Foreign worker class action a warning to employers

Group of workers recruited together can proceed with joint complaints against operator of Denny’s restaurants in B.C.
By Sergio Karas
|employmentlawtoday.com|Last Updated: 04/05/2012

The British Columbia Supreme Court has certified a foreign worker’s claim for damages as a class action, the first case of its kind in Canada and one that could reshape the recruitment and employment of temporary foreign workers in this country. The foreign worker’s claim arose out of her employment relationship with a corporate defendant. Although the claim will 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 Dominguez v. Northland Properties Corp., the court must deal with allegations of systematic and repeated breaches of an employment contract by Northland Properties, a company operating Denny’s restaurants who employed a large number of foreign workers, mostly from the Philippines. The worker alleges that the foreign workers were under a significant disadvantage in terms of protecting their own interests and the company 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 company’s current and past employment. For that to be accomplished, the worker had to overcome significant hurdles that would allow her to become a representative for that entire class of foreign workers.

Herminia 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 Northland 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. 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. In addition, Dominguez also claimed Northland was unjustly enriched by reason of nonpayment of these wages and other expenses, and that the breaches were systemic in the sense that Northland failed to implement the necessary procedures to ensure that she and other employees were appropriately compensated.

Dominguez sought to have the matter certified as a class action proceeding on behalf of herself and all other current and former employees — about 75 people — who came to Canada under the Temporary Foreign Worker Program to work for Northland. The question for the court was to decide whether Dominguez was the appropriate representative plaintiff in a class action pursuant to the Class Proceedings Act of British Columbia.

Workers recruited in the Philippines

Dominguez was recruited by Northland as a temporary foreign worker and she initiated her application in order to join her husband, who was already working for the company. As part of the process, she was required to send her resume to an agency in B.C. designated by Northland, which obtained the necessary approvals for the foreign workers. The agency carried its recruitment activities in the Philippines through a counterpart and the majority of the foreign workers in the class action 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 Dominguez’s husband that he would have to pay an initial $3,000 in order to proceed with his wife’s application. After that payment, 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 Northland 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 B.C. was very involved in the process to obtain LMOs for the foreign workers placed in the Denny’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 employee shall work 40 hours per week and would receive 50 per cent more than the regular wages for any hours worked over that limit. In addition, the contract specified that Northland would not recoup from the employees, through payroll deductions or any other means, any costs incurred in recruiting or retaining the employee, including 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. Dominguez and most of the other foreign workers were required to sign the employment contract in substantially the same fashion.

Shortly after the contract was signed, a work visa for Dominguez 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 “agency fee” to continue with the hiring process. The court noted that all of the putative class members applying for positions with Northland through the agency and its counterpart were similarly required to pay fees in order to complete the hiring process. Employees paid between $6,000 and $7,000 in total, depending on currency conversion. In addition, Dominguez and other employees purchased their airfare to Vancouver from the agency’s counterpart at a cost of approximately $1,000 and were not provided with a receipt for this payment.

Immediate problems with hours and OT pay

After arriving in Canada, Dominguez began to work for Northland as a food and beverage server at a Vancouver location. Almost immediately, she 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. Northland contended that there was a shortage of work and it chose to cut the hours of foreign workers before reducing those of Canadian citizens or permanent residents.

Dominguez alleged that she occasionally worked more than eight hours a day, but she was not paid overtime, and that she lodged numerous complaints with management. The lack of overtime pay 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 Northland 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. All of these factors made for a negative work environment, according to Dominguez.

The court had to determine whether there was an identifiable class of “two or more persons” as required by B.C. legislation to certify a class action. The court agreed, dividing the class into two subsets: all current and former employees with a positive labour market opinion (LMO) allowed to work in Canada under the Temporary Foreign Worker Program who were still in Canada; and all the current and former employees who had worked for Northland as foreign workers with an LMO but were no longer living in the province.

The allegation was that Northland 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 Northland 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 worked for Northland 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. There appeared to be systemic issues that would best be dealt with in a class action.

Significance for employers

While the merits of the case are 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. The 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.

For more information see:

Dominguez v. Northland Properties Corp., 2012 CarswellBC 518 (B.C. S.C.).

Sergio R. Karas is a Certified Specialist in Canadian Citizenship and Immigration Law by the Law Society of Upper Canada

. He is Past Chair of the Ontario Bar Association Citizenship and Immigration Section, Past Chair of the International Bar Association Immigration and Nationality Committee, and Editor of the Global Business Immigration Handbook. His comments and opinions are personal and do not necessarily reflect the position of any organization. He can be reached at (416) 506-1800 or karas@karas.ca.

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