Vancouver company owes half-a-million in wages after paying staff with gift cards

Despite pushing for appeal, director must also pay nearly $450,000

Vancouver company owes half-a-million in wages after paying staff with gift cards

Vancouver-based Dayton Boots Company has lost its bid to amend a ruling that requires it to pay nearly half-a-million dollars for using its retail gift cards as part of employees’ pay.

The BC Employment Standards Tribunal (BCEST) rejected an appeal to reconsider the scope of the ruling, leaving the bootmaker and retailer owing $484,995 in wages, while the company’s sole director is ordered to pay out $446,472. 

‘Other deductions’

The case originated in 2020 after two individuals filed a case against Dayton alleging that the company was replacing 50% of employees' wages with its retail gift cards.

An investigation into the company's wage statements revealed that, starting June 2020, Dayton made deductions from some employees' gross wages and labelled the deductions as "other deductions," then "Dayton Card," and then "Dayton Gift Card,” according to the ruling by the tribunal.

According to the probe, these deductions were equivalent to "either exactly half or all of the employees' wages."

Dayton's sole director initially argued that the deductions were the company's way of paying for the cost of employees' clothing, as they were required to wear store products at work. According to the owner, the cost of the clothing was incorporated into the pay structure.

The employees also agreed verbally to be paid a weekly salary of $600 and a merchandise credit of $600 weekly, according to the owner.

Dayton also argued in later proceedings that the issue of wage deductions for gift cards was "just a big misunderstanding and accounting error." According to the company, the gift cards "were never meant to be wages" and that employees "were never intended to receive the gross amount."

If you want to keep your workers happy – and keep attrition rate low – forget those fancy gift cards and gift baskets for your ‘Employee of the Month,’ says one expert.

Decision and appeal

Dayton Boots was found to have violated four different sections of the Employment Standards Act in the case of 71 employees. It was initially ordered to pay wages amounting to $610,417, including interest, as well as an additional $2,000 in administrative penalties.

The company’s sole director was also found "personally liable under section 96" of the ESA, and was ordered to pay $545,688, plus an interest amount of $10,349.

Dayton and its owner both submitted appeals for the determinations, which reduced the amount they need to pay to $484,995 and $446,472.

Arguing for ‘new evidence’

Both parties, however, pushed for a reconsideration of the appeal decision on the basis of "new evidence," arguing in the latest hearing that 36 of the 71 individuals were "brand ambassadors" instead of employees.

The tribunal has rejected that argument, saying in its decision "the evidence provided throughout the original investigation did in fact point to the… individuals being employees."

According to the BCEST, the new evidence from the parties "does not warrant a new investigation" and that the applicants failed to show new significant and pertinent evidence that would make the tribunal reopen the case.

"The applications for reconsideration of the Appeal Decision are dismissed," said the BCEST's order. 

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