Feds settle class action, compensating 1,700 who became ill on parental leave

February 13, 2019

The federal government’s about-face in settling a multi-million dollar class action in the Federal Court of Canada means more than 1,700 individuals who become ill while on parental leave between 2002 and 2013 will be compensated for the government’s refusal to convert their benefits into employment insurance sickness benefits.

For 11 years after the Employment Insurance Act was amended in 2002 to allow for the “stacking” of maternity, parental and sickness benefits, the government took the position that employees on parental leave could not switch to EI sickness benefits because they weren’t “otherwise available for work” — a condition whose potential impact on the 2002 changes appears to have been overlooked when the amendments were drafted. The condition was removed when the legislation was revised again in 2013, but the revisions weren’t retroactive.

In filing the class action in 2012, Stephen Moreau, a lawyer in Cavalluzzo LLP’s labour group who is representing the class, alleged the government had been negligent in its interpretation and administration of the 2002 amendments by not allowing claimants to switch to sickness benefits, a refusal that resulted in the amendments failing to address the identified gap in the previous version of the law.

Although the government didn’t admit liability in settling the case, it agreed to pay between $8.5 million and $11 million in damages to members of the class, including representative plaintiff Jennifer McCrea of Calgary, who was diagnosed with breast cancer while on parental leave after her son’s birth in 2011. The settlement will compensate class members for the full amount of the sickness benefits they were denied.

Justice Catherine Kane of the Federal Court also ordered the government to pay some $2.5 million to Moreau and his firm for legal fees — separately and apart from the sums paid in damages to class members.

Moreau believes the settlement, approved in late January, restores confidence in the country’s EI regime.

“Although we’re talking about a social insurance scheme, employment insurance has many of the features of a private contract in the sense that people expect to get their benefits if they pay their premiums and meet the statutory conditions,” he says. “With employees and employers each paying about $1,000 annually in premiums, there would be no backing for the system if the payouts were all about government discretion and if the government did not provide the support required to ensure that individuals received the benefits they had paid for and deserved.”

In her reasons for approving the settlement, Kane noted “the importance of the litigation, which, as she saw it, went ‘above and beyond’ the award of compensation to restoring the public’s faith in the system. Unsuccessful claimants were likely discouraged by the outcome for them, while observing that new benefits programs were promised and implemented to address other important needs, but not to address their failed claims,” she wrote.

Christopher Simard, a spokesperson with Employment and Social Development Canada, denied negligence on the government’s part and told media the settlement “demonstrates that the government understands the challenges faced by this group of claimants who were in a very tough position, sick and taking care of a child or children.”

Simard said the objective of the settlement was “to bring closure to parents and their families who were denied by the rules set out at the time from receiving EI sickness benefits while in receipt of parental benefits.”

Kane also awarded an honorarium of $10,000 to McCrea in recognition of her “exceptional” contribution to class members’ pursuit of access to justice over the six years the case had been ongoing. She had raised awareness of the gap in the parental benefits regime, was the recognized face of this issue long before the lawsuit was filed, immersed herself in the litigation, prepared several affidavits, provided input on the settlement, communicated with class members, brought their concerns to counsel’s attention, was media spokesperson for the group and would likely be the go-to person during the settlement’s implementation.

“The Court has no hesitation in approving the honorarium of $10,000 for Ms. McCrea in recognition of her role in bringing this litigation and this cause to the finish line,” wrote Kane.

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