Workers say they’re owed $1.4 million after losing hotel jobs
Advocates say plight of staff hired through subcontractor exposes gap in legal safety net
When Sarah MacNeil landed a job managing events at Toronto’s swanky Hotel X, she was thrilled at the prospect. The pay and hours were solid, a rarity in the hospitality world that would soon be upended by COVID-19.
And while she was hired through a catering company, she felt like an integral part of the hotel’s operation. She received training from Hotel X management, wore a Hotel X name tag, and did “everything in her power” to help Hotel X guests.
But when Hotel X switched subcontractors in the middle of the pandemic, MacNeil was cut loose — along with around 200 workers who say they are now owed upwards of $1.4 million in unpaid entitlements. “It makes me sick to my stomach,” said MacNeil.
In response to questions from the Star, a spokesperson for Hotel X said the company’s actions were “in compliance with its contractual commitments and all applicable laws.”
“Since these matters are in litigation we are unable to comment further,” the emailed statement said.
But the hotel’s business model illustrates a broader issue, said Mary Gellatly of Parkdale Community Legal Services. Subcontracting, she said, obscures responsibility for workers’ rights and entitlements at a time when a safety net is more crucial than ever.
“The fundamental problem is that this business model allows the company at the top to try and shift its responsibilities and liabilities onto contractors and subcontractors,” said Gellatly.
That, says MacNeil, is her experience.
Despite working full-time at Hotel X since April 2019, MacNeil and her colleagues were employed by Peter and Paul’s, a catering company contracted to provide food and drink services. In March, with the pandemic-forced industry-wide shutdown, employees were temporarily laid off.
As Hotel X prepared to host the NHL playoff bubble, MacNeil cobbled together money through employment insurance and by making food deliveries through Foodora and Uber Eats.
Then, in July, Hotel X terminated its contract with Peter and Paul’s.
MacNeil said she had no idea until a colleague messaged her and told her to look at the job recruiting site Indeed. There, MacNeil saw her own job posted as a vacancy — this time through a new contractor.
Panicked, she sent an email to Hotel X’s director of human resources.
“I just found out through the grapevine that Peter & Paul’s is no longer working at Hotel X,” the email reads. “Is there any information you can provide me about this situation and the status of my employment?”
MacNeil said she received a brief response confirming the change in contractor and informing her that the new provider, a consortium of catering companies called Project X, was hiring.
She said she had no choice but to apply online for her own job. She wasn’t hired.
“My belief is the hotel really didn’t want that many (Peter and Paul’s) staff coming back,” she said.
Peter and Paul’s is now suing Hotel X for $60 million for breaching its contractual obligations. Meanwhile, lawyers for out-of-work employees say the hotel and Project X had a legal obligation either to recall MacNeil and her colleagues, or to provide them with termination and severance pay — entitlements that could “approach or exceed $1.4 million.”
“Your collective conduct has deprived (workers) of desperately needed income at a time of unprecedented uncertainty,” says a letter sent to Hotel X and Project X in September by Ryan White, a lawyer with Torontobased labour law firm Cavalluzzo LLP.
“Your prompt attention to this matter is particularly important given the current pandemic and the related reduction in hospitality and hotel services work in Toronto.”
Provincial employment laws say that if a company changes building service providers, the new contractor must employ the same workers or pay out severance. In a statement to the Star, Peter and Paul’s said it too believes Hotel X has “shirked its duties” under those provisions.
The Star contacted the three new service providers who form Project X: Food Dudes, Harlo Entertainment, and Honeycomb Hospitality. All three said they had no purview over the issues raised and said questions should be directed to Hotel X.
Much like MacNeil, former hostess Evelina Tihomirova says she was initially elated when she was hired in 2019 through Peter and Paul’s to work at Hotel X. It was the kind of venue with a “beautiful view, good pay and growth opportunities.”
“Unfortunately for me, it turned out to be the opposite,” she said.
Tihomirova said she was trained by Hotel X managers, and to guests, gave all appearances of being a Hotel X employee. But she said her appearance soon came under another kind of scrutiny.
“Managers started to tell everyone they have to pay more attention to grooming, and they started to have more rules for makeup,” she recalled.
Tihomirova said even before the pandemic, she was demoted to a lower-paid role despite never having any performance issues; she believes the only problem, from Hotel X’s perspective, was how she looked. Peter and Paul’s suit against Hotel X also alleges that the company “conducted itself in a heavy-handed and oppressive manner,” including making “derogatory” comments about staff members.
Then came layoffs. By early summer, Tihomirova said it seemed like there would be some kind of plan to return to work — until late July, when she said she received an email telling her to collect her belongings from the hotel. She said she found out through a friend that Hotel X was hiring a new batch of hospitality workers.
Given her past experiences, she decided not to reapply and instead retrain in a line of work less battered by the pandemic. But she said she was taken aback by the abruptness of the Hotel X job losses, especially since many of her colleagues who were new Canadians may not qualify for income support.
“I think it’s really hard that there was nothing done to support anyone from a company as big as that,” she says.
For Gellatly, the lack of protection for employees hired through subcontractors is a prominent feature of an increasingly precarious workplace. An expansive 2017 report to the Ministry of Labour on the province’s changing workplace identified the same issue, noting the shift toward businesses off-loading employment responsibilities to “subcontractors, temporary help agencies and franchisees.”
The report recommends that ministry enforcement focus on “the top of the supply chain” where “decisions are made that influence compliance by those lower in the chain.”
Gellatly said broader legislation is needed, especially amid a pandemic. In Quebec, all employers who use subcontractors are jointly liable for obligations to workers.
But in Ontario, the protections are narrower: while employers in the building services sector have some responsibilities to employees when contracts change, companies are generally only jointly liable for unpaid entitlements when they use temp agency workers.
“As we’ve seen through COVID, it’s the workers at the bottom of the subcontracting chain who are left in the most precarious situations,” she said. “I think this kind of contracting model in the current context shows the gaps in our labour laws.”
Despite the pandemic, Hotel X is seeking to expand its presence through a “phase 2 development” at Exhibition Place, according to a September report by the publicly owned site.
As former employees struggle to find jobs in an industry beset by closures, MacNeil said it is no time for employers to “hide behind legal loopholes.”
“This is a horrible situation,” she said. “Some of these people, they need to feed their families.”