When the Ontario Ministry of Labour ruled a Domino’s Pizza franchise had to pay Juan Jose Lira Cervantes more than $25,000 in lost wages and benefits he thought it sounded too good to be true.
It turns out it might have been.
Seven months after the ministry ordered the franchise to pay up, he’s still waiting for most of what he’s owed.
“I always thought, ‘I’m not saying anything until the money comes in.’ Because I had my doubts,” said Cervantes, a 52-year-old father of four who worked as a delivery driver for one of the pizza chain’s Mississauga franchises.
Labour lawyers say Cervantes’ experience highlights a legal loophole that employers can use to escape paying workers lost wages, even in instances when the ministry has ordered them to do so.
Under the Employment Standards Act, the directors of a company have individual liability. That means the directors of the corporation set up to run the Domino’s franchise had to pay Cervantes up to six months worth of wages.
The directors paid Cervantes a total of $6,383.24, but still owe him nearly $20,000. The problem is that the corporation in question no longer exists. It was dissolved not long after the ministry sided with Cervantes.
“The franchisor is not responsible and the Ministry of Labour, in the end, cannot do anything,” said Cervantes.
“So it’s frustrating that nothing can be done.”
Cervantes first filed the claim with the ministry in March 2018, after he says his boss refused to pay him minimum wage. He argued he was doing the work of an employee for more than four years, but was being paid as an independent contractor and was therefore not entitled to earn minimum wage. He also wasn’t given overtime or vacation pay and benefits.
After he filed the claim, Cervantes was taken off the work schedule.
In November 2018, the ministry ruled that not only was his termination an act of reprisal, but also, his employer violated the Employment Standards Act by classifying him as an independent contractor.
The ministry ordered the franchise to pay Cervantes a total of $28,144.54 — $25,812.76 in lost wages and benefits and an additional $2,581.28 for administrative fees.
Numbered company dissolved
The franchise location was sold in August 2018, five months after Cervantes filed the claim, according to the ministry.
CBC Toronto reviewed documents that show the numbered corporation was dissolved less than two months after it was ordered to pay Cervantes. The provincial Ministry of Finance — which enforces these orders — can’t make a company that no longer exists pay up.
“By the beginning of January 2019, the corporation is dissolved and that is really the core of the problem of collection right now,” said Joshua Mandryk, a labour lawyer with Goldblatt Partners, a firm working to help Cervantes get his money.
Meanwhile, the Mississauga Domino’s pizza franchise where Cervantes worked is still making pies with a new company running it.
“The business continues. From what we understand, you can go to that location right now and order a pizza but, unfortunately, the Ministry of Finance can’t collect the money,” said Mandryk.
Simon Archer, also with Goldblatt Partners, said that while they still don’t have specific details about who bought the franchise or the specific terms of the purchase, it appears as if the dissolution was to avoid paying Cervantes.
“It looks suspiciously like it changed hands to avoid paying this liability. We believe that it happens fairly commonly in these situations in order to avoid these awards,” said Archer.
Mandryk and Archer said Cervantes’ case highlights an enforcement loophole that needs to be closed.
“When employees like him do have the courage to step forward and fight against their employer and ultimately win, it’s a bit of a hollow victory when there’s challenges with enforcement at the Ministry of Finance,” said Mandryk.
“[Cervantes’s] situation from start to finish has exposed multiple problems and flaws in the ways we treat working people in this province and I think it’s important that they’re addressed.”
Corporation director says balance ‘paid’
When reached by phone, Ragunthan Arunagirinathan — one of the two directors of the now dissolved corporation — insisted the balance they owed was paid.
“The only thing that I can tell you is, whatever the ministry asked to pay, we cleared it,” Arunagirinathan said. He hung up the phone when asked about the remaining $19,429.52 that is still owed to Cervantes.
In response to questions about enforcement from CBC Toronto, the Ministry of Finance issued a statement, saying it makes every effort to recover amounts owed and if the employer does not pay, the ministry may take legal action to collect the money.
The statement did not address how the ministry collects money from companies that no longer exist.
“Due to taxpayer confidentiality, we are unable to comment further,” the statement read.
In November, a spokesperson for Domino’s Pizza Canada told CBC Toronto it had “no plans to appeal the ruling” and that the franchise “will fully comply” with the order.
No one from Domino’s Pizza Canada returned messages to CBC Toronto for this story.