Ex-employees accuse former Better Business Bureau of bad behaviour

Former employees of a Better Business Bureau (BBB) that covered a sizable chunk of Canada are accusing it of terminating staff without severance after it was booted out of the BBB network.

The BBB Serving Canada's Northern Capital Regions and Quebec was headquartered in Ottawa and responsible for eastern Ontario, Quebec and northern Alberta.

In June 2024, the International Association of Better Business Bureaus expelled it for "not meeting BBB standards."

BBB is a network meant to promote trust, transparency and good business standards. The bureaus operate as independent non-profits under the umbrella of the international association, and the expulsion of the one headquartered in Ottawa deprived it of the right to use the BBB name and branding.

It quickly laid off all of its staff, according to several former employees who say it also billed that move as temporary.

But it didn't shut down. Instead, it rebranded itself as Nearby Incorporated and rehired some of its sales staff in a bid to hold onto member businesses.

According to former assistant sales manager Celia Lyons, the aim was to mimic BBB and offer online marketing for businesses.

It didn't go well, Lyons said.

"No one knew who we were. People were laughing at us. People were yelling at us on the phone and hanging up on us," she said. "It was crazy."

'It all came crashing down'

Nearby Incorporated had taken out a bank loan to carry it through the rebranding effort, according to Lyons. But after that money ran out, another wave of layoffs followed around October, she said.

Two former employees, Lindsay Donnelly and Jeffrey Querel, are now suing Nearby and its two remaining directors for dismissal without severance or vacation pay. Together, they argue they're owed more than $257,000. 

The accusations haven't been proven in court and Nearby hasn't submitted a statement of defence.

But Lyons and several other employees say they suffered the same fate. They showed CBC their contracts, which variously entitled them to two or three weeks of severance for every year of employment.

"All of a sudden, it all came crashing down on us," said Lyons. "We're all desperately trying to survive. I know a lot of people haven't found jobs yet, and people that have found jobs are working for minimum wage, just trying to pay their bills."

Cassandra Fowler, who was part of the operations department, was let go during the first wave of layoffs. She said she hasn't seen any severance or vacation pay.

"It hurts a lot," Fowler said. "I was already, as it was, living paycheque to paycheque. So to have lost my job, which I thought was going to be my career right up until retirement, I then had to scramble and try to make ends meet."

Jocelyn Lavergne worked at the Ottawa-based BBB for 30 years and was nearing retirement. She headed the compliance department and was entitled to three weeks of severance for every one of those years. 

Lavergne said she didn't get a penny and is now living off savings until she turns 65.

"It was a huge blow," she said.

International association had financial concerns

It's unclear precisely what led the international association to expel the Ottawa-based BBB. When asked by CBC, it said the local bureau was violating a standard relating to financial management.

The standard on finance, revenue and growth requires local BBBs to have a budget approved by their board of directors. It must include careful analysis of programs, staff and expenses and balance them against realistic revenue projections. 

In a statement, the international organization pointed to what it called "ongoing deficiencies" and "serious concerns" relating to that standard. It said the local BBB was made aware of those issues in 2023, and there were numerous meetings and suggested corrections. 

It said the local BBB had an opportunity to present evidence to a special committee before it was expelled last June.

"The BBB vision and mission are centred on building and advancing marketplace trust," said Melanie McGovern, the international association's director of public relations and social media, in the statement.

"It's critical that each BBB has the financial strength and management expertise to provide services to businesses and consumers. Otherwise, that trust is lost."

After the expulsion, a new BBB entity was formed for the Ottawa service area under new management, McGovern added.

Diana Ferenbach, who was program director of the former BBB's co-working space, said that in January 2024 the CEO looped other managers into the challenges facing the local bureau.

"The conversations around that were about how they were trying to expel us for our lack of reserves, not having enough money," she said.

But she also described what she saw as spending issues at the organization.

"We had luxury cars, dinners out, very regularly at very expensive places, with very expensive beverages," she said.

Fowler said she remembered dinners with tomahawk steaks, seafood platters and "really, really nice bottles of wine." She called it "obnoxiously unnecessary."

Lyons called the spending "egregious" and "lavish." She believes it played a role in the financial management issues that led to the expulsion. 

Former directors push back 

The international association did not directly respond to a question about whether spending of that type was related to the expulsion.

But one of the former directors, Russ Salo, disputed the employees' account. He said the CEO did have a company vehicle and there were dinners for clients and the board, but he called it "nothing out of the ordinary."

Another former director, Robart Swyrd, said management was transparent and the accusations from the international association were not justified.

He called those running the Ottawa-based BBB "a wonderful bunch of people."

The remaining directors of Nearby Incorporated later provided a statement to CBC saying they "deeply regret the toll this transition has taken on our employees." They explained that the split with the international association followed "a long and complex legal dispute."

We consistently upheld strong financial oversight, including the involvement of independent auditors, rigorous internal controls, and full transparency in financial reporting.- Statement from remaining Nearby Inc. directors

"In the immediate aftermath, the organization attempted to continue under the name Nearby Inc., securing short-term financing to assess the viability of continuing services and collecting member dues," their statement said. "Unfortunately, the business was unable to sustain operations, and that transition did not succeed.

They also defended the financial management of the organization.

"At all times throughout our history, the Board of Directors remained fully engaged and committed to sound governance," their statement said. "We consistently upheld strong financial oversight, including the involvement of independent auditors, rigorous internal controls, and full transparency in financial reporting. 

"Every decision was made with thoughtful consideration for the needs of the organization, its members, and its employees."

Lyons wants to know why Nearby Incorporated isn't taking actions that, in her view, could cover at least some of the money owed to the former employees. 

Nearby owns a building in Edmonton that is listed for $1.65 million. Lyons said it has been sitting on the market for more than a year, and she wonders why selling it doesn't seem to be a priority.

"I haven't seen the price drop at all, so I don't think it's very urgent," she said.

Nearby also hasn't declared bankruptcy, though it appears to have more or less ceased operations. The phone line listed on its website has been suspended. If it did declare bankruptcy, Lyons noted, employees could apply for compensation under the federal Wage Earners Protection Act.

That program can provide a one-time payment of up to $8,844.

If there are assets left over in bankruptcy or receivership proceedings, wage earners would fall below secured creditors like mortgage holders.

"I'm not holding on to hope anymore," Lyons said.

Fowler doesn't see much point in legal action, given that the BBB's coffers seem bare.

"If there's no money, what am I going to do?" she asked. "Why am I going to fight for something I'm never going to get?"