Dayton Boots owes workers nearly $500K for wages paid out in company gift cards, tribunal confirms

The Employment Standards Tribunal (EST) has dismissed an application from Vancouver's Dayton Boots Company to reconsider a decision that found the company owes close to half a million dollars in wages to workers who had previously been compensated with Dayton Boots store gift cards.

The case began in October 2020 when two individuals filed confidential complaints with the B.C. Employment Standards Branch, alleging Dayton Boots was deducting 50 per cent of employee wages and making up for the deductions with gift cards.

An investigation looked at employment records provided by Dayton Boots, and found wage statements starting in June 2020 that showed pay deductions labelled as "other deduction," then "Dayton Card," and finally "Dayton Gift Card."

According to tribunal documents, company owner Eric Hutchingame initially explained that Dayton Boots' employees are "required to wear the store's products when at work, so Dayton Boots developed a way for the employer to pay for the cost of the employees' clothing by incorporating it into their pay structure."

The company also claimed employees had agreed verbally to be paid $600 per week in salary, plus $600 per week in a merchandise credit. 

Over the course of the investigation and subsequent appeal, the company also argued that the gift cards were never meant to be wages; that the gift cards were paid on top of salary; that the wage statements were erroneous and employees were never meant to receive the gross amount stated; and that it would be unreasonable to require Dayton Boots to pay the amounts shown as deducted as many employees did not work a full 40 hours in a week, according to documents.

Wages must be paid in Canadian currency

A determination by an EST delegate found against Dayton Boots and Hutchingame says they breached several sections of the Employment Standards Act (ESA), including Section 20, which requires wages be paid in Canadian currency, and Section 21, which says employers can't withhold, deduct or require payment of any part of employee wages for any purpose.

The decision calculated that 71 employees were owed wages of $610,417.68, plus interest. It said Hutchingame, as the sole director of Dayton Boots, was personally liable for approximately $556,000 of the amount. 

Both Dayton Boots and Hutchingame appealed the decision.

In April 2022, an appeal tribunal dismissed all but one of their arguments — it agreed that some employees who lived out of province did not fall under the jurisdiction of the ESA, and therefore should not have their wages included in the calculation.

The appeal decision ordered a re-calculation that excluded the out-of-province employees, dropping the wages owed by the company to $484,995.33, and adjusting Hutchingame's liability to $446,472.04.

'Brand ambassadors'

Dayton Boots and Hutchingame then sought a reconsideration of the appeal decision, claiming new evidence purporting to show that 36 of the 71 individuals originally awarded wages were in fact "brand ambassadors" and not actual Dayton Boots employees who performed actual work.

A three-person panel said the new evidence did not meet the test for reconsideration because Dayton Boots and Hutchingame had themselves claimed 71 employees and provided evidence supporting the fact when they submitted employment records for 71 individuals to the tribunal.

"The Applicants repeatedly represented, and even affirmed, that the individuals, including the brand ambassadors, were their employees," said the panel in confirming the re-calculation decision.