No-hire clause had 'valid business purpose,' say judges
The British Columbia Court of Appeal has upheld a lower court ruling dismissing a proposed class action against The TDL Group Corp., franchisor of Tim Hortons, over allegations that a "no-hire clause" in franchise agreements restricted employee mobility and suppressed wages.
The case, Latifi v. The TDL Group Corp., 2025 BCCA 45, involved claims that the clause, in effect from at least 2003 until 2018, prevented franchisees from hiring employees from other Tim Hortons locations.
The plaintiff, Samir Latifi, sought to certify a class action on behalf of affected workers, alleging that the clause constituted a conspiracy to limit job mobility and control wages.
Latifi claimed that the clause prevented employees from seeking competitive job opportunities within the Tim Hortons franchise system, resulting in lower wages and fewer opportunities for professional advancement. The claim, initially based on a breach of Section 45 of the Competition Act, was later narrowed to focus on a predominant purpose conspiracy – a legal claim that requires proving that the primary intent of an agreement was to harm another party.
"The plaintiff and class members have suffered reduced wages, reduced employment benefits, loss of professional growth opportunities, and worsened working conditions (collectively, 'wage suppression') because of the express unlawful agreement among TDL and its franchisees in the no-hire clause," the claim alleged.
TDL argued that the clause was not intended to harm employees but was designed to protect franchisees' investments in training workers. The company also noted that the clause had been removed from franchise agreements in 2018 and was no longer enforced.
According to a previous investigation by CBC, hundreds of workers from different food establishments have claimed that they have been victims of “tip theft”.
In the case, the British Columbia Supreme Court granted summary judgment in favour of TDL, ruling that there was no genuine issue for trial. The chambers judge found no evidence that TDL and its franchisees intended to harm employees by implementing the no-hire clause.
Key to the decision was the testimony of James Gregoire, TDL’s vice-president, franchise operations, who stated:
"The purpose of the No-Solicitation [No-Hire] Clause was not to injure the plaintiff or any other persons who are or were employees at a Tim Hortons restaurant in Canada. Its purpose was not to limit employment mobility generally, reduce or suppress wages, reduce employment benefits, cause loss of professional growth opportunities, or to worsen working conditions."
The court also noted that Latifi had provided no contradictory evidence from franchisees, making it impossible to prove that TDL and its franchisees acted together with the intent to harm employees.
"There is no evidence from any alleged co-conspirator to contradict [Gregoire’s] claim. I have been given no cogent reason to doubt his reliability or credibility," the judge stated.
Latifi worked the graveyard shift as a baker at a Surrey, B.C., Tim Hortons in 2012, according to CBC.
The British Columbia Court of Appeal upheld the lower court’s decision, rejecting Latifi’s argument that the chambers judge had erred in characterizing the alleged injury and in accepting TDL’s evidence.
Justice Willcock, writing for the unanimous panel, stated:
"The judge found that wage suppression may have been the effect of the no-hire clause but it was not TDL’s intent. The judge accepted Mr. Gregoire’s evidence that there was a valid business purpose to the policy: protection of the investment in employee training."
The court also reaffirmed the principle that a predominant purpose conspiracy claim cannot succeed if the agreement primarily benefits the parties involved rather than being intended to harm a third party.
Rejecting Latifi’s argument that the licensing agreements themselves proved a conspiracy, the court ruled:
"There was no genuine issue for trial with respect to the alleged predominant purpose conspiracy."
One-third of workers in British Columbia are not earning enough to meet the basic needs of their families, according to a previous report by the Canadian Centre for Policy Alternatives (CCPA).
To prevent wage suppression and ensure equitable compensation practices, BC employers should adhere to the following guidelines from the BC government:
Comply with the Pay Transparency Act - Enacted on May 11, 2023, the Pay Transparency Act mandates several key requirements:
These reports aim to publicly disclose the status of gender pay gaps within organizations.
