Employer could be held liable for third-party agencies' errors, court rules
The British Columbia Supreme Court has ruled that an employer could be held liable for damages incurred by foreign nationals who paid for Canadian jobs.
In ruling the in Basyal v. Mac's Convenience Stores Inc., the court found that Mac’s Convenience Stores could be potentially liable for alleged illegal recruitment fees charged to foreign workers hired under the Canadian Temporary Foreign Worker Program (TFWP).
The class-action lawsuit involves workers recruited through third-party agencies, specifically Overseas Immigration Services Inc. and Trident Immigration Services Ltd., which allegedly charged foreign workers fees for job placements in Canada, despite Canadian law prohibiting such charges.
The class action – representing foreign workers including lead plaintiffs Prakash Basyal, Arthur Cajes, Edlyn Tesorero, and Bishnu Khadka – accuses Overseas of charging substantial fees for jobs purportedly arranged with Mac’s. The workers, having paid up to $8,000 in fees, arrived in Canada only to find that promised jobs were unavailable.
The class action seeks to hold Mac’s vicariously liable for Overseas’ alleged breach of fiduciary duty, arguing that Overseas acted as an agent of Mac’s in recruiting temporary foreign workers. Justice Sharon Matthews’ ruling on Nov. 1, 2024 addressed whether Mac’s could be liable for Overseas’ actions, and whether workers were required to mitigate losses by seeking other employment if promised jobs were unavailable.
Numerous groups have spoken up about how immigrants looking to land employment in Canada are being asked to pay tens of thousands of dollars by employers who are abusing TFWP.
Vicarious liability and worker vulnerability
Matthews found that Mac’s bore responsibility for recruitment activities conducted by Overseas under an unwritten agreement that allowed Overseas to act as Mac’s representative in recruiting and obtaining work permits for foreign workers. This agreement included pre-screening, candidate recruitment, and assistance with immigration paperwork.
“Mac’s appointed [Overseas] as its agent for recruitment and compliance with the TFWP, while acknowledging responsibility for Overseas’ adherence to federal and provincial recruitment laws,” Justice Matthews noted, based on evidence that Mac’s had attested in official documents to responsibility for Overseas’ compliance with laws governing recruitment.
Mac’s contended that Overseas’ alleged misconduct should not be attributed to it, as Overseas hosted job fairs for various employers and charged fees independently. However, the court concluded that the degree of authority given to Overseas effectively made Mac’s responsible for its recruitment activities under Canadian law.
In assessing the case, Justice Matthews applied the Bazley test – a legal framework assessing factors that establish vicarious liability. Key considerations included the vulnerability of the workers, the extent of authority conferred upon Overseas, and the connection between Mac’s enterprise and the opportunity for alleged misconduct. The court found that the authority delegated to Overseas by Mac’s made vicarious liability appropriate under the circumstances:
“The workers were vulnerable… they had little to no support in Canada and had incurred significant fees to obtain employment through Overseas,” Justice Matthews said. This vulnerability, along with Mac’s decision to delegate nearly all recruitment activities to Overseas, placed Mac’s in a position of potential liability.
The court’s decision means that if Overseas’ recruitment fees are found to be illegal at trial, Mac’s could be held financially accountable for damages suffered by the workers.
Duty to mitigate and deductibility of earnings
Mac’s also sought to reduce potential damages by arguing that workers had a duty to mitigate their losses by finding alternative employment when promised jobs were unavailable. The court ruled that the duty to mitigate did not apply to these workers, citing the nature of the fixed-term employment contracts and regulatory constraints of the TFWP.
Justice Matthews noted that TFWP restrictions legally limited workers to specific positions at specific locations, preventing them from easily securing alternate employment. The workers’ precarious immigration status, combined with the prolonged process of obtaining new permits, meant requiring them to mitigate losses would be unreasonable. The court held that their contracts implicitly ousted the duty to mitigate, as they could not legally take up other work without violating TFWP rules.
Nonetheless, the court concluded that, if subclass members secured employment during their contractual notice periods, any earnings from those positions would be deducted from damages owed by Mac’s.
In May, the owner of an Edmonton-based immigration business was convicted for charging $30,000 and $45,000 to arrange employment for foreign workers, according to a previous CBC report.
The federal government has made numerous changes to the TFWP this year.