Canada’s largest bricks-and-mortar travel retailer routinely failed to pay employees overtime and created “unlawful barriers” to claiming accurate compensation, according to a proposed class-action lawsuit worth more than $100 million.
The suit launched Friday by Toronto-based labour law firm Goldblatt Partners claims Flight Centre, a well-known travel company with 150 stores across Canada, “regularly required” employees to work beyond their scheduled hours but instituted “unlawful” overtime policies that shortchanged them out of payment and overtime protections.
As a result, workers were “systemically prevented from claiming and/or receiving overtime compensation in accordance with the applicable employment standards legislation,” the statement of claim says.
If certified, the class action will seek $100 million in general damages for thousands of employees across the country dating back to October 2010, as well as $10 million in punitive damages.
Allison Wallace, Flight Centre’s vice-president of corporate communications, said the company intended to vigorously defend itself.
“We don’t believe we’ve done anything wrong,” she said. “At this point, now that it’s a legal matter, I can’t comment further than that at this time.”
According to the class action’s statement of claim, Flight Centre travel consultants have employment contracts that stipulate full-time hours of work, a base salary plus commission, which constitutes a significant portion of their compensation.
But if consultants surpass certain sales targets, they earn a larger chunk of their total sales as commission — a structure that incentivizes them to “work longer and harder in order to sell more,” the suit says.
“While class members regularly work significantly in excess of their scheduled hours, the defendant has no system in place to track, monitor, record or compensate (them) for their actual hours worked.”
Stephen Aps was a Mississauga-based international travel consultant employed by Flight Centre from 2014 to 2015. His base salary was $27,000 a year and he averaged about 45 to 50 hours of work a week — but he worked longer hours during busy periods, according to the statement of claim. He was never compensated either with overtime pay or time off in lieu, the lawsuit says.
“This class action is about more than just reclaiming our back pay,” said Aps. “It’s about changing company-wide practices and improving working conditions in the entire industry.”
Goldblatt lawyer Nadine Blum said the retail travel industry is a “high pressure” sector where employees are often expected to work as long as required to hit sales targets and support customers.
“The employers who reap the benefits of that work should be properly compensating employees for their time,” she said.
“We hope that this proposed class action serves as a powerful reminder that employees are not disentitled to overtime pay merely because they are paid on a salaried basis,” added co-counsel Josh Mandryk.
“There’s a misconception that employees who are on commission aren’t entitled to overtime and that’s not the case.”
Under Ontario law, employees must receive time-and-a-half when they work more than 44 hours a week.
As part of their standard employment contract, Flight Centre employees were required to sign averaging agreements and excess weekly hours of work agreements — legal tools that reduce employers’ overtime obligations, the statement of claim says.
The contract also stipulated that employees must attend staff meetings, “buzz nights,” and training sessions. According to the class action, workers were not remunerated for this time.
The contract specifies that overtime is only payable when specifically authorized by management and that in “some cases” the company could offer “special incentives” as compensation for overtime — a practice the class action calls unlawful.
Overall, the contracts do “not allow for payment of overtime to persons who are routinely required or permitted to work overtime to fulfil the basic duties of their employment,” according to the suit.
“By virtue of the power imbalance inherent to the employee-employer relationship, the class members are powerless to challenge the unlawful aspects of the defendant’s overtime policy,” the statement of claim says.
“In attempting to do so, they would risk discharge and/or employment and career-related sanctions.”
In order to proceed, the class action must first be certified in court. Mandryk said the hearing would likely take place within the year.
Flight Centre has outlets in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia and Newfoundland. Its parent company, which is listed on the Australian Securities Exchange, earned around $2.7 billion in global revenue last year.
Sara Mojtehedzadeh is a Toronto-based reporter covering labour-related issues. Follow her on Twitter: @saramojtehedz