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A class-action lawsuit launched by workers against their former employer breaks new ground on the issue of mass terminations, says Toronto employment lawyer Stephen Moreau.
“It’s extremely unusual,” says Moreau, who represents 76 factory workers let go in 2015 when U.S.-based CTS Corp. shut the doors of its Mississauga, Ont. manufacturing plant.
He says that the employees allege CTS did not give the required notice to the Ministry of Labour until the eve of the shutdown, depriving workers of valuable government adjustment and retraining services for some 13 months.
“I’ve never heard of a case like this,” says Moreau, a partner with Cavalluzzo LLP. “You’d like to think that when employers are looking to shut their plant down … the vast majority get it right.”
Summary judgment
The workers have filed a summary judgment motion against CTS, which will be argued in Ontario Superior Court over three days starting July 17. They are seeking a minimum of $5 million in compensation.
Based in Elkhart, Indiana, CTS operates plants worldwide that make sensors, actuators and electronic components for various industries.
In February 2014, the company told its 129 Mississauga employees that it was shutting down the plant and moving the work to Mexico. On April 17, 2014, the company gave formal written notice to the employees and provided 77 of them with severance letters designating March 27, 2015 as their departure date. They did not inform the labour ministry of the terminations as required until 13 months later, in May 2015, the workers’ factum alleges.
The plaintiffs claim CTS should have notified the ministry in early 2014 when they knew 77 employees were being let go on March 27, 2015.
“The failure to give notice was a serious breach of a statutory minimum duty,” they allegein their factum.
Under the Employment Standards Act, employers letting go of 50 or more employees over a four-week period must alert the Ministry of Labour by submitting a notice, called a Form 1, and posting it in the workplace, according to the ministry’s website. Any notice to the affected employees would not be considered to have been given until the Form 1 was received, the ministry states.
CTS should be given no credit for the year or so of notice it gave employees, the plaintiffs claim.
‘Incomplete information’
“It disseminated false, misleading and incomplete information in termination and other documents, giving employees the false impression that they would need to stay until the shutdown to collect any monies owing,” they allege.
The 76 workers are each seeking roughly $50,000 to $100,000 per year in compensation over a period of about two years, Moreau says.
The allegations have not been proven in court.
In its statement of defence, CTS says that none of the workers received less than 49 weeks’ notice, some received 69 weeks, and that this notice, combined with separation payments the company provided constituted reasonable notice.
The company also stated it did not realize until May 2015 that it had not filed a standard Form 1 notice of the terminations “due to inadvertence. Upon discovering its error, CTS Canada immediately submitted and posted the Form 1.”
The company denies that “this oversight” resulted in any damages to the workers.
CTS further denies its severance letters were “ambiguous, confusing or misrepresentative” or a violation of the Employment Standards Act.
Moreau says the case hinges on two basic issues.
The first question is whether the company had to inform the Ministry of Labour it was shutting down as soon as it told the workers in early 2014, as the plaintiffs assert, “or are they within their rights to wait until the plant is just about to close.”
If the workers are right that CTS should have notified the ministry from the outset, the second question is whether the company’s failure to do so voids the 12 to 13 months of notice the company otherwise gave the workers, as they claim, Moreau says.
CTS is essentially arguing it should be given credit for the notice it gave its workers and that its failure to notify the ministry at the outset is a technicality, Moreau says.
‘Not a technicality’
“I’m saying it’s not a technicality,” he adds. “I believe it’s absolutely critical and core to mass terminations.
“When you notify the Ministry of Labour in Ontario it sends in the supports to help people transition from their old job.” These include up to $30,000 per person for, job-search assistance, education, apprenticeships and even childcare support, he says.
“It’s a compelling case,” Moreau says. “Take away all the legal issues, you have 76 people who are thrown out with varying skill levels. Some have engineering degrees, but most of them are labourers. English is not necessarily their first language.
“They’re in their 50s and 60s and they’re tossed out the door and the most basic of obligations in place in Ontario for more than 40 years — informing the ministry — wasn’t complied with.”
