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Nova Scotia Amends Labour Standards Code to Block Hockey Class Action Lawsuit

July 11, 2016

A very good investigative sports reporter from TSN named Rick Westhead informed me the other day about a quiet little amendment made to the Nova

Should Major Junior Hockey Teams Be Excluded from Employment Standards Laws?

Should Major Junior Hockey Teams Be Excluded from Employment Standards Laws?
Photo: CBC

Scotia Labour Standard Code regulations last week.  I had not noticed the change.  The amendment excludes “athletes ..engaged in their athletic endeavour” from the Code.  So this exclusion is broader than just major junior hockey players, and would exclude any employee paid to play or train for a sport.

Here is a Rick Westmead’s story describing the move.   In defending the move, Premier Stephen McNeil said the government’s concern was blocking a class action from proceeding against the province’s junior hockey teams:

“To be frank, we saw the class action suit killing junior hockey in the Maritimes. The fact is that junior hockey here is important to us. We believe these changes will keep it here.”

The class action lawsuit he is referring  was filed by Toronto law firm Charney Lawyers.  It seeks damages from Canadian major junior hockey teams for unpaid wages, overtime, and other statutory entitlements.  The core legal issue the lawsuit raises is whether major junior hockey players are “employees” for the purposes of employment standards legislation.  More on that question later.

The Premier’s comments are interesting.  Firstly, he specifically references the desire to block the class action lawsuit from proceeding for fear it would kill the teams or drive them from the province. Since the amendment if only effective from July 4 2016 it would not block claims by former employees I presume, but would stop future claims.  Secondly, the inference is that it was necessary to exempt the hockey teams from the legislation because otherwise the teams might leave or become insolvent.   That is a curious statement.

We have a government intervening to exclude the application of basic minimum standards for the expressed purpose of protecting a small industry from the costs associated with complying with a law that applies to most other workplaces in the province.

The Premier’s argument is that employers who cannot afford to comply with the province’s minimum employment standards should thereby be exempted from them.  Does that strike you as an odd thing for a Premier to say?

Canadian labour law students will be reminded of the infamous “Michelin Amendment“, also from Nova Scotia, that Brian Langille explained so well back in 1980.    The government amended the Trade Union Act to ensure that a union organizing campaign at Michelin would fail, by requiring that the union organize a majority of all the Michelin factories in the province, rather than just the one large factory that supported collective bargaining.  We still teach that story in labour law class as an example of how governments sometimes manipulate work laws to exempt powerful employers from labour laws for fear that the companies may respond by laying off workers.

Of course, lots of employers complain that labour standards laws threaten their survival, and yet we do not exclude every employer who makes that claim.  There is a good reason why.  The principal purpose of minimum employment standards laws is to signal to the business community and workers what is the absolute floor of working conditions that is tolerable to society at a given place and time.  If employers cannot afford to comply with even this basic floor, then they should not be in business or they should reorganize their model, such as for example charging more for their products (i.e. tickets, beer, souvenirs, and hot dogs). That is the message conveyed by minimum standards laws.

Therefore, we do not usually decide on the applicability of minimum standards laws by applying a means test that asks ‘can you afford to comply’.  If we did that, there would be a lineup out the door of the legislature full of employers seeking exemptions.  Why then would the Halifax Mooseheads hockey team be given a special pass on basic minimum employment standards?  [Actually not a complete pass, since I presume these junior teams pay their other employees in accordance with the law.  The government is only excluding the players from the law, the employees upon which the entire business depends.]

As an aside, I’ve been to a Moosehead game.  That team looked to be doing pretty well, probably much more profitable than the Mac’s Milk store down the street that must comply with the Labour Standards Code. In fact, a new report prepared for the plaintiffs in the class action lawsuit by Professor  Kevin Mongeon of Brock University found that many major junior hockey teams are doing very well.   As in all industries, some companies are no doubt doing much better than others.

Are Major Junior Hockey Players Employees?

The class action lawsuits claim unpaid wages and overtime, and other entitlements available to “employees” under Canadian employment standards legislation.  Its an interesting lawsuit because it requires a decision on whether major junior hockey players are “employees” for the purpose of employment standards legislation.   Since Nova Scotia is excluding the players from the Code, the government must believe that there is a strong probability they would otherwise be treated as “employees” and therefore covered by the legislation.

The statement of claim in the class action lawsuit describes the relationship between the players and teams and the various hockey leagues. All players must sign a standard form contract with their team.  That contract entitles the players to a fee ranging from $50 to $150 per week and room and board if they live away from home during the season.  The teams make (or used to make) “employee payroll deductions at source” according to the statement of claim.   The contract entitles players to an amount towards post-secondary education which the players can access only if they pursue an education within a certain period of time after their playing days are done.   The lawsuit claims players work between 35-65 hours per week during the hockey season, including games, practices, travel, and promotions.

Major junior hockey players have already been ruled to be “employees” of their teams by the Tax Court of Canada, deciding a case under the Employment Insurance Act in a 2000 decision called  McCrimmon Holdings v. M.N.R. .   In a 1979 decision called Toronto Marlboro Major Junior A Hockey Club v. Tonelli, the Ontario Court of Appeal ruled that a contract between a junior hockey player and his team was a “contract of service” [aka an employment contract].  As far as I am aware, the issue has not yet been decided directly under employment standards legislation, but I have not fully researched that point.  If you are aware of a case under employment standards legislation involving junior hockey players, please let me know.

