Court Certifies Monkhouse Law Class Action Regarding Severance Pay and Other Benefits for Misclassified Workers

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class action certified

Monkhouse Law has once again successfully certified a class action for worker misclassification. In a case before Justice Morgan of the Ontario Superior Court, Monkhouse Law certified a class action requesting severance pay and statutory minimum benefits against FSB Insurance Ltd. and FSB Commercial Ltd. (“FSB”), related companies that sell personal and commercial insurance products. 

Severance Pay Class Action for Misclassification

Employee misclassification as independent contractors is a growing and concerning trend in Ontario, depriving many workers of their basic employment rights. As a result of such misclassification, employees are deprived of their right to common law severance pay when they are terminated without cause. Workers are entitled to roughly 3 to 5 weeks severance (reasonable notice) -per year of service with a lower end of 3 months and upper end of around 24 months if they are terminated without cause. If the employer fails to provide such notice, they are entitled to their regular wages for the same period. Independent contractors, conversely, are only owed what is specifically stipulated in their contract, if anything is at all. 

Common law severance pay has sometimes proved difficult to bring forward in a class action setting because the legal analysis focuses largely on individual factors. Nevertheless, Monkhouse Law was able to certify common issues relating to severance pay. This means that the court will determine for the entire class their contractual terms regarding severance pay and whether they are entitled to damages. 

The Case: FSB Insurance

The Defendants’ business model is to act as an intermediary between insurance companies and clients. In doing so, it generates revenue through commissions, calculated as a percentage of the premium paid by the client to the insurance company. The representative plaintiff in this case worked as producer for FSB, selling life, home, business, and casualty insurance to clients from different insurance companies. The representative plaintiff and the other producers were paid entirely in commission for their work. 

FSB’s producers are and were paid entirely as independent contractors. As such, they were not paid Employment Standards Act minimums such as severance pay, termination pay, minimum wage, vacation pay, holiday pay, premium pay, or overtime. They also do not receive contributions from FSB towards Employment Insurance and the Canada Pension Plan. 

This class action was brought because the representative plaintiff understood that while he had agreed to work as an independent contractor, in practice he was treated as an employee.

Certification Decision

At the certification hearing, the judge will certify (approve) what are called “common issues”. These are the legal issues that class members share. A common issue is one which must be resolved for each class member in order to determine if there was a legal wrong which they should be compensated for. 

Justice Morgan certified all eleven of the representative plaintiff’s requested common issues. These included:

  • Whether they have been misclassified as independent contractors
  • Whether they are owed statutory minimums under the ESA: minimum wage, vacation pay, holiday pay, overtime pay, and premium pay
  • Whether the Defendants are liable for contributions to the Canada Pension Plan or Employment Insurance
  • If the producers are employees, what the terms of their employment are for regular and overtime hours of work, termination and severance pay, and pay in lieu of overtime
  • Whether the Defendants breached such terms and, if so, if class members are owed damages

A positive certification decision is a great outcome. It means that the class members’ legal issues can be heard together. They do not need to retain their own lawyer and bring their own claim forward to determine if they should receive a remedy for the legal wrongs committed against them.

This class action was certified for all the producers who had worked for FSB since August 2004 who were classified as independent contractors. The Defendants are currently seeking leave to appeal the decision.

What’s next?

The next stage in a class action, notwithstanding possible appeals, is a resolution on the merits of the common issues. 

Common issues are resolved through trial, summary judgment or settlement. In addition to the common issues described above, Justice Morgan also certified common issues which would allow for an aggregate assessment of the damages owed to class members. If Monkhouse Law is successful on this point, it will greatly reduce the need for any individual assessments and will simplify the distribution process. 

If you are a member of this class, you will be bound by the outcome of further litigation or settlement of this case. If you do not want to be, you must opt-out before the opt-out deadline. Make sure to check this page for updates as the case progresses. For more information, contact Lexa Cutler at lexa.cutler@monkhouselaw.com or 416-907-9249 ext. 222.

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