Desjardins has agreed to pay more than $7 million to settle a class action lawsuit alleging the financial services company made unauthorized wage deductions from employees with negative vacation balances.
The proposed settlement, reached April 24, resolves claims that Desjardins violated employment standards by deducting negative vacation bank amounts from workers’ final pay without proper written authorization. The lawsuit covered former employees of multiple Desjardins entities across Canada, excluding Quebec, dating back to 2011.
Under the settlement terms, funds will compensate former employees who had negative vacation balances deducted from their wages when they left the company. Current employees will see their negative vacation balances eliminated or receive credits in their time management banks.
Court approval pending
The Ontario Superior Court of Justice certified the class action for settlement purposes on May 28. A settlement approval hearing is scheduled for September 29, with objections due by July 14 and opt-outs by July 27.
Monkhouse Law filed the lawsuit in June 2021, arguing that Desjardins’ negative vacation bank policy violated section 13 of Ontario’s Employment Standards Act. The law requires employers to obtain signed written authorization before making wage deductions, specifying either the amount or calculation method.
Desjardins denies liability and any wrongdoing in the matter.
Common workplace practice under scrutiny
The case highlights a widespread workplace practice where employers allow new employees to take vacation time before earning it, creating a negative balance. While Ontario law entitles employees to two weeks of vacation after one full year of work, many companies permit early vacation use that must later be repaid through overtime or wage deductions.
The legal challenge centers on whether employers properly obtain authorization for these deductions when employment ends.
Settlement details
Verita has been appointed as class administrator and will handle compensation claims after the September 29 hearing. The class includes former employees of 13 Desjardins entities, including Desjardins Financial Services, The Personal Insurance Company, and Desjardins Securities.
Employees don’t need to take action to join the class action, as Ontario uses an opt-out system. Those who wish to exclude themselves must submit opt-out forms by July 27.
The settlement comes without admission of liability from Desjardins.
