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Class Actions, We Hardly Knew You

Employment lawyers in British Columbia are mourning the apparent (and early) demise of the class action. Class actions briefly showed promise for pursuing large-scale claims in court against employers.
 
Class action lawsuits allow many plaintiffs to band together to pursue their claims in court. Typically, each individual claim is small in scale, sometimes small enough that it wouldn’t be worth pursuing at all on its own.
 
Combined with hundreds, or even thousands, of similar claims the potential damages definitely start to attract some attention. Not long ago, a group of Wal-Mart employees in the U.S. won an award of $78 million for unpaid overtime pay.
 
The attraction of the class action is that the plaintiffs share the burden of the cost of the litigation. There may also be a psychological motivator behind class actions as well - an individual who wouldn’t initiate a claim on her own might feel more comfortable doing so as part of a larger group.
 
An area which seemed perfectly suited for class actions in court was claims arising under B.C.’s employment standards statute. Claims such as unpaid overtime pay, vacation pay, and statutory holiday pay were likely candidates for a class action.
 
Until recently, the hurdle preventing such collective claims was the courts’ refusal to adjudicate claims arising out of employment standards statutes. The courts in B.C. had taken the view that a statutory claim must be pursued through the complaint procedure provided in the statute (in the case of B.C.’s Employment Standards Act, via a complaint submitted to the Employment Standards Branch).
 
That seemed to be changing as B.C.’s Supreme Court began to take a more open-minded view of litigants pursuing statutory claims in court. That meant the avenue of a class action in court was suddenly available for these statutory claims. 
 
The B.C. case which got the ball rolling involved a plaintiff named Macaraeg and her employer, E Care Contact Centers Ltd.   Macaraeg’s claim was for overtime pay pursuant to the B.C. Employment Standards Act.
 
B.C.’s Supreme Court ruled it was an implied term of Macaraeg’s employment contract that she would be paid overtime in accordance with the Employment Standards Act. The Court’s ruling that the requirements of the Employment Standards Act are implied terms of the employment contract was critical – it allowed the Court to hear and decide upon the claim just as it would any other breach of contract claim.
 
Employment lawyers interested in the pursuit of class actions rejoiced as the doorway to the courts had seemingly been flung open.
 
But now the Macaraeg decision has been quickly overturned by B.C.’s Court of Appeal. B.C.’s top court reverted to the more traditional view that statutory claims must normally be adjudicated by the administrative body created for that purpose.
 
The Court of Appeal rejected the notion that employment rights conferred by statute are implied by law into the employment contract. It determined that the general rule is there is no cause of action in court for the enforcement of statutory rights. If a statute provides its own enforcement mechanism (as B.C.’s Employment Standards Act does), there is simply no need for a cause of action which can be pursued in court.
 
That being the case, the doorway for B.C. employment lawyers looking to launch large-scale class actions based on statutory entitlements has been slammed shut once again. This doesn’t mean that all class actions in the employment context have been eliminated, but it does mean that the most fertile ground for such claims is looking barren once again.
 
 
Robert Smithson is a partner at Pushor Mitchell LLP in Kelowna practicing exclusively in the area of labour and employment law. For more information about his practice, log on to http://www.pushormitchell.com/.