Montaque v. Handa Travel Student Trip Ltd., 2020 ONSC 3821
In 2017, several college-age students thought they were signing up for a "job of a lifetime" as trip leaders with S-Trip to travel and assist with executing activities, excursions and parties.1 While the students were told to expect 14-hour workdays, evening shifts, and long hours, trip leaders did not receive a paycheque and were called "volunteers" in internal documents. S-Trip would only pay the students a small honorarium - well below the province's minimum wage.
A class action lawsuit was launched against S-Trip and its affiliates with the suit alleging that the trip leaders were wrongfully classified as volunteers while doing the work of an employee. It was contested whether the students were entitled to receive benefits for employees as specified under the Employment Standards Act ("ESA")2.
An Ontario court has approved the settlement between the former trip leaders and the organization with the firm's Toronto-based parent company, I Love Travel. The court has agreed to a $450,000 settlement and reclassifying staff on future trips as employees rather than volunteers.3
This case is the first volunteer misclassification class action in Canada.4 In addition to setting a new precedent, the case has the potential to significantly impact employment law moving forward.
Background
Despite the fact that S-Trip advertised full-time salaried positions on their job board, S-Trip trip leaders were required to sign contracts specifying that they were volunteers providing services to the company and that no employment relationship was established between the trip leader and the company.5 Trip leaders were responsible for performing various tasks related to pre-trip planning and procedure, travel organization, airport and flight procedures, briefing sessions, and return trip organization and procedures.6 While staff were granted an honorarium, it was calculated by the number of trips they completed and differentiates based on position.7 Income tax, employment insurance, and Canadian pension plan deductions were not deducted from the honorarium.8
The Class Members argued that the following factors established an employment relationship:
- The Class Members are the main point of contact between the customers and S-Trip;
- S-Trip's operations along with the duties performed by the Class Members serve no civic, religious or charitable purpose;
- S-Trip is a for-profit company;
- Class Members are subject to a six-step interview process, which includes a Garda Pre-Employment Background Check;
- Class Members are provided with extensive guidelines and manuals;
- Class Members are assigned mandatory duties and working schedules;
- The duties assigned to Class Members are obligatory and not voluntary;
- Class Members are compensated for their work - e., the honorarium; and
- The compensation provided to Class Members increases with seniority.9
Settlement Approval
The Ontario Superior Court of Justice approved the proposed settlement in the all-inclusive amount of $450,000. Justice Morgan first reviewed the principles in which the court must take into account in assessing the reasonableness of a settlement including the likelihood of success, the presence of good faith, and the future expense and likely duration of litigation.10 In applying these principles to the settlement, Justice Morgan found that the settlement proposal was reasonable and provided several benefits including that it avoided delays associated with trial and appeals, provided for pro-rata payments based on the length of the trips taken by class members, and it achieved behaviour modification as the defendants agreed to reclassify class members as employees for future trips.11 Justice Morgan further noted that the settlement struck a balance between individual compensation of class members and an efficient and expeditious overall distribution.12 The court concluded by noting that the settlement achieved was a good one as it will put money in the pocket of class members that they would not likely be able to achieve on their own.13
Conclusion
As Justice Morgan noted, this is the first volunteer misclassification class action in Canada and will have a significant impact in labour and employment law moving forward. The case is significant for employers in particular as it reflects what type of resolution in class proceedings would fall within the "zone of reasonableness" required by the Class Proceedings Act, 1992.14
While a settlement is not a binding precedent in law, the Court's approval of the settlement provides a cautionary tale for employers. For example, employers would be well-advised to carefully consider if the volunteers in their organization may actually be considered employees by law. Further, class actions are becoming a more effective method for employees to seek claims against employers as it provides class members with a less expensive and more efficient litigation vehicle to pursue their claims.
This blog was co-authored by student-at-law, Abby Leung
Footnotes
1 Lauren Pelley, "S-Trip accused of exploiting volunteer 'trip leaders' who work long hours" CBC August 24, 2017: https://www.cbc.ca/news/canada/toronto/s-trip-employees-1.4246725 [CBC].
2 SO 2000, c. 41
3 2020 ONSC 3821 at para 6 [Montaque].
4 Ibid at para 13.
5 CBC, supra note 1.
6 Montaque, supra note 3 at para 3.
7 CBC, supra note 1.
8 Ibid.
9 2020 ONSC 3821 [Statement of Claim, Plaintiff at para 40].
10 Montaque, supra note 3 at para 5.
11 Ibid at para 6.
12 Ibid at para 8.
13 Ibid at para 13.
14 S.O. 1992, c.6.
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