndicat des travailleuses et travailleurs du Centre d’approbation de Nordia — CSN. Without suddenly becoming an expert in this regard, the arbitrator must also, therefore, above all else, be satisfied of the truthfulness of the circumstances relied on by the employer and of their significance.
Of particular importance in this decision was Wal-Mart’s failure to adduce evidence to counter the Union’s evidence that the decision to close the Jonquière store “was not consistent with the employer’s past management practices or with those of a reasonable employer in the same circumstances.”
The Jonquière decision is an important case for employers in all provinces of Canada. Indeed the Court specifically notes that there is an equivalent to s.59 of the Code in every province in Canada as well as at the federal level. Most significantly, the Court emphasizes that in the context of labour relations during the statutory freeze period, employers should tread carefully if considering the closure of a business. Strong objective evidence will be required to show the closure was a decision made in the ordinary course of business. If there is evidence that the employer has departed from past or reasonable management practices, and the employer does not or cannot explain the departure, arbitrators have the remedial authority to make potentially significant orders for “reparation by equivalence” to reinstatement.
The case has been remitted to the arbitrator for a decision on the remedy. We will keep you posted.
On June 20, 2014, the B.C. Government announced a host of new liquor laws that will be of interest to B.C. employers. Regulations that came into force under Bill-15, also known as the Liquor Control and Licensing Amendment Act, 2014, amend the Liquor Control and Licensing Regulation to permit:
- licensed establishments to vary drink prices and provide “happy hour” pricing at different times throughout the day; however, happy hour prices cannot go below prescribed minimums and must be set in advance;
- businesses that retail or manufacture alcoholic beverages to market their wares in a broader range of venues (for example, retail liquor stores can now apply for permits entitling them to sell alcohol at food and beverage festivals for off-site consumption, and vintners, brewers and distillers can now apply to sell their beverages at farmers markets);
- liquor primary establishments to allow parents to bring minors into their establishments for family dining before 10 p.m. (requiring designation by the General Manager ["GM"] of the Liquor Control and Licensing Board ["LCLB"] as a “Family Foodservice” establishment); and
- Family Foodservice establishments (along with others approved by the GM of the LCLB) to hire minors to work in their establishments in positions where they do not sell or serve alcoholic beverages.
You can learn more about the LCLB’s list of recently implemented policy directives here.
While the new laws reflect a loosening of provincial rules regarding the service and selling of alcohol, compliance will still be strictly enforced. Employers operating Family Foodservice establishments, in particular, will have to pay close attention to scheduling and ensure all employees are aware of the limits on work performed by minors.
The recent amendments are but a few of the intended changes to B.C.’s liquor regime. Among other things, new and varied training requirements for the serving and selling of alcohol are on the horizon, which employers will want to ensure are quickly and diligently implemented for compliance purposes.
We will keep you apprised of further developments.