Legal Alert: NB Government Revisiting Personal Director Liability for Unpaid Wages
October 3, 2013
By Chris Borden, at McInnes Cooper
Note: On December 3, 2013 the NB Government introduced Bill 21 to amend Chapter 13. Chapter 13 was never made effective, but would amend the NB Employment Standards Act to impose personal liability on directors of NB employers. Click here to read McInnes Cooper’s December 6, 2013 Legal Alert, “NB Government Throws Directors of NB Employers a Life Preserver”.
The NB Government is revisiting amendments to the NB Employment Standards Act imposing personal liability on directors of NB employers. On June 21, 2013, the NB Legislature passed Bill 46 – An Act to Amend the Employment Standards Act (now referred to as Chapter 13) – including a new section 65.1 to the NB Employment Standards Act.
Chapter 13 (and section 65.1) has never been made effective. However, it would have a significant impact on the directors of NB employers. Click here to read McInnes Cooper’s July 19, 2013 Legal Update, “Director Overboard – Directors of NB Employers To Be Personally Liable for Unpaid Wages.”
Based on recent communications with the Government, we anticipate it will propose additional amendments to address private sector response in the Fall 2013 session. The Government has not made the additional amendments public but has indicated they will include:
- Diligence Defence. Section 65.1 imposes a new liability on directors, making them jointly and severally liable with the employer for unpaid wages and vacation pay earned by current and former employees while the director was on the board. Of greater concern to directors is that there is no defence to this new liability – and possibly no insurance coverage. The Government will propose adding a diligence defence for this liability. It has not confirmed the nature of the defence; possibilities include a “reasonable” or a “due” diligence defence.
- Administrative Penalties. The Government will propose eliminating directors’ exposure to administrative penalties of $150 to $900.
- Effective Date. The Government confirms it is targeting an early 2014 effective date for Chapter 13 – including the further amendments it will propose in the Fall 2013 session.
We will continue to keep you updated on the developments to this legislation.
Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Corporate Governance and Compliance Team to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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