Recent updates to the employment standards act, 2000
12th Annual Employment Law Seminar
November 19, 2015
Prepared and presented by: Ned Nolan
Nolan Ciarlo, LLP
nn@nolanlaw.ca
1 King Street West, Suite 700
Hamilton, ON
L8P 1A4
***
There is overwhelming evidence that labour market conditions in Ontario are in transition. Today’s labour market is fundamentally different from that of the previous generation. This shift in conditions is characterized by two phenomena: increasing income inequality and the rise of precarious employment.[1]
***
In 2011, only about half of workers in the Greater Toronto and Hamilton area reported being employed in permanent, full time jobs with benefits. Over recent years we have seen a staggering increase in the percentage of workers earning minimum wage, working for temp-agencies, or working as independent contractors.[2] Critics have pointed out that Ontario’s dated labour and employment statutes may be ill-equipped for dealing with the harsh realities of 21st Century capitalism.[3]
On November 20th 2014, Bill 18: Stronger Workplaces for a Stronger Economy Act, 2014 received royal assent in the Ontario Legislature, bringing changes to various labour and employment statutes – changes mostly being rolled out over the course of 2015. The amendments are generally (though cautiously) designed to address the changing labour market in Ontario and to provide some greater protection to the increasing number of vulnerable and precarious employees in the province.
Bill 18 amends the Employment Standards Act, the Labour Relations Act, the Employment Protection for Foreign Nationals Act, the Occupational Health and Safety Act and the Workplace Safety and Insurance Act. This paper will provide a purely explanatory update on the Bill 18 changes to the Employment Standards Act (the “ESA” or the “Act”), without revisiting earlier changes such as the leave of absence updates which have been widely discussed over the past few years.
SUMMARY – EXPLANATORY NOTE[4]
- Schedule 2 [of the Stronger Workplaces for a Stronger Economy Act] amends the Employment Standards Act, 2000.
- Section 2 of the Act is amended by adding a requirement that an employer provide each of his or her employees with a copy of the most recent informational poster published by the Minister under the section. The section is also amended to require an employer to provide available translations of the poster if they are requested.
- Currently, the minimum wage is set out in a regulation made under the Act. The Act is amended to provide that, each year, the minimum wage is adjusted in accordance with the new sub- section 23.1 (3). Related amendments are also made.
- The new sections 74.4.1 and 74.4.2 of the Act require temporary help agencies and their clients to keep certain records in respect of assignment employees.
- The new section 74.18 of the Act makes a temporary help agency and its client jointly and severally liable for certain unpaid wages owing to an assignment employee.
- Under the new section 91.1, an employment standards officer may, by giving written notice, require an employer to conduct an examination of the employer’s records, practices or both to determine whether the employer is in compliance with one or more provisions of the Act or the regulations. The section sets out the rules that govern these employer self-audits.
- Section 103 of the Act is amended to remove the $10,000 maximum cap on orders made under that section. Transitional matters are provided for.
- Section 111 of the Act is amended to change the time limits on recovery of wages to two years. Transitional matters are provided for.
CHANGES TO THE MINIMUM WAGE
As of October 1, 2015, the minimum wage as it is prescribed for different classes of employees, will begin to float alongside Statistics Canada’s Consumer Price Index. In other words, the prescribed minimum wages is likely to increase every year along with inflation.
The new minimum wage formula, as of October 1, 2015 is as follows:
Previous wage × (Index A/Index B) = Adjusted wage[5]
Here, “previous wage” means the prescribed minimum wage before October 1 of any given year. “Index A” means the Consumer Price Index (“CPI”) for the previous calendar year and “Index B” means the CPI for the current calendar year. “Adjusted wage” is, of course, the new prescribed minimum wage.
As of October 1, 2015, the hourly minimum wage is as follows:
The foregoing is published directly by the Ministry of Labour. Consulting Regulation 285 to the ESA now only shows the “Previous wage” as defined above. While the effective date for the new rate is now going to be October 1st of each year, the updated rate must be published by the Ministry of Labour on April 1st of each year, reflecting the new rates taking effect in the fall.
