Canadian banks, insurance firms owe $1.2B in employee vacation pay, class actions allege

When Leigh Cunningham of Winnipeg left her 26-year career as an investment adviser with RBC Dominion Securities, she did some math and realized that for decades she hadn’t been receiving six per cent vacation pay on her full income.

Canada lost 213,000 jobs in January as lockdowns took a giant bite out of the job market

Cunningham has launched a proposed $800-million class-action lawsuit on behalf of thousands of advisers.

She alleges that RBC, which last week reported soaring profits, has systematically short-changed workers by failing to provide proper vacation pay to advisers whose compensation is based mostly on commissions and bonuses.

“It’s just wrong,” Cunningham told CBC News. “We are helping as employees to create that profit.”

Cunningham’s lawsuit was served to RBC in December but not made public until now.

It is one of five proposed class actions launched against banks and insurance companies since early 2019 seeking a total of $1.2 billion for vacation pay that’s allegedly owed current and former employees.

The allegations include that employers would calculate vacation pay based only on an employee’s base salary, without including commissions and bonuses that can make up a large portion of a worker’s compensation.

If successful, experts say these suits could open the floodgates on major employers that fail to pay salespeople and commissioned staff in accordance with various provincial and territorial employment standards laws across Canada.

‘I need my money. Plain and simple.’

RBC, named in three of the five proposed class actions, declined to discuss specifics, but did issue a statement to CBC News.

“RBC takes pride in ensuring that everyone who works at any RBC company is fairly compensated,” RBC Insurance communications director Greg Skinner wrote in an email.

“The policies that apply to the employees involved in the action state that their compensation includes vacation pay and statutory holiday pay.”

Maureen Barrett of Brampton, Ont., resigned her position as an insurance salesperson for RBC in 2017, after almost a decade with the company.

She, too, is now a lead plaintiff, but in a different proposed class-action lawsuit seeking $80 million from RBC Insurance on behalf of its salespeople.

“I need my money, plain and simple,” Barrett told CBC News. “There’s no bells and whistles around it, you owe me my money. I’ve worked for it.”

Barrett’s claim alleges she only ever received vacation pay on her base salary of $37,500 and that RBC Insurance systemically failed to include in the calculation the commissions and performance bonuses that routinely made up a large share of her compensation.

“We need to make sure that this is rectified for those who are taken advantage of,” she said. “That’s how I feel. When this happened, when I found out that this took place, I felt as if I was taken advantage of.”

Barrett says she moved to a new job as a salesperson with a smaller company, and was paid the proper amount of vacation pay from the start.

The Bank of Montreal is facing a similar class action launched by former BMO private wealth adviser Paul Cheetham in Vancouver.

BMO declined to comment on the suit.

Allstate Insurance is also facing a $160-million claim launched by home and auto insurance salesperson Sung Taek Lee in Toronto.

It said the claim is “completely without merit” and that it will defend its case “in due course.”

“Allstate compensates its employees in full compliance with all provincial employment legislation,” it said in a statement.

The class actions have yet to be certified by the courts, and so none of the allegations have been tested by a judge or jury.

A wake-up call for major employers, lawyer says

The class actions on behalf of large groups of employees have emerged following recent court decisions that upheld individual employees’ rights to outstanding vacation pay as part of severance packages.

Toronto investment banker David Bain sued his former employer, UBS Securities Canada Inc., after he lost his job in 2013 when the company shut down part of its Canadian operations.

In 2018, Ontario’s Court of Appeal upheld his right to $87,472 in vacation pay for his years of service, calculated as a percentage of his base salary as well as his bonuses.

These kinds of rulings have been a wake-up call for major employers, according to Toronto lawyer James Heeney, who specializes in employment law and is not involved in any of the class-action lawsuits.

“Many companies have caught up and changed the way that they pay people to be compliant, but many, many haven’t,” he told CBC News.

He says employment standards across Canada vary by province and by profession and need to be modernized.

He suspects the $1.2 billion worth of lawsuits and class actions over vacation pay could be just the beginning.

“If you look across the country, there’s at least hundreds of millions of dollars of liability, if not more, because there are just so many entities that have not caught up,” he said.

While the five proposed class actions have yet to be given a green light, lawyers for Leigh Cunningham of Winnipeg hope to be in court later this year to certify the action on behalf of RBC investment advisers.

She acknowledges advisers are usually well paid, but says she worked hard for her clients and is entitled to what is provided for under the law.

“If the law states that an investment adviser is entitled to receive a holiday and vacation pay, why should I be penalized?” she said.

“If you look at six per cent over 21 years … RBC Dominion Securities has really had the use of that six per cent of mine, my money.”

CBC