Bill 148 – Fair Workplaces, Better Jobs Act, 2017: Changes to the Employment Standards Act. Presented at the Hamilton Law Association 14th Annual Employment Law Seminