Several laid-off RenoRun employees are seeking unpaid wages through a Quebec labour board, claiming the company laid them off last month without paying them the minimum severance required by law. 

“As you are aware, [RenoRun’s] board of directors, along with management, has determined that it is necessary and in the best interest of the company to commence proceedings under the Bankruptcy and Insolvency Act,” the company wrote in a Feb. 10 termination letter to a former employee, whom The Logic agreed not to name because they were not authorized to share confidential company information. 

The Montreal-based company—whose drivers deliver construction material to work sites—told the worker at the time that they may be able to access unpaid wages through the federal government’s Wage Earner Protection Program (WEPP) once the company filed for bankruptcy protection. But more than a month later, RenoRun has still not formally declared insolvency, leaving workers unable to access the program. 

Now, a group of former employees is turning to the province’s labour board in a bid to force the company to compensate them. Quebec case law has determined that laid-off employees are entitled to between two and four weeks per year worked, said labour lawyer Antoine Godin-Landry.

Neither a RenoRun spokesperson nor CEO Eamonn O’Rourke responded to a request for comment Thursday.

RenoRun’s imminent insolvency comes just a year after announcing it raised $181 million from a host of high-profile investors, including the New York private equity giant Tiger Global and the now-bankrupt Silicon Valley Bank. 

The Logic reported on Monday that the cash-strapped company has been scrambling for a lifeline to keep the company afloat, either by finding a buyer or by securing another injection of money. The startup, which had over 550 staff a year ago, is now running on what one recently departed employee described as a “skeleton crew.”

At the time of its last fundraise—touted as the fourth-largest Series B in Canadian history—O’Rourke said the company’s business had consistently tripled in growth year over year since its 2017 inception, and that it expected its revenue to exceed nine figures in 2022. 

The company’s long list of investors includes the Crown corporations BDC Capital and Export Development Canada, as well as Montreal firms Inovia Capital, Real Ventures and Desjardins Capital, along with Toronto-based ScaleUP Ventures and Vancouver’s Nicola Wealth. California-based SE Ventures, Obvious Ventures, Fifth Wall and Maple VC are also investors.

Canada’s startup and tech sector has struggled over the past year to adjust to a cautious fundraising environment following early-pandemic boom times that saw companies raise record amounts of money and fuelled their rapid growth. The Wall Street Journal reported last week that Tiger, one of the lead investors in RenoRun’s last funding round, wrote down the value of its venture capital investments by about 33 per cent in 2022. 

Private messages between a group of laid-off RenoRun workers show at least four of them have filed complaints with the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST) in Quebec, seeking unpaid wages, including for vacation, retention bonuses and for the company not providing sufficient termination notice. 

The CNESST, Quebec’s workplace health and safety commission, analyzes complaints upon receipt, as CNESST spokesperson Antoine Leclerc-Loiselle told The Logic. Should it deem the complaint valid, the commission acts as a mediator between the employer and employee. Should the parties not come to an agreement, the CNESST can launch an investigation, during which the government body has search and seizure powers. The commission typically gives the employer 10 days to pay the employee, after which the commission transfers the file to the labour tribunal. 

“The tribunal has extensive powers to impose punitive damages that encompass, ordering payment of punitive damages on the part of the employer,” Godin-Landry told The Logic. Laid-off employees also have recourse in Quebec courts.

Citing privacy concerns, the CNESST wouldn’t say if it had received any complaints regarding RenoRun.

In the event of a bankruptcy, employees would be considered creditors. “If the company goes bankrupt, even though they have a case, unfortunately there is a chance that the employee isn’t going to be able to successfully claim the damages,” Godin-Landry said. 

Employment lawyer Fiona Martyn of Toronto firm Samfiru Tumarkin told The Logic that directors of the company ultimately could be held personally responsible for paying workers the legal minimum severance to which they’re entitled. For workers in Ontario, directors could be subject to fines or even imprisonment if they fail to comply with orders to compensate workers.

“In case law, there’s usually a reluctance to do what’s known as piercing the corporate veil and hold directors liable for the debts of their company,” said Martyn. “But unpaid wages is the exception to that.” 

Under federal law, directors of federally incorporated corporations are liable for up to six months of unpaid wages. RenoRun is federally incorporated. Employees of Quebec-based companies like RenoRun can file a complaint with the CNESST even if they reside outside the province, Godin-Landry said.

Companies often have directors and officers liability insurance to cover unpaid wages in the event a company can’t pay. 

In Ontario, where RenoRun operated in Toronto, directors of companies that fail to comply with orders to compensate workers for unpaid wages could be fined up to $50,000 or imprisoned for up to 12 months, said Martyn. 

Martyn said accessing wages through the WEPP—as RenoRun has said workers may do—is much more difficult than going through the labour ministry. Through the federal program, workers join a list of all the other creditors the company owes money. “Versus if you’re going after the directors personally, your claim for unpaid wages is essentially prioritized,” she said. 

In an email RenoRun sent to a former employee on March 16, which The Logic reviewed, the company said it was “continuing to pursue maintaining the business.”

“We do not have control of the speed of this process despite doing all we can to move forward as quickly as possible,” reads the email, which notes that the company is in communication with Service Canada, the government body that processes WEPP claims. “Whether we are able to maintain the business or not, monies owed will be paid.”