The Ontario Labour Relations Board has already dealt with at least one Pizza Nova case: In 2022, the board ruled a Scarborough franchisee had misclassified a driver and owed him more than $35,000 in unpaid entitlements.Dave LeBlanc/The Globe and Mail
A popular Ontario pizza chain allegedly paid delivery drivers as little as $6 an hour after systematically misclassifying them as independent contractors, a newly certified class-action lawsuit claims.
The $150-million lawsuit against Pizza Nova argues the company and its franchisees “were party to a conspiracy” to avoid paying minimum wage and other entitlements through a hiring model that excluded up to 2,000 delivery drivers from employment protections. Pizza Nova denies the allegations, which have not yet been tested in court.
The lawsuit passed its first legal hurdle in December when an Ontario Superior Court judge permitted it to proceed – a process known as certification – and the case is among the province’s first significant class actions tackling employment issues at a major franchisor. If successful, the lawsuit could push franchisors to shoulder greater responsibility for workplace violations at their franchisees.
The company argued during certification proceedings that holding it jointly responsible for franchisees’ alleged wrongdoing would “cause ripples within Canada” and had the “potential to end the entire franchise structure in this country.”
However, the court ruled there was enough evidence for the class action to proceed against both parties on claims of conspiracy, negligence and unjust enrichment arising from Pizza Nova’s alleged hiring practices.
Tina Yang, a partner with Toronto labour law firm Goldblatt, which is spearheading the case, said low-wage workers often struggle to pursue workplace complaints individually, making class actions a “valuable and important” tool to address alleged wrongdoing.
In a statement, Pizza Nova president Domenic Primucci said the certification ruling is “a procedural decision only and does not decide the merits raised in the claim.”
“Pizza Nova intends on vigorously defending itself. At Pizza Nova, and for over 60 years, we have always taken pride in the manner in which each member of our extended family is treated,” Mr. Primucci said.
Ontario courts and tribunals have previously found in individual cases that franchisors can be jointly liable for workplace standards. But class actions tackling working conditions at franchisors are a rarity, York University labour law professor David Doorey said, noting that cases such as the Pizza Nova suit are complex and may take years to resolve.
Nonetheless, class actions are an important – if nascent – avenue for “challenging systemic workplace problems” because they prompt businesses to pay closer attention to issues such as misclassification, Dr. Doorey said.
Founded in 1963 by the Primucci family, Pizza Nova grew its original storefront in a Toronto suburb to a franchise outlet with more than 140 outlets across Ontario.
Representative plaintiff Juan Jose Lira Cervantes worked at four Toronto-area Pizza Nova franchises as a driver between 2013 and 2019, earning between $6 and $9 an hour, according to his statement of claim. He was classified as an independent contractor, a category of worker that is excluded from provincial employment laws, including minimum wage. Though he earned tips, he also paid for expenses such as gas out of pocket. Pizza Nova did not make contributions to federal benefit programs, including the Canada Pension Plan, on Mr. Cervantes’s behalf, the statement of claim says.
In certifying Mr. Cervantes’s class action, the court relied on evidence from three drivers and more than 40 franchisees, as well as Pizza Nova’s internal operations manual setting company-wide policies.
That manual directs Pizza Nova franchisees to hire drivers as independent contractors rather than employees; drivers also signed contracts stating they were self-employed.
The class action alleges that, unlike true independent contractors, Pizza Nova drivers had little control over their working conditions.
Drivers did not set their own pay rates or make their own shift schedules, the certification decision notes. The company’s operation manual described drivers as franchisees’ “business cards,” and required them to wear Pizza Nova-branded uniforms. Deliveries were assigned through a centralized system developed by Pizza Nova and used by all its franchisees.
“Despite this, they are paid and compensated at levels that are significantly below the minimum standards set out in the Employment Standards Act,” said Goldblatt partner Josh Mandryk, co-counsel on the case.
Pizza Nova told the court there were too few commonalities in drivers’ working conditions to merit a class action. The class action threatens to “sweep all drivers” into the lawsuit even if they benefited financially from being contractors, the company added.
The court rejected this argument, stating that no evidence was provided to support the claim that some drivers were better off as self-employed workers.
Mr. Cervantes said he launched the lawsuit to “improve working conditions for pizza delivery drivers in an industry that treats us poorly,” adding that the class action brings drivers “one step closer to finally receiving recognition as employees.”
The Ontario Labour Relations Board has already dealt with at least one Pizza Nova case: In 2022, the board ruled a Scarborough franchisee had misclassified a driver and owed him more than $35,000 in unpaid entitlements.
The Canadian Franchise Association has argued in position papers that franchisors should not be held jointly liable for workplace standards at their franchisees if they don’t have a role in hiring and firing decisions, pay rates or scheduling. That, the association argues, is crucial to “protecting the position of franchisees as independent business owners.”
Labour advocates disagree, citing precarious working conditions in some sectors where franchising in common. In 2021, a study of workplace standards by academics at York and Toronto Metropolitan University found franchisees in Ontario were more likely to have monetary violations than other kinds of employers.