Limitation Periods in Misclassification Cases: Brown v. Procom Consultants Group Ltd., 2021 ONSC 4185

In Brown v. Procom Consultants Group Ltd., 2021 ONSC 4185 (“Brown v. Procom”), a motion was brought to substitute the representative plaintiff in a proposed class action with another person (the “New Plaintiff”). The class action concerned the alleged misclassification of employees at Procom as independent contractors, thus disentitling those employees from the minimum employment standards under the Ontario Employment Standards Act, 2000, including vacation pay, public holiday and premium pay, and overtime pay. 

Procom opposed the motion on the grounds that the New Plaintiff’s interests did not align with the prospective class and further that the New Plaintiff’s claim was statute-barred and therefore not viable. 

Ultimately, the Ontario Superior Court of Justice granted the motion and permitted the substitution of the representative plaintiff. In the Court’s view, there was no basis at the certification stage of class proceedings to limit claims of employee misclassification to two years prior to the issuance of the statement of claim. 

The Low Bar to Replace a Representative Plaintiff

The test for replacing a representative plaintiff was set out by Winkler J. (as he then was) in Logan v. Canada (Minister of Health), [2002] O.J. No. 522. Relevant factors include whether the class proceeding was commenced for an improper purpose, whether class members or the defendant would be prejudiced, and whether the new representative plaintiff was prepared to accept exposure to cost consequences. 

In order to replace a representative plaintiff, the claim must at least be “tenable”. This is a very low bar. A claim will be untenable if it is clearly impossible of success. Where a claim is possibly capable of success, conceivable, or within the bounds of legal possibility, then it is not untenable. It is clear not much is required for a claim to be tenable. If it is possible, and not excluded by law, a claim will be tenable. 

Thus, the question in Procom was whether the claim was excluded by law via the Limitations Act, 2002, which generally provides a plaintiff only two years to pursue an action. 

Limitation Periods and Discoverability in Misclassification Class Proceedings

The Ontario Limitations Act, 2002, states that no proceeding can be commenced more than two years after the claim was first “discovered”. The two-year limitation period does not start ticking until a claim is discovered. 

When does a misclassified employee discover their claim? The Court in Brown v. Procom relied on the Ontario Court of Appeal decision Evangelista v. Number 7 Sales Limited, 2008 ONCA 599 which concerned discoverability in the context of unpaid vacation pay. There it was said that a claim for vacation pay is not discoverable simply because it was not paid when due but is instead discoverable when the employee knew or ought to have known they were entitled to the vacation pay. 

Therefore, the simple act of not being paid something an employee is entitled to does not trigger the running of a limitation period where the employee cannot know of that entitlement. An employee must know, or ought to know, of their entitlement to something before the failure to provide it can trigger the limitation period. 

This reasoning also applies to misclassification cases. If an employee does not know they are an employee, this may delay discoverability. This is especially true where the employer wrongfully labels the employee an independent contractor. It was said in Omarali v Just Energy, 2016 ONSC 4094 that an employer’s misrepresentations regarding employee status can extend discoverability. Further, in Fresco v. Canadian Imperial Bank of Commerce, 2020 ONSC 6098, reliance on the employer’s misrepresentations was said to be reasonable. The determination of employment status is not a simple exercise. If a large, sophisticated, and highly regulated organization such as a bank could inaccurately assess a worker’s employment status, why should it be assumed that workers could self-diagnose that status? 

Ultimately, the Court in Brown v. Procom held that workers are “not required to conduct independent research as to employment status when the employer represents that the worker is an independent contractor and provided no ESA entitlements in a manner consistent with that representation.” In such a context, it is reasonable for the worker to rely on their employer’s misrepresentations and never doubt their classification as an independent contract.

Given this, a claim of misclassification is only discoverable when a worker can reasonably know he or she has been misclassified, and they do not have a duty to independently investigate whether that is the case. 

Thus, in Brown v. Procom, it was only when the New Plaintiff consulted with legal counsel in 2020 that she discovered her misclassification and therefore her entitlements under the ESA. The limitation period only began to run after this discussion with counsel. The New Plaintiff brought her claim within two years of that discussion with counsel, hence within the limitation period. As a result, her claim was tenable as it was not excluded in law by virtue of the Limitation Act, 2000.

This article was written by Shane Burton-Stoner and was originally published by The Lawyer’s Daily on December 15, 2022. Shane is licensed by the Law Society of Ontario and is an Employment Lawyer at Monkhouse Law. 

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