With ongoing labour shortages driving more use of third-party recruiters, employers face growing legal risks tied to how those recruiters operate. A recent decision from the B.C. Court of Appeal, Mac’s Convenience Stores Inc. v. Basyal, 2025 BCCA 284, provides a critical reminder of best practices for avoiding vicarious liability, while also underscoring that even where liability is avoided, poorly structured arrangements can expose employers to costly claims.
Case Background
The plaintiffs, a group of temporary foreign workers, brought a class action against Mac’s Convenience Stores (“Mac’s”) after alleging that the recruiter it used, Overseas Immigration Services (“Overseas”), charged illegal fees and misrepresented job opportunities under the Temporary Foreign Worker Program. The B.C. Supreme Court initially found that Overseas acted as Mac’s agent and held Mac’s vicariously liable for the recruiter’s conduct. The Court of Appeal, however, overturned that decision, concluding that no agency relationship existed based on the contracts and conduct. In particular, the Appeal Court emphasized that Mac’s retained control over binding employment agreements, shielding it from liability for fees or fiduciary breaches.
Agency Test Clarified
The core issue before the Court was whether Overseas legally acted as Mac’s “agent,” meaning Mac’s would be responsible for the recruiter’s actions in carrying out its role. In simple terms, agency requires proof that the recruiter had authority to bind the employer contractually, such as making promises or signing deals on the employer’s behalf.
The Court of Appeal found no such authority existed. The documentation and conduct demonstrated that Overseas functioned as an independent contractor, limited to screening and administrative support. Because the recruiter could not bind Mac’s contractually, no vicarious liability applied.
How Mac’s Avoided Liability
Mac’s avoided liability largely because its contracts explicitly limited Overseas’ role to screening and paperwork, with Mac’s controlling all job offers and terms. However, the trial decision highlights how broader discretion or unclear communications could have implied agency, potentially exposing employers to misrepresentation or unjust enrichment claims.
Key Risk Areas for Employers
Even with Mac’s win on appeal, the case exposes recurring pitfalls for employers using recruiters:
- Job misrepresentations that could give rise to negligent misrepresentation or human rights complaints
- Prohibited recruitment fees claimed as unjust enrichment
- Vulnerable workers (e.g., temporary foreign workers) inviting stricter judicial scrutiny
- Ambiguous contracts implying recruiter authority to speak for the employer
Practical Steps to Limit Liability
Employers can minimize exposure by structuring recruiter relationships with clear documentation and oversight:
- Secure ironclad contracts: Specify the recruiter as an independent contractor and prohibit them from binding the employer, making promises beyond written offers, or collecting fees (unless legally permitted). Contracts should also include compliance requirements for employment standards, human rights, and immigration laws, along with indemnity for breaches.
- Control candidate communications: Supply standard job descriptions and offer templates, and prohibit alterations without approval. Require recruiters to provide candidates with written offers and policies, making it clear that only these documents govern employment terms.
- Monitor and audit actively: Use new-hire questionnaires to flag fees paid or misrepresentations. Perform spot-checks via interviews or document reviews and terminate the relationship if red flags arise.
Key Takeaways
Courts will not assume agency simply because an employer uses a third-party recruiter. However, where controls are unclear or oversight is lax, particularly with vulnerable workers, employers may still be held accountable for recruitment misconduct.
Recruitment should be treated as a high-risk area. Employers should review contracts in light of cases like Mac’s v. Basyal, audit current practices, and consult counsel to align with evolving law – a quick review today prevents litigation tomorrow.
If you have questions about using third-party recruiters, structuring recruitment agreements, or mitigating liability risks, contact the lawyers at Ascent Employment Law – we’re here to help!
