Court approves pandemic-related class action for non-unionized workers

Non-unionized, hourly hotel employees assisted by trade union in lawsuit

Court approves pandemic-related class action for non-unionized workers

The British Columbia Supreme Court has certified a class-action lawsuit related to the termination of hourly employees by a Vancouver hotel.

Early in the COVID-19 pandemic, the Pan Pacific Hotel cancelled the scheduled hours of several hourly employees due to the downturn in business. Romeul Escobar, a concierge at the hotel who was one of those terminated, filed a class-action lawsuit with the support of Unite Here, Local 40, a trade union. The lawsuit sought damages on behalf of a number of hourly employees who were terminated at the same time.

Escobar’s lawsuit claimed damages arising from wrongful dismissal, the hotel’s breach of group termination provisions in B.C.’s Employment Standards Act (ESA), the hotel’s “unjust enrichment” from not paying group termination benefits, its breach of the duty of good faith and honest performance, and punitive damages.

The court struck the group termination and unjust enrichment claims because they were related to rights under the ESA, which are not enforceable in civil proceedings in the province.

“Courts have been clear for a number of years that you can't pursue statutory remedies under the Employment Standards Act in court,” says Paul McLean, an employment lawyer and partner at Mathews Dinsdale in Vancouver. “If you wish to pursue those remedies, you'll have to do that in front of the Employment Standards Branch and, ultimately, in front of the Employment Standards tribunal.”

However, the court found that there were common issues for certification related to the wrongful/constructive dismissal claim — did the hotel fundamentally change a term of the employment contracts by cancelling the employees’ hours — whether the pandemic’s effect on re-employment opportunities warranted a longer notice period, whether the hotel breached its duty of good faith, and whether punitive damages were appropriate.

“What will drive this one is the combination of whether there was a constructive dismissal based on the actions taken by the employer and, if there's a common issue, finding that all of the employees identified in the class were constructively dismissed,” says McLean, adding that some of the employees are likely short-service hourly workers. “Without knowing the full details of each individual employee’s circumstances, I'm not sure the balance of the claims are going to be that substantial.”

More to come?

While there have been a number of court decisions dealing with dismissals during the pandemic, this is one of the first class actions of which McLean is aware that deal with the issue, and he thinks more could follow.

“If you've got a workplace where you had multiple terminations during the pandemic, plaintiff's counsel are certainly taking a hard look at whether or not the class proceedings is the appropriate fit,” he says. “There are certainly litigation advantages and strategic advantages if they can manage to get a class action certified against an employer as opposed to requiring each individual client to pursue their wrongful dismissal claim.”

A class-action lawsuit may look a little different, but the factors surrounding termination of employment during the pandemic are similar to other individual constructive or wrongful dismissal lawsuits tied to pandemic firings. McLean says that courts have to weigh the balance between employers trying to stay in business and the damages employees may face from being terminated through no fault of the employer or the employee due to “exceptionally rare circumstances.”

“The takeaway for the employer is that you continue to act in good faith and you continue to be honest,” he says. “If you have to make that tough call, the court will sort out whether it was right or wrong, but you can certainly minimize the risk by being forthright with staff and disclosing your plans in as timely a way as you can.”

Non-union workplace

One particular aspect of this class action of which employers should take note is that the lawsuit was co-ordinated and filed by a trade union before the hotel employees were organized into a collective bargaining unit, says McLean.

“Even though it involves non-union employees and the unionization process hasn't been completed, this is a case where the union is facilitating the class-action suit even though they're not exactly actually representing employees,” he says. “If I'm an employer, I think I need to be alive to the fact that even though I may operate a non-union business, I may well have to contend with the union co-ordinating and trying to organize my employees to pursue this type of remedy.”

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