Deductions for unpaid benefit premiums not allowed: board

Worker didn't provide written authorization for deductions from final pay

Deductions for unpaid benefit premiums not allowed: board

An employer breached employment standards legislation when it deducted a worker’s share of benefit premiums and cellphone payments made during the worker’s leave from her final paycheque, the Ontario Labour Relations Board has ruled.

The worker was hired by Superior Home Health Care, a home health care service in Thunder Bay and Barrie, Ont., in May 2016. As part of her employment offer, Superior agreed to reimburse the worker $40 per month towards a second cellphone that she would use for work purposes only. The worker was to submit monthly expense reports to cover this along with other out-of-pocket expenses.

The worker was also entitled to participate in Superior’s group insurance plan. Employees who opted into the plan paid 50 percent of the monthly premiums with Superior paying the other half.

The worker was scheduled to begin a leave of absence in November 2019. On Oct. 1, she emailed management saying that she believed that she would remove herself from the benefits plan but they needed to check with the third-party benefits provider to ensure that she could be added back when she returned from her leave. She also said that they had discussed two options for the cellphone – keep it active and transferring it to Superior’s account, or upgrading it so she can make changes to the account.

An employer’s plan to deduct a Christmas overpayment from overpaid workers was not permissible without the written consent of all affected employees, an Alberta arbitrator ruled.

Request to be removed from benefits plan

According to the worker, she met with her manager in November and asked to be removed from the benefits plan during her leave because she had alternate coverage under her spouse’s plan. She was told that the request would have to be reviewed, but no one said that it couldn’t be done. Management did not submit a signed request to the benefits provider.

When the worker began her leave, her benefits plan continued to be active and Superior paid the full monthly premium. Management did not consider the worker to have definitively withdrawn from the benefits coverage prior to her leave, as the discussion had been left open and the worker did not submit a signed request.

The worker returned from her leave in January 2021. Three months later, she advised Superior that deductions for her 50-percent share of the benefits premium were being made from her pay, which should not have been happening because of her request to be removed before her leave. She had not made any request to resume benefits coverage.

Management treated this as a clear request and stopped the deductions with the intention of discussing the matter later.

Unilateral deductions of employee wages is usually not permissible, even for mistaken overpayments, according to an employment lawyer.

Deductions from final pay

However, the worker resigned from her employment in December 2021. Superior deducted $1,209.34 for benefits premiums and $480 for cellphone payments that it had made during her leave. It had not previously tried to collect the money from her.

The worker filed an employment standards claim, arguing that Superior was not entitled to make the deductions from her final pay.

An employment standards officer agreed with the worker, finding that Superior did not have written authorization to deduct either amount, which contravened the Ontario Employment Standards Act, 2000. The officer ordered Superior to repay the worker for the deductions it made to the worker’s final pay.

Superior appealed the decision to the Ontario Labour Relations Board, arguing that the deductions were from an understanding with the worker and the deductions for benefit premiums were part of the employment offer that the worker signed. As for the cellphone deductions, the worker had an understanding that she was liable for the cost of the phone, Superior said.

Employers should proceed cautiously before making any deductions from employees’ pay to recover losses, says an employment lawyer.

Written authorization

The board noted that the act only permits deductions from an employee’s pay when authorized in writing by the employee, but if the employee authorization does not refer to a specific amount or formula, then deductions are still not permitted. This was because of the control employers have over employee wages and the act’s purpose was to protect the rights of workers in the face of an imbalanced employment relationship, said the board.

The board also noted there was no definitive evidence of what was required to stop coverage under Superior’s group benefits plan or whether Superior agreed to do it for the worker’s leave, but this was irrelevant. Regardless of the circumstances, the worker did not provide any authorization in writing for Superior to submit the amounts from her paycheque, said the board.

The board also found that the employment offer that the worker signed only stated that the company would reimburse $40 per month for the worker’s cellphone, there was no written authorization for any deductions from her pay for either the phone or benefits premiums. Even if there was a verbal agreement, this did not meet the act’s requirement for written authorization, said the board.

The board acknowledged that it was understandable that Superior would want the worker to pay what she owed for the benefits premiums and the cellphone. However, the act’s requirements were specific and must be interpreted “in a broad and generous manner and its exceptions narrowly,” the board said. Without authorization from the worker that met the act’s requirements, Superior was not entitled to make any deductions related to unpaid benefits premiums or cellphone payments, the board said.

The board upheld the employment officer’s order to Superior to repay what it had deducted from the worker’s pay. See 1591783 Ontario Inc. o/a Superior Home Health Care v. Alayna Kollman, 2022 CanLII 116939.

Latest stories