Employer Shuts Down: Unpaid Wages in the Hundreds of Thousands

Written on behalf of Peter McSherry Law Office
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Addiction Canada, a group of addiction treatment centres in Alberta and Ontario, is closing in the wake of hundreds of thousands of dollars in unpaid wages claims as well as criminal charges brought against the owner.

Employees of Addiction Canada (and its previous iteration, Vita Novus Inc.) have alleged that more than $500,000 in unpaid wages remain outstanding. Employees report multiple pay cheques bouncing, and Ontario’s Ministry of Labour has reported that more than 27 claims have been filed by employees attempting to obtain the remuneration to which they are entitled.

The company’s owner has disputed the criminal charges against him, and has said that he shutting down the company due to “economic pressures” and the “challenges of maintaining the highest standards of recovery care” in the face of the allegations, which he says are “false and inaccurate”.

The owner further explains that a “new conglomerate” will be taking over some of Addiction Canada’s existing locations, and that all current employees will be retained.

How Can Employees Recover Unpaid Wages?

Most businesses in Ontario are provincially regulated and fall under the purview of the Employment Standards Act (ESA).

Under the ESA, “wages” are defined as any type of monetary payment owed to an employee, including salary, commission, vacation pay, profit sharing, and payments for room and board, but excluding any payments that are subject to an employee’s performance such as bonuses and/or gifts and prizes.

Where an employee believes that he/she is owed unpaid wages, they can either make a complaint to the Ministry of Labour, or sue their employer in court, but not both.

Ministry of Labour

Once a claim for unpaid wages is filed with the Ministry, an Employment Standards Officer (ESO) will investigate. The ESO may try and get the complainant and their employer to agree to a voluntary settlement. If that is not possible, the ESO will decide whether the complainant is owed any money, and if they are, can order that the employer pay the amount owed.

Significant changes were made to the ESA in February 2015 which have significant implications for unpaid wage claims. For any claims filed prior to February 20, 2015:

  • there is a $10,000 cap on recoverable wages;
  • claims can only be made for wages due 6 months prior to making the claim;

For claims filed after February 20, 2015:

  • there is no upper limit to how much can be recovered.
  • Claims can be made for wages due up to 2 years prior to the claim.

If an employee has filed an unpaid wages claim with the Ministry, but intends to start a court action with respect to those same unpaid wages, he/she must withdraw the claim within two weeks of filing it with the Ministry.

Small Claims Court

If an employee is owed less than $25,000, they can file a claim against their employer in Small Claims Court. If a claim is made, a settlement meeting will take place first to see whether an amount can be agreed on without going to court. If an agreement cannot be made, the claim will proceed to a hearing before a Judge.

Superior Court

If an employee is owed more than $25,000, a claim can be made in Superior Court to recover the unpaid wages.

Unionized Employees, Federal Employees, and Independent Contractors

It is important to note that different rules apply to unionized employees (who should first and foremost speak to a union rep about their options), federal employees (i.e- those who work for federally regulated industries such as banking, trucking/interprovincial transportation, and the federal government), and independent contractors (who do not have recourse to the Ministry of Labour).

Which Option is Best?

There are pros and cons to each of the wage recovery options available to employees. Before you pursue any of these possibilities, it is important to speak with a knowledgeable employment lawyer, who can clearly and thoroughly explain the differences between each, and help you decide which may be best for you.

If you are owed unpaid wages, contact employment lawyer Peter McSherry online or at 519-821-5465 to discuss your options, and recover what you deserve.