Canadian Employment Law Today

CELT June 26 2013.qxp:celt 467.qxd 13-06-17 10:36 AM Page 3 CANADIAN EMPLOYMENT LAW TODAY Denny's settles foreign worker class action suit Restaurant chain must pay airfare, agency fees, overtime and shortfall from promised work hours to workers from Philippines and the fees paid to Denny's' recruiters abroad. AFTER more than two years of litigation, Throughout the course of the prothe British Columbia Supreme Court ceedings, and given the close relationhas approved a settlement of a foreign ship between Denny's and most of the worker class action against Denny's employees who continued to work for Restaurants. This was the the chain, there were allefirst class action proceedgations of improper comIMMIGRATION ing in Canada involving munications between foreign workers. management and the forThe foreign workers who constituted eign workers with the intent to disthe class alleged that, contrary to cer- suade them from participating in the tain contractual and other obligations, class action and urging them to "optDenny's failed to provide them with the out" of the proceedings. Therefore, the amount of work promised in their con- representative worker in the case, Hertracts, failed to pay them overtime, and minia Vergara Dominguez, obtained failed to reimburse them for recruit- relief in court to restrict communicament and travel costs, amongst other tions between Denny's and the foreign items. After certification of the class in workers. Notwithstanding that, 19 of the March 2012, the parties embarked upon 77 workers who constituted the class a dispute resolution process that members opted out. resulted in a settlement. Denny's also Settlement on several issues leads began third-party proceedings against its agents in the Philippines who to big payout to workers After what the court characterized recruited the foreign workers, seeking indemnity to the extent that it may be as highly charged negotiations, a settleliable to the foreign workers for travel ment agreement was reached between costs and recruitment fee repayments. the foreign workers and Denny's, which the court summarized as follows: That action continues independently. The class members alleged that •Work hours: The workers were entitled despite contracts between them and to either 37.5 or 40 hours of work per Denny's, the restaurant chain failed to week based on the contracts. Denny's provide them with the hours of work was to pay any shortfall between the agreed upon and, despite British hours the workers were entitled to Columbia legislation requiring a certain work and the actual number of hours level of pay for overtime work, Denny's worked. Denny's was entitled to assert failed to pay it. In addition, many of the that worker was unavailable for work or employment contracts stipulated that limited their availability. Any disagreethe foreign workers were not required ment could be referred to the arbitrator to pay for any travel or recruitment for a final determination. costs, but nonetheless they were asked •Overtime: All workers were entitled to to do so by the third parties who acted be paid overtime (including vacation as the chain's agents in the Philippines. pay and interest) for work done on that The cause of action against Denny's was basis. Denny's was to provide the initial grounded on breach of contract, breach calculation which was to be confirmed of fiduciary duty, unjust enrichment, by an independent auditor. Class mem- | BY SERGIO KARAS | bers had the ability to challenge the auditor's calculations to the arbitrator. •Airfare costs: All workers who had not already received reimbursement would be paid their airfare costs to Canada by Denny's, with certain exceptions. The excepted class members would have their airfare determined by the arbitrator with no right of appeal. Denny's was also to reimburse return airfare, except for those individuals who secured permanent residency in Canada or obtained employment in Canada with another employer. Any disagreement could be referred to the arbitrator for a final determination. •Agency fees: Workers would fill out a claim form indicating they paid agency fees, either directly or indirectly, to ICEA or Luzern, the agents in the Philippines. Denny's would establish a settlement fund in the amount of $300,000 for the purpose of paying these claims, which would be paid to a maximum of $10,000 each. If there was a shortfall, the funds would be distributed pro rata among the workers; if there was no shortfall, any remaining funds would be distributed equally. •Donations: Denny's was to make a $40,000 charitable donation to Migrante British Columbia, an organization which assists temporary foreign workers and their families, and a $40,000 charitable donation to a children's charity agreed to by the parties. •Release: Upon Denny's performing its obligations under the settlement, all class members would be deemed to have provided a full release of all claims against Denny's. The court discussed at length the propriety of the settlement agreement, and canvased the case law to decide Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 7 3

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