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BC Court awards employee almost $40,000 in unpaid overtime going back six years

In Stastny v. Dependable Turbines Ltd. 2009 BCSC 1648,  the court addressed the notice period, a claim for unpaid overtime and a claim for aggravated or punitive damages.

Notice Period

The 51 year old machinist with 20 years service was dismissed without cause. The court awarded him a notice period of 15 months.  The fact that the employee had been laid off and rehired on several occasions did not, the court concluded, effect the duration of his employment for the purposes of calculating his notice period.

Unpaid Overtime

The employee had regularly worked more than 40 years a week but had not received overtime pay. This was confirmed by time sheets produced by the employer, which showed that the employee only received his regular wage for overtime hours worked. The employer argued that it had an agreement with the employee to this effect.

The court noted that section 4 of the BC Employment Standards Act ("ESA") stipulated that the minimum standards set out in the Act - including overtime rates -  could not be waived by agreement.

The court further noted, however, that although the employer's practice of not paying overtime was long-standing, section 3(5) of the BC Limitation Act limited the employee's claim for a period of six years before the lawsuit was commenced. As such, the court ruled that, pursuant to the ESA overtime rules, the employee was entitled to unpaid overtime going back to only 2002.

The employee was earning $34.10/hour at the time of dismissal. However, for the purposes of calculating the overtime, and in the absence of detailed information about what his hourly wage rate had been since 2002, the court ruled that his overtime entitlement should be based on a regular wage rate of $25/hour.  Based on that figure, the court awarded the employee almost $40,000 in unpaid overtime.

Aggravated and/or Punitive Damages

Although the employer had not made this allegation at the time of dismissal, it alleged in the Statement of Defence that the employee had stolen tools and a "great deal of time at trial was consumed" by these allegations (para. 34).

At the trial, the employer admitted that, once the employee had retained a lawyer, he 'had to come up with a reasonable cause in my mind why I was not happy" (para. 34).

The employee, in turn, testified that the allegation of theft was upsetting and forced him to remove the employer as a reference from his resume, creating  a 20 year gap in his employment history that was difficult to explain to potential employers.

The court concluded that while some tools were missing, "the  allegation of theft was not based on a reasonable interpretation of the facts" (para. 38) and "were made the intention of avoiding severance pay" (para. 42).  

It further noted that aggravated damages are compensatory in nature, take into account intangible injuries and "by definition will generally augment damages assessed under the general rules relating to the assessment of damages." Punitive damages, in contrast, "may only be employed in circumstances where the conduct giving the cause for complaint is of such a nature that it merits punishment" (para. 37, quoting Waddams).

The court awarded aggravated damages, but only in the amount of $1,000. The court justified this low amount by stating that the damages flowing from these allegations were minimal and the employee's inability to find secure work was more likely related to the general economic conditions, than the allegations.

The court declined to award punitive damages, stating that such damages are awarded for conduct that is "harsh, vindictive, reprehensible and malicious, whereas the employer's conduct in this case was more appropriately described as "careless" and insensitive" (para. 40).  The court further stated even if punitive damages had been appropriate, the amount of the compensatory award and its likely impact on a relatively small company would "sufficiently meet the goals of punishment and deterrence".

Comment

This decision is curious for several reasons, including the following:

  1. In Macaraeg v. E Care Contact Centers Ltd., 2008 BCCA 182, the BC Court of Appeal ruled that employees are not entitled to enforce Employment Standards Act rights in court. Rather, they must enforce these statutory rights through the employment standards complaint process. The Macraeg decision was not referred to in this case.
  2. Section 80 of the BC ESA expressly limits the amount of wages recoverable to six months before the earlier of: (1) the date of a complaint or termination or, (2) in cases other than complaints, six months before the date an employer was advised of an investigation. The court did not address how this provision interacts with the Limitation Act.
  3. It appears that the employee did not claim for Wallace or moral damages, despite the employer's unfounded allegations that it had just cause for dismissal.  In previous cases, the courts have awarded such damages on substantially similar facts.