‘Shock, disbelief’ over Goodwill store closures

Filing for bankruptcy provides some protection for workers
By Sabrina Nanji
|Canadian HR Reporter|Last Updated: 02/22/2016

ON Jan. 17, many Goodwill workers showed up for work only to find the doors locked and the company shuttered. 

Goodwill Industries of Toronto, Eastern, Central and Northern Ontario (TECNO) had suddenly closed 16 stores and 10 donation centres, citing an unsustainable fiscal crisis. The move left 430 workers across Ontario — including ones in Toronto, Barrie, Orillia and Brockville — out of a job.

The non-profit’s 12-member board of directors also resigned, but Keiko Nakamura, CEO of the Ontario operation, stayed on.

Then, on Feb. 9, Goodwill filed for bankruptcy, saying the purpose was to preserve the assets of the corporation for the benefit of its principal creditors — collectively meaning ex-employees. Goodwill said it is also considering a proposal which, if approved, would annul the bankruptcy and allow the re-opening of some stores. 

And the Canadian Airport Workers Union (CAWU), which represents Goodwill workers, supports the plan, according to the company.

But in the days immediately following the initial shutdown, there was confusion about the situation, particularly from the union. While Nakamura did eventually pay employees their outstanding wages on Jan. 22, the severance and termination pay and outstanding vacation pay were still owed to workers, according to Denis Ellickson, the union’s lawyer. 

He confirmed the union would be moving forward to try to work alongside Goodwill to settle the outstanding issues, and maybe talk about rehiring the out-of-work employees when the organization’s future becomes clearer. 

“When the stores closed, there was shock and disbelief and I think a lot of that turned into anger when the company announced it was not going to make payroll,” said Ellickson. “There was, at first, great despair and once again anger; then there was elation, of course, 48 hours later when they said and actually did make payroll.”

Now, CAWU is focusing on helping employees sign up for employment insurance (EI) benefits and attending workshops for employment opportunities, he said.

Nakamura but would not comment directly on the ongoing case. 

“I regret the concern, anxiety and frustration the staff of Goodwill has experienced,” she said, adding records of employment were mailed out so employees could begin the EI process.

Until Goodwill’s fate becomes a little clearer — whether it’s through bankruptcy, buyout, bailout or a reopening — the eventual goal would be to get some workers their jobs back, said Ellickson.

“We’re hoping step two will be seeing some of the stores reopen and employees back to work — we simply don’t know what the next steps are in that regard,” he said.

Payroll obligation

Goodwill is legally obliged to pay severance in lieu of notice, under Ontario’s Employment Standards Act. However, any confusion or legal action could have been avoided, or at least mitigated, if the provincial government would step up enforcement, said Jenny Ahn, national assistant to the president of Unifor.

“The government needs to have more enforcement of the Employment Standards Act,” she said. “And that’s ‘How many officers do we have so that companies like this don’t get away?’”

While there are regulations that govern a shutdown to protect employees, in some situations, an employer could be held personally liable for owed wages or dues, said labour and employment lawyer Hugh Christie at Ogletree Deakins in Toronto.

“Generally, the concept is under the Employment Standards Act, for-profit organizations, (they) have direct liability, but for not-for-profits, it doesn’t fall through to the directors,” he said, adding that Goodwill’s board members, all of whom resigned, wouldn’t have been on the hook. At other companies, a court could rule a director financially responsible.

As for what happens next, there are a number of routes, said Christie, including bankruptcy, a buyout or a reopening — or some sort of combination of those. It would be up to the employer and union to come to an agreement either together or in front of a judge or mediator, based on the collective agreement, as to who is owed what and how much, he said.

But the bankruptcy filing protects employees, he said, and out-of-work employees can file for the federal government’s wage protection program. It also enhances the priority for the case, in terms of unpaid wages and dealing with other creditors an employer might have.

As a last resort, and if the two could not come to a consensus concerning payroll, the union would have the legal option of taking its case to the province’s ministry of labour or have it heard in front of an arbitrator or the Ontario Labour Relations Board, said Christie. That could also address any uncertainty about the future of employment or the organization. 

Moving forward

What happened at Goodwill may seem like a sudden and isolated incident, but  the retail industry at large needs to re-evaluate how it treats this particular group of employees, said Ahn.

“We’re always quite devastated, but when you hear about it in a sector that is predominantly precarious workers — meaning they don’t have enough hours, they’re lower-paid, minimum wage jobs and many women and diverse workers — we’re always concerned.” 

For instance, about 70 to 75 per cent of Unifor members working at Metro grocery stores are in part-time positions, she said. The trend is common in the retail industry, which in past decades had more full-time positions and hours of work available, she said. 

Unions would do well to follow Unifor’s lead, said Ahn, and advocate for more full-time work and stable jobs in the industry. 

“Who’s bearing the brunt of all this is the front-line workers,” she said. 

In the meantime, a group of volunteer former staffers set up a website to raise $100,000 for workers for transitional support for rent, food and medicine. 

CAWU also partnered with Second Harvest to deliver food packages to about 400 laid-off workers. And employers such as Tim Hortons and Subway offered direct employment opportunities for the former employees, according to media reports.

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