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An important case that could reshape the
recruitment and employment of temporary foreign workers is moving through the
courts. In a recent decision, the British Columbia Supreme Court certified a
foreign worker’s claim for damages as a class action, the first case of its
kind in Canada. The claim arose out of the foreign worker’s employment
relationship with a corporate defendant. Although the claimwill be decided at
trial, the certification as a class action should give employers some pause to
evaluate their dealings with foreign workers and the international agencies
they engage for recruiting them.
In the case ofDominguez v. Northland Properties Corp. (c.o.b. Denny’s Restaurants)[i]
the court must deal with allegations of systematic and repeated breach of
employment contract by a corporate defendant who had in its employ a large
number of foreign workers, mostly from the Philippines. The nature of the claim
to be decided by the court is that the breaches took place within an employment
situation where the foreign workers were under a significant disadvantage in
terms of protecting their own interests, and that the defendant sought to take
advantage of these vulnerable individuals, given their precarious status in
Canada. In its current phase, the issue was whether the case could be certified
as a class action on behalf of similarly situated foreign workers in the
defendant’s current and past employment. For that to be accomplished, the plaintiff
had to overcome significant hurdles that would allow her to become a
representative for that entire class of foreign workers.
The plaintiff, Ms. Dominguez, was a temporary
foreign worker who came to Canada in 2008 to work at one of Denny’s
restaurants operated by the defendant. She contends that the defendant employer
failed to provide her as much work as promised, failed to pay her overtime for
hours worked, and failed to reimburse her for expenses related to her
employment such as travel from the Philippines and agency recruitment fees. As
a result, she alleges that she suffered damages arising out of breach of
contract, including breach of duty of good faith and fair dealing, and breach
of fiduciary duty by the defendant. She also alleges that the defendant employer
was unjustly enriched by reason of nonpayment of these wages and other
expenses, and that the breaches were systemic in the sense that the defendant
failed to implement the necessary procedures to ensure that she and other
employees were appropriately compensated.
Ms. Dominguez sought to have the matter
certified as a class action proceeding on behalf of herself and all other
current and former employees who came to Canada under the Temporary Foreign
Worker Program to work for the defendant. There were approximately 75 people in
the putative class. The question for the court was to decide whether Ms.
Dominguez was the appropriate representative plaintiff in a class action
pursuant to the Class Proceedings Act[ii]
of British Columbia.
There was considerable background evidence
before the court. Ms. Dominguez was recruited by the defendant employeras a
temporary foreign worker and she initiated her application in order to join her
husband, who was already working for the defendant. As part of the process she
was required to send her resume to an agency in British Columbia, designated by
the defendant, which obtained the necessary approvals for the foreign workers. The
agency carried out its recruitment activities in the Philippines through a
counterpart. The vast majority of the foreign workers were recruited as a
result of the dealings between the agency in British Columbia and its
counterpart in the Philippines.
At some point the agency in Canada advised Ms.
Dominguez’s husband that he would have to pay an initial $3,000.00 in order to
proceed with his wife’s application. After that payment, Ms. Dominguez was
contacted in the Philippines by the agency’s counterpart and advised that a
positive Labour Market Opinion (LMO) had been issued by Service Canada relating
to her job with the defendant employer as a food and beverage server, and that
she would be paid $9.80 per hour for a 24 month period. The hours of work were
not specified in the LMO. However, in the case of other putative class members
the LMO specifically provided that the employees would work 40 hours per week.
The agency in British Columbia was very
involved in the process to obtain LMOs for the foreign workers placed with the
defendant’s restaurants. The agency’s counterpart in the Philippines copied the
contents of the Human Resources and Skill Development Canada sample contract,
which specified that the employees shall work 40 hours per week and would
receive 50% more than the regular wages for any hours worked over that limit. In
addition, the contract specified that the employer shall not recoup from the
employee, through payroll deductions or any other means, any costs incurred in
recruiting or retaining the employee, including, but not limited to, any amount
payable to a third party recruiter. Further, the employer agreed to assume the
cost of two way air transportation for the employee and to abide by the
standards set out by all relevant provincial labour legislation. Ms. Dominguez
and most other foreign workers were required to sign the employment contract in
substantially the same fashion.
