Ontario Employment Standards Act Reforms Underway

This article was updated June 1, 2017

On May 30, 2017, the Ontario government decided to move forward with some of the 173 recommendations from the Changing Workplace Review final report which includes broad ranging amendments to Ontario’s Employment Standards Act.

At the same time, the government also announced that they will be increasing the minimum wage effective January 1, 2018, which was not included in the report.

To that effect, proposed legislation, Bill 148, The Fair Workplaces, Better Jobs Act, 2017, was tabled on June 1, 2017 in Legislature. There are a number of recommendations that are, in fact, not being retained by the government. Specifically, and as stated by the Ontario Ministry of Labour statement and background documents and Bill 148, measures that are retained and that will amend the Employment Standards Act include:

1. Changes to minimum wage

Ontario’s general minimum wage will increase to $14 per hour on January 1, 2018, and then to $15 on January 1, 2019, followed by annual increases at the rate of inflation. The special minimum wage rates for liquor servers, students under 18, hunting and fishing guides, and homeworkers will be maintained and will increase by the same percentage as the general minimum wage.

 

2. Changes to equal pay for equal work provisions

The Bill would mandate equal pay for part-time, temporary, casual and seasonal employees doing the same job as full-time employees; and equal pay for temporary help agency employees doing the same job as permanent employees at the agencies’ client companies.

The proposed amendments would enable employees to request a review of their wages if they believe that they are not receiving equal wages to full-time employees. The employer would have to respond to the request with either an adjustment in pay or a written explanation.

There would be exceptions to the requirement for equal wages where a wage difference is based on seniority or merit system among others.

The proposed legislation would also protect casual, part-time, temporary, seasonal employees and temporary help agency employees against repercussions for inquiring about their wage rate or asking another employee about their wage rate.

If the proposed legislation passes, this proposal would come into force on April 1, 2018.

3. Payment of wages

The proposals would create the authority to prescribe additional methods of payment of wages employers make to employees.

The proposals would also allow for an Employment Standards Officer to order money to be paid directly to an employee when an employer or Temporary Help Agency client owes money to that employee.

If the proposed legislation passes, this proposal would come into force on January 1, 2018.

4. Changes to statutory leaves of absence

• Paid personal emergency leave: Currently the unpaid personal emergency leave (PEL) currently applies only in workplaces with 50 or more employees. Under the proposed amendments, this threshold would be eliminated and all employees would be entitled to personal emergency leave. Specifically,

• The proposed legislation would also ensure all employees are entitled to 10 PEL days per year, including two paid PEL days.
• The reasons for taking PEL would also be expanded so that employees experiencing domestic or sexual violence or the threat of sexual or domestic violence could take the leave.
• The proposed changes would prohibit employers from requesting a sick note from an employee taking Personal Emergency Leave.

• Leave for the death of a child and for crime-related disappearance: The proposed legislation would create a new, separate leave for child death from any cause for a period of up to 104 weeks. Specifically, the proposed amendments would also establish a separate leave for crime-related child disappearance for a period of up to 104 weeks.
• Family medical leave: The proposed legislation would increase Family Medical Leave from up to 8 weeks in a 26-week period to up to 27 weeks in a 52-week period.

If the proposed legislation passes, this proposal would come into force on January 1, 2018.

5. Changes to vacation and public holidays

• The Bill will bring Ontario’s vacation time into line with the national average by ensuring at least three weeks’ vacation after five years with a company.
• The proposed changes would simplify the formula for calculating public holiday pay so that employees are entitled to their average regular daily wage. Other elements of the public holiday provisions would also be simplified.

If the proposed legislation passes, this proposal would come into force on January 1, 2018.

6. New scheduling provisions

The proposed legislation would set out new scheduling rules:

• Employees would have the right to request schedule or location changes after having been employed for three months without fear of reprisal.
• Employees who regularly work more than three hours per day, but upon reporting to work are given less than three hours, must be paid three hours at their regular rate of pay.
• Employees can refuse to accept shifts without repercussion if their employer asks them to work with less than four days’ notice.
• If a shift is cancelled within 48 hours of its start, employees must be paid three hours at their regular rate of pay
• When employees are “on-call” and not called in to work, they must be paid three hours at their regular rate of pay. This would be required for each 24-hour period that employees are on-call.
• If a collective agreement is made between an employer and a union, the agreement would prevail in place of some of these new rules.

If the proposed legislation passes, this proposal would come into force on January 1, 2019.

7. Additional changes to temporary help agency provisions

The Bill would require a Temporary Help Agency (THA) to provide an assignment employee with at least one week’s notice when an assignment scheduled to last longer than three months will be terminated early. If less than one week’s notice is given, the assignment employee must be paid for the difference, unless the assignment employee is offered at least one week’s worth of reasonable work during the notice period.

If the proposed legislation passes, this proposal would come into force on January 1, 2018.

8. Hours of work and overtime pay

• The proposed changes would make clear that electronic agreements between employers and employees, such as an agreement to work excess hours, can serve as an agreement in writing.
• Under the proposed legislation, employees who hold more than one position with an employer and who are working overtime must be paid at the rate for the position they are working during the overtime period.

If the proposed legislation passes, this proposal would come into force on January 1, 2018.