It is interesting to note the following:
- Despite the various exemptions to parts of the ESA as set out in Regulation 285 of the ESA, the only employees who are fully exempt from the various prescribed minimum wages are certain students (for example babysitters and camp-counselors) and live-in janitors / building superintendents at residential buildings.[9]
- The lieutenant governor in council is granted authority to prescribe classes of employees and assign those classes a set minimum wage which does not fall under the new formula.[10]
- If the application of the CPI formula results in a decrease, the minimum wage remains unchanged.[11]
- 9% of Ontario workers make minimum wage which represents a fivefold increase since 1997 when only 2.4% of workers were paid the minimum.[12]
- An employee who works full time at the minimum wage will earn only $23,850 (gross) per year.
CHANGES TO THE REQUIREMENTS FOR POSTING INFORMATION
Employers now have stricter obligations with regard to the “rights” poster published by the Ministry of Labour. Previously, employers simply had to display the poster in a conspicuous location in the workplace. As of June 19, 2015, employers must also directly provide each employee with the “most recent version”[13] of the poster -currently Version 6.[14]
The poster may be provided by email attachment, link, or paper copy. New employees must be given a copy of the poster with 30 days of their date of hire[15] and the poster must be provided in the majority-language of the workplace in addition to English.[16]
CHANGES REGARDING THE COLLECTION OF WAGES
Until recently, employees could not claim, through the Ministry, wages owing in excess of $10,000.00. “Wages” under the Act is defined as “any payment required to be made by an employer to an employee under this Act.”[17] Accordingly, the $10,000.00 cap acted as a significant barrier to the Ministry’s complaint procedure, having the effect of funneling claimants into the civil system instead – even when claiming exclusively unpaid wages or termination and severance pay under the Act.
Effective February 20, 2015, that cap has been removed and there is no longer any cap whatsoever for wages owing after February 20, 2015.[18] Wages which became owing before February 20, 2015 are still capped at $10,000.00 regardless of when the claim is filed with the Ministry.[19] Accordingly, as February 20, 2015 fades into the past, fewer employees will have to resort to a civil claim for breach of contract in order to collect unpaid wages or termination or severance pay under the Act.
In addition to the monetary cap, until recently there was a limitation period of 6 months, beyond which an employee could not be awarded unpaid wages. This limitation has been increased to 2 years.[20] However, the transitional period will stretch for two years past February 20, 2015 which gets a little complicated:
The new limitation period will not really begin to have an effect until after August 20, 2015, because there remains a 6 month limitation on the entirety of any claim seeking to stretch back before February 20, 2015.[21] In other words, the limitation period for unpaid wages only begins to “grow” beyond the old 6 month restriction as of February 20, 2015, making claims dated, say, September 2015, the first that could stretch back 7 months; and October 2015 claims the first that could stretch back 8 months, etc.
This 6-months transitional restriction does not apply to a claim for unpaid vacation pay[22] nor does it apply to shield repeat employer-offenders.[23] As with the monetary cap, during the transitional period, employees with a claim for unpaid wages which exceed the 6-month limitation period continue to have recourse to a civil claim for breach of contract where common law rules surrounding limitations apply.[24]
CHANGES REGARDING TEMP AGENCIES
Employers will now have to be more cautious when retaining the services of “temporary help agencies” whose dubious practices may now result in liability on the part of the employer / client.
Temporary employment in Ontario has increased by 40% since 1997[25] and almost always means low-paying employment without benefits, without job-security and without stable workplace relationships.
Employers who retain temp agencies to bring in workers normally do not pay those workers themselves, and until recently, have not been liable under the ESA regime for the regular wages of assigned workers. Recent changes to the ESA include s.78.18 which, effective November 20, 2015, imposes joint and several liability on temp agencies along with their client employers[26] and deems the client employer to be an employer of the assigned employee for the purposes of the section.[27] While the temp agency will still be considered “primarily responsible,” the Act states that where the agency is in default, employees are not required to exhaust proceedings against the agency before claiming against the client employer for regular wages owing after November 20, 2015.[28] Joint and several liability will apply only with respect to payment of:
- Regular wages that were earned during the relevant pay period.
- Overtime pay that was earned during the relevant pay period.
- Public holiday pay that was earned during the relevant pay period.
- Premium pay that was earned during the relevant pay period.[29]
It is important to note that “regular wages” is defined differently in the Act than “wages” and does not include termination or severance pay. This limitation, in addition to the terms ‘for the purposes of this section’ added to the deemed employer provision, will have the effect of limiting the scope of liability for employer’s who use temp agencies.