In addition to arguing that they can’t afford to comply with the law, the teams and the Major Junior Hockey leagues argue that the players are not “employees” and instead are “student athletes”.  Frankly, I am not persuaded by that argument.  The “student athlete” argument might have some traction in relation to athletes playing on university sports teams, which is the issue in some recent American cases involving attempts by college athletes to unionize.  However, major junior hockey players aren’t playing for their schools.  They are playing for commercial enterprises, when they are not at school.  The older junior players may not even be students.  Nor is the situation of junior hockey players analogous to a student doing a post-secondary school coop program.  Hockey players receive no academic credits for playing junior hockey.

Since hockey (I coach a minor atom AA hockey team) and work law are two of my passions, I will follow the class action lawsuits closely on this blog, as well as the new Nova Scotia law that attempts to exclude players on Nova Scotia teams.  We will watch if other provinces follow.

Issues for Discussion

1.  Should governments exclude from employment standards laws employers who claim that compliance with those laws would threaten their viability?  If so, what would/should be the test for deciding if an employer met that standard?

2. Do you think that major junior hockey players are “employees” under employment standards legislation?

3.  Do you think that the stipend players receive, along with the room and board and possibility of post-secondary tuition being paid is sufficient compensation to players to justify their exclusion from employment standards laws?

4.  If it is true that some teams would not survive financially if required to comply with employment standards laws, should this justify governments excluding hockey teams from the laws?  (See this story if you are interested in this last point)

Cross-Reference to Law of Work book:

Chapter 2 [The Law of What?  Employment, Self-Employment, and Everything In Betweenexplores how tribunals and courts identify and define the employment relationship.

Chapter 7 [The Requirements of an Employment Contract] includes a review of the Marboros v. Tonelli decision mentioned in this post while exploring the issue of whether an ‘infant’ (a person under the age of 18) can enter into a binding employment contract).

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7 Responses to Nova Scotia Amends Labour Standards Code to Block Hockey Class Action Lawsuit

  1. Tim Bousquet Reply

    July 12, 2016 at 1:16 pm

    You may not be aware that the newsroom union at the Chronicle Herald is on strike, as the paper’s management is attempting to slash wages and break the union. The paper is currently being produced by scab reporters, and we locally are not linking to it.

    Incidentally, Chronicle Herald president Mark Lever is also one of the owners of the Halifax Rainmen basketball team, which also gets the minimum wage exemption. So there’s no surprise that the paper would editorialize in favour of the exemption.

    • Doorey Reply

      July 12, 2016 at 2:16 pm

      Thanks Tim, was not aware of either of those facts. Will change the link.

  2. Nicholi Reply

    July 12, 2016 at 7:22 pm

    When Saskatchewan made some major changes to The Saskatchewan Employment Act in 2014, Athletes while engaged in their athletic endeavor, were no longer covered under the act. Many people wondered why they made changes like this and not to changes they needed to change like removing termination notice requirement for the construction industry which most other provinces have already done.

  3. Linda Reply

    July 13, 2016 at 7:30 am

    Issues for discussion: On 1) no. On 2) yes. On 3) no. On 4) no.
    It’s ridiculous that we even have to have this discussion and that Premier should step down. Why do these elected politicians think that they can do whatever they like? The CRA has already deemed the players to be employees and I’m pretty sure the Human Rights Council would as well. If the market can not support a business, then the business closes. Sport is a business…I have to pay for a ticket to watch, pay for drinks, food, and souvenirs…it’s not by donation! Sorry but that makes the enterprise a business and if the model isn’t able to support itself, then it’s not viable. Employment standards laws are there for a reason…to protect workers and employees from being taken advantage of, and to keep greedy and unconscionable employers from abusing employees and workers. If a player decides not to pursue post secondary education, he/she loses the tuition funding…this is an unfair model as it clearly discriminates against players who may not, for whatever reason, pursure higher education.

  4. Dan McGarry Reply

    July 19, 2016 at 7:50 pm

    And in other sports ‘entertainment’ news 50 former WWE/WWF wrestlers are attempting to launch a class action suit in Connecticut against the WWE and Vince McMahon regarding head trauma that they allegedly suffered while performing for the WWE.

    One of their contentions is that while categorized as ‘independent contractors’ they were actually employees of the WWE/WWF.

    The WCW which was at one time the WWF’s competition, did provide its wrestles with benefits and categorized them as employees.

    https://www.thestar.com/sports/2016/07/19/wrestlers-sue-wwe-for-head-trauma-suffered-in-ring.html

  5. Wesley Emerson Reply

    August 26, 2016 at 7:30 pm

    I use Western Canada Junior Hockey as my 1st assignment in the HR Legislation course I teach in Continuing Education, University of Manitoba. I give them the standard contract and ask questions as they apply to the Manitoba Employment Standard Code.

    I have not used a text book in the past for the course as I did not believe there were any appropriate texts for the student group. I now have approval to use Dr. Doorey’s new book! I will let this group know how it goes.

    • Doorey Reply

      September 6, 2016 at 1:17 pm

      Thanks Wesley for adopting the Law of Work! Your type of class is the exact target audience for the book. I hope it works for you. David

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