9. Employee misclassification

The government also proposes to make certain that employees are not misclassified as independent contractors, thus ensuring they get the benefits they deserve. To enforce these changes, the province will hire up to 175 more Employment Standards Officers and launch a program to educate both employees and small- and medium-sized businesses about their rights and obligations under the Employment Standards Act.

The proposed legislation would prohibit employers from misclassifying employees as “independent contractors.” This is intended to address cases where employers improperly treat their employees as if they are self-employed and not entitled to the protections of the ESA.

Employers that misclassify their employees could be subject to penalties including prosecution, public disclosure of a conviction and monetary penalties.

In the event of a dispute, the employer would be responsible for proving that the individual is not an employee.

There will be no change to the definition of “employee” to include a “dependent contractor.” The current ESA definition is already quite broad, and changes to the definition are likely to have unintended consequences. The real issue is the misclassification of the employees.

As well, the Law Commission of Ontario, which recently studied this issue, specifically advised against a “dependent contractor” provision as its scope would be very difficult to define without inadvertently capturing true “independent contractors.” This would create significant legal and potentially economic uncertainties.

If the proposed legislation passes, this proposal would come into force on Royal Assent.

10. Exemptions and exclusions

The proposed legislation would:

• Ensure that almost all existing ESA requirements and entitlements would apply to Crown employees. If the proposed legislation passes, this proposal would come into force on January 1, 2018.
• Ensure that all ESA requirements and entitlements would apply to people receiving training for work through their employer. However, individuals working as part of an experiential learning program run by a university, community college, private career college or high school would be excluded from the requirements and entitlements under the ESA. If the proposed legislation passes, this proposal would come into force on January 1, 2018.
• Ensure that students who are employed and regularly work more than three hours are paid for at least three hours even if they work less than three hours. If the proposed legislation passes, this proposal would come into force on January 1, 2019.
• Ensure that all ESA requirements and entitlements would apply to employees working in a simulated job or working environment for their rehabilitation (commonly known as a “sheltered workshop”). If the proposed legislation passes, this proposal would come into force on January 1, 2019.
• Beginning in fall 2017, the Ministry of Labour will conduct a review of ESA exemptions and special industry rules, including consultation with affected stakeholders. This review would include exemptions in place for managers and supervisors.

11. Enforcement and employer liability

• Joint liability: The proposed legislation would remove the provision that requires proof of “intent or effect” to defeat the purpose of the Employment Standards Act, 2000 when determining whether related businesses can be treated as one employer and held jointly and severally liable for monies owing under the Act. The current language has limited the effectiveness of the joint liability provisions.
• Self-help kit before filing a claim: The proposed legislation would no longer require employees to contact their employer before filing claim under the Employment Standards Act (ESA). Under the proposed changes, the Director of Employment Standards could no longer refuse to assign an Employment Standards Officer to investigate an ESA claim due to insufficient information from the claimant.
• Penalties for non-compliance of the ESA: The proposed legislation would increase flexibility around the administrative monetary penalties that Employments Standards Officers can give out to employers that do not comply with the ESA.

  The government also intends to amend a regulation under the ESA to increase the maximum administrative monetary penalties for non-compliant employers from $250, $500 and $1000 to $350, $700 and $1500, respectively.

  The proposed changes would allow the Director of Employment Standards to publish (including online) the names of individuals who have been issued a penalty, a description of the contravention, the date of the contravention and the amount of the penalty.

• Interest on unpaid wages: The proposed legislation would enable Employment Standards Officers to award interest on employees’ unpaid wages and on fees that were unlawfully charged to employees. The Director of Employment Standards would be allowed, with the Minister’s approval, to determine rates of interest for amounts owing under different provisions of the ESA.
• Wage collections: The proposed changes would improve wage collections by the government or an authorized collector, including: Allowing a collector authorized by the Director of Employment Standards to issue warrants, place liens on real and personal property and to hold a security while a payment plan is underway and enabling government and the authorized collector to collect and share personal information. If the proposed legislation passes, the legislative proposal would come into force on January 1, 2018.

Enhancing employment standards enforcement

The province plans to hire up to 175 more employment standards officers and launch a program to educate both employees and small- and medium-sized businesses about their rights and obligations under the Employment Standards Act. Education will help employers understand their obligations.

Once the new Employment Standards Officers are hired by 2020–2021, the Employment Standards program will resolve all claims filed within 90 days and inspect one in 10 Ontario workplaces. Additionally, the program will provide compliance assistance to new employers specifically focusing on medium and small business. This will help good employers understand their obligations.

Enforcement will focus on employers who compete unfairly by breaking the law, and will level the playing field for the majority of employers that follow the rules.

Increased enforcement will aim to motivate compliance and deter non-compliance. This requires resources in enforcement and in education to impact employer behaviour and deter potential violators.

These new resources will help to ensure that the proposed changes under the ESA are fully and effectively implemented.

Last words for now

Changes to the Labour Relations Code found in the same proposed legislation will be published on Slaw next week.

As the Bill progresses in Legislature, we will provide an update to this article to ensure all measures and provisions are complete. We will also provide additional input on how employers, unions, HR and payroll professionals should prepare.