A British Columbia business owner who described an employment standards investigation as “nonchalant and conversational” has lost an appeal of $1,000 in penalties for failing to keep payroll records and pay severance to a teenage employee.
The Employment Standards Tribunal dismissed all grounds of appeal by Broughton & Broughton, which operated the Lions Bay General Store and Café until selling the business in January 2024.
The company’s director argued he was misled about the seriousness of the investigation and that penalties were disproportionate because the business had closed. The tribunal found he had multiple opportunities to provide evidence and that penalties are mandatory once contraventions are established.
“Despite [the company’s] assertion otherwise, the Director does not have the discretion to waive an administrative penalty,” the tribunal wrote.
The case highlights the limited grounds on which employers can challenge administrative penalties and reinforces that companies remain responsible for record-keeping even after closing or selling.
Investigation deemed routine
The director took issue with how the investigation was conducted, claiming it “seemed nonchalant and conversational” and gave him “the erroneous impression that the investigation was routine and minor.”
He argued he was never told breaches of the payroll records provision or compensation for length of service were “live” issues with “real financial consequences.”
The tribunal rejected this argument, finding the investigating delegate made numerous requests for payroll records and clearly communicated what was required.
“An investigating delegate is not responsible for seeking out and obtaining all possible evidence,” the decision stated. “In my view, the Investigating Delegate’s persistent attempts to obtain the payroll records should have made clear to [the director] that they were required as part of the investigation.”
Bookkeeper excuse rejected
The director told investigators he no longer had access to the Square point-of-sale system or QuickBooks after the business sale, and that he could not reach the former bookkeeper.
When asked for the bookkeeper’s contact information, he refused, saying he owed the bookkeeper money and they would not want to be involved.
The tribunal found this was not a valid excuse.
“It is no defence that an employer’s bookkeeper did not keep its payroll records in compliance with the employer’s section 28 obligations,” the decision stated. “It is always the employer’s responsibility to ensure that it complies with those obligations.”
On appeal, the director claimed he could have tried to revive the cancelled QuickBooks subscription if he had known there would be financial penalties.
The tribunal was unmoved: “I am not persuaded by [the director’s] statement that he could have made further attempts to access these records only under the threat of a financial consequence.”
Business closure not a defence
The director argued penalties should be waived because the business was no longer operating and could not be influenced to change its behaviour. He also said the penalties exceeded the amount owed to the employee.
The tribunal cited previous cases establishing that financial hardship is not a defence.
“An employer is not alleviated from a monetary penalty under the ESA simply because it is ‘no longer in business’ or is ‘on the verge of financial disaster,'” the decision stated. “An employer’s financial difficulties do not diminish their obligation to meet the minimum standards of compensation set out in the ESA.”
Severance liability
The employee worked as a server and cashier from March 2022 to November 2023. Their final shift was Nov. 18, 2023, and they received no further shifts.
The director said he was not involved in scheduling after mid-November and that the employee’s “seasonal and casual employment ceased in connection with the change in ownership” of the business.
He never suggested the employee resigned or was dismissed for just cause.
The tribunal found this evidence established the employee was terminated and entitled to compensation for length of service.
“Broughton did not pay the Employee compensation for length of service, so it did not discharge its burden,” the decision stated.
New evidence rejected
On appeal, the director sought to introduce six payroll records and a statement from the woman who purchased the business.
The tribunal rejected both, finding they could have been obtained during the investigation with reasonable effort.
“The law is clear that when evidence or information could have been discovered with due diligence and presented at the time of the initial investigation, that evidence and information should not be considered on appeal,” the tribunal wrote.
The tribunal confirmed the original determination, including accrued interest.
For more information, see Broughton & Broughton Inc., 2026 BCEST 1 (CanLII).
