Wage Deduction Dispute under the ESA: Courtroom Victory
Overview
A car dealership unilaterally reduced an employee’s monthly commissions for losses it allegedly suffered from fraudulent credit applications submitted by the employee’s customers.
Ben Hahn represented the employee, Mr. Khan, arguing that the reductions in the commissions were illegal wage deduction contrary to the requirements of the Employment Standards Act, 2000 (the “ESA”). A Ministry of Labour employment standards officer decided in favour of Mr. Khan and the Ontario Labour Relations Board (the “Board”) upheld that decision.
Background
Carhub North York Chrysler accused Mr. Khan of participating in lending fraud during his employment, allegedly resulting in significant financial losses and damaging the dealership’s relationships with lenders. The employer did not terminate Mr. Khan but instead deducted the alleged losses from his monthly commissions over the span of about a year.
Mr. Khan argued that the reduction in commissions represented an illegal deduction from wages contrary to employment standards. He made an employment standards complaint through a Ministry of Labour employment standards officer who decided in favour of Mr. Khan. The employer sought to challenge that decision through an application for review at the Ontario Labour Relations Board.
Case Details
The key issue for the Board to decide was whether the employer’s reduction of Mr. Khan’s commissions represented an illegal deduction of wages contrary to s. 13 of the ESA.
- Employer’s Position: The company argued that Khan’s actions warranted the deductions, and that his failure to object to the deductions earlier implied consent.
- Khan’s Position: Mr. Hahn, on behalf on Mr. Kahn, argued that the deductions violated section 13 of the Act, which prohibits employers from making deductions from wages unless authorized by law or with written consent from the employee. Mr. Khan had never provided written authorization, and the deductions were therefore illegal, regardless of the employer’s claims of fraud.
Results
The Board ruled in favour of Mr. Khan. The employer’s deductions were made without written authorization or a court order, and therefore represented illegal deductions from wages. The Board dismissed the employer’s application for review and upheld the employment standards officer’s prior order for the return of $63,766.02 to Mr. Khan.
Conclusion
This case underscores the strict application of employment standards regarding wage deductions. Even in cases of alleged employee misconduct, employers cannot unilaterally deduct wages. They must commence proper legal proceedings to prove an employee owes alleged losses. The employer cannot act as “judge and jury” by resorting to the self-help remedy of unilaterally withholding the employee’s wages to recuperate losses. The s. 13 prohibition against deductions from wages exists to protect employees especially in cases where an employer alleges some loss was incurred through an employee’s actions or misconduct.
How Can Employees Protect Their Rights?
If you are an employee whose employer has not adhered to the ESA, consult with experienced employment lawyer who can guide you through the legal process and ensure compliance with employment standards. Contact us for a consultation online or by phone (416) 640-2667 today.