Shortly after the contract was signed, Ms.
Dominguez underwent a medical examination and a work visa was approved by the
authorities. At that point, she was advised by the agency’s counterpart in the
Philippines that she would have to pay an additional $2,750.00 to continue with
the hiring process as an “agency fee”. The court noted that all of the putative
class members applying for positions with the defendant through the agency and
its counterpart were similarly required to pay fees in order to complete the
hiring process. Employees paid between $6,000.00 and $7,000.00 in total depending
on currency conversion. In addition, Ms. Dominguez and other employees
purchased their airfare for travel to Vancouver from the agency’s counterpart
at a cost of approximately $1,000.00 and were not provided with a receipt for
this payment.
After arriving in Canada, Ms. Dominguez began
to work for the defendant as a food and beverage server at one of itsVancouver
locations. The problems started almost immediately and Ms. Dominguez complained
that she was often provided with less than 40 hours of work per week and was
not compensated for hours she did not work despite being able to do so. There
was evidence that other foreign workers were treated in a similar fashion. The
defendant contended that there was a shortage of work and that it chose to cut
the hours of foreign workers before reducing those of Canadian citizens or Permanent
Residents.
Ms. Dominguez alleged that she occasionally
worked over 8 hours a day, but she was not paid overtime, and that she lodged
numerous complaints with management. The lack of payment of overtime had
been the subject of a separate investigation by the Director of Employment Standards
in British Columbia, which had led to a voluntary settlement by the defendant
with other claimants. There was evidence that the fees charged by the agency
and its counterpart in the Philippines was also the subject of a prior
investigation by the Director, and other evidence disclosed that at least one
employee had filed a complaint with the Employment Standards Branch and was subsequently
terminated, apparently in retaliation for bringing that complaint. All these
factors made for a negative work environment.
The courthad to determine whether there was an
identifiable class of “two or more persons” as required by the British Columbia
legislation[iii]
to certify a class action.The court answered in the affirmative, dividing the
class into two subsets, one comprising all current and former employees with a
positive LMO allowed to work in Canada under the Temporary Foreign Worker
Program who were still in Canada, and another one of all the current and former
employees who had worked for the defendant as foreign workers with an LMO but were
no longer resident in the province.
The allegation in the caseto be tried is that
the defendant employer was in breach of employment contracts with the putative
class members. In this phase of the case, the court held that although each foreign
worker had a separate contract, there was sufficient commonality to deal with all
of them together as the issues arising were substantially similar, if not
identical in many cases.
A claim was advanced that there is a further
common issue, to be decided at trial, that the defendant acted as fiduciaries in
the context of the vulnerability of the temporary foreign workers and took
advantage of them.In that regard, the court accepted that there was sufficient
commonality of experiences of all the foreign workers who were employees of the
defendant to be part of the class action.
Considering all aspects of the case, the court
held that certification as a class action was warranted and would result in an
efficient use of judicial resources, since the experiences of all the foreign
workers in the class were substantially similar and the allegations were also
substantially the same, and there appeared to be systemic issues that would
best be dealt with in a class action.
While the merits of the caseare yet to be
decided, the certification of this case as a class action should sound the
alarm amongst employers with a large number of foreign workers. A defendant
employer faces the prospect of a very large monetary award against it in a
class action proceeding. This being the first case of its kind in Canada, it
will no doubt attract considerable scrutiny by employers and employees alike. In
addition to potential financial liability, employers should be reminded that
they may be subject to significant administrative sanctions by Service Canada
for breach of conditions set out in LMOs, which can result in a two-year
suspension from the Temporary Foreign Worker Program.