In order to give effect to the wider scope of liability, both client employers as well as temp agencies are required to keep detailed records of hours worked for all employees for three years and to have the records available for inspection as required by an employment standards officer.[30]
CHANGES REGARDING INSPECTIONS AND AUDITS
As of May 20, 2015, the ESA includes a “self-audit” provision which requires that employers, upon receipt of written notice from an employment standards officer, conduct an examination of their records and determine whether they are in compliance with one or more sections of the Act.[31] An employment standards officer may require an employer to provide an assessment of whether one or more employees are owed wages. If any such employees are identified, the employer will have to report the employee’s name, the amount of wages owing, an explanation of how the amount owing was determined, and a proof of payment of the amount owed. [32]
Of course nothing in the section regarding self auditing will preclude an employment standards officer from conducting an investigation or inspection, and from taking such enforcement action under the Act as appropriate[33]
The new self-audit provision, if widely used, could have a very profound impact on province-wide compliance with the ESA without having to expend significant public resources. Though not one of the most glamorous changes to the ESA, self-audit orders have the potential to be one of the most important.
CONCLUSION
The most recent round of updates to the Employment Standards Act as set out in Bill 18: Stronger Workplaces for a Stronger Economy Act, 2014, cover some very important ground. In some cases the changes have just managed to bring Ontario employment standards in line with the norms in other provinces. Bearing in mind the stated intent of the legislation, it will be interesting to see to what extent these most recent changes to our minimum standards legislation will be able to raise the bar for vulnerable and precarious employees to a sensible minimum standard of decency.
APPENDIX A
[1] Adapted from Lewchuk, Wayne, et al. It’s More Than Poverty: Employment Precarity and Household Wellbeing McMaster University and United Way. February, 2013. p.12.
[2] Ibid. See in particular Part 1.
[3] In the words of the Liberal Government’s Minster of Labour: “The nature of work may have changed, but our labour laws and regulations have lagged behind.” See: The Law Commission of Ontario’s report on vulnerable workers and precarious work: http://www.lco-cdo.org/vulnerable-workers-final-report.pdf and various publications of the Workers Action Centre: http://www.workersactioncentre.org/ issues/precarious-work/
[4] This Explanatory Note was written as a reader’s aid to Bill 18 and does not form part of the law. Bill 18 has been enacted as Chapter 10 of the Statutes of Ontario, 2014.
[5] s.23.1(4), ESA.
[6] Applies to students under 18 who work 28 hours a week or less when school is in session, or work during a school break or summer holidays.
[7] Applies to employees who directly serve liquor at licensed premises as a regular part of their job.
[8] Applies to employees who do paid work in their own homes. For example, they may sew clothes for a clothing manufacturer, answer telephone calls for a call centre, or write software for a tech company.
[9] s.7, Regulation 285/01.
[10] s.23(1)(2), ESA.
[11] s.23.1(6), ESA.
[12] Block, Sheila A Higher Standard: The Case for Holding Low-Wage Employers in Ontario to a Higher Standard. Canadian Centre of Policy Alternatives. June, 2015.
[13] s.2(5), ESA.
[14] Attached at Appendix A.
[15] s.2(7), ESA.
[16] That is, assuming that the Ministry has published a version in said language. s.2(4) of the ESA. Note, posters are published in English, French, Arabic, Chinese, Hindi, Portuguese, Punjabi, Spanish, Tagalog, Thai and Urdu.
[17] s.1(1), ESA.
[18] s.103(4.1), ESA.
[19] s.103(4), ESA.
[20] s.111(1) to s.111(3) , ESA.
[21] s.111 (3.1), ESA.
[22] s.111 (3.2), ESA.
[23] s.111 (4), ESA.
[24] See for example: Kumar v. Sharp Business Forms Inc. [2001] O.J. No. 1729.
[25] Id. fn 1, p.14.
[26] s.74.18(1) and (2), ESA.
[27] s.74.18(5), ESA.
[28] s.74.18 (4), ESA.
[29] s.74.18(3), ESA.
[30] s.74.4.1 – 74.4.2.
[31] 91.1, ESA.
[32] 91.1 (6), ESA.
[33] 91.1 (9), ESA.