After the mass termination of all its staff, Steve Nash Fitness World (SNFW) is now facing more legal action in the form of a proposed class-action lawsuit.
The proposed suit is on behalf of about 1,200 employees who were suddenly terminated on March 24. It alleges their contracts were breached by failing to provide notice of termination without cause or payment in lieu of notice.
The suit seeks damages including individual termination pay of up to eight weeks’ of wages, and group termination payment of up to 16 weeks’ worth of wages.
Lead plaintiff Brenie Matute claims the company had been planning this and is using the COVID-19 pandemic as an excuse.
“I believe the termination is not because of the COVID-19 situation, I’m afraid it was pre-meditated and this is precisely why the case is going forward,” alleges Matute, a former group fitness instructor who is now teaching virtual classes from home.
None of the allegations have been proven in court and the company has not responded to multiple Global News requests for comment on the issues, including terminations and severance pay.
“Termination with absolutely no notification prior to that, no payment upon termination is definitely a surprise for everybody and it has consequences,” Matute said.
“People have lives, their livelihood was disrupted and their income certainly.”
Global News has also obtained a Notice of Intention to file for insolvency filed by the company. A title search of the company’s other brand, Crunch Fitness in Surrey, shows seven liens against the property all filed within the last two weeks.
“I think the people who run SNFW have some explaining to do about why this happened so quickly,” McQuarrie Hunter LLP partner Robert Finlay told Global News.
Finlay is not representing any clients related to SNFW but he has received calls from concerned former employees and members who prepaid for hundreds of dollars in personal training or were charged for memberships even though the gyms shut down amid the COVID-19 pandemic.
“They were one of the first employers to pull the plug and mass terminate all employees,” Finlay said. “From my perspective, that’s not necessarily a requirement at this point.”
Finlay says businesses should be able to look at their cash flow and options like temporarily laying off staff, restructuring over a period of weeks or months or other cash and financing resources.
“I didn’t see any of that happening and from what I’ve heard, from what I’ve seen… it happened very quickly,” Finlay added.
“It was very sudden and there weren’t really any mitigating steps taken, it was just simply ‘we’re going to shut our doors and terminate everybody.’ I think that’s a concern.”
The Canadian Federation of Independent Business (CFIB) says as of April 3, it estimated 25 per cent of B.C. businesses closed due to the pandemic and 40 per cent of B.C. business owners are worried they may have to close their business permanently as a result of COVID-19.
In one example, the CFIB said a B.C. small business owner, who asked to remain anonymous and who had to file for insolvency due to the pandemic, took out an additional mortgage and paid the employees’ severance out of their personal bank account.
A stark difference from the situation former SNFW staff are in.
This latest lawsuit adds to a growing list of legal challenges against SNFW, including basketball great Steve Nash himself, who wants to have his name removed.
Last year a $20-million class-action lawsuit was filed by employees alleging they were not being paid properly. None of the allegations have been proven in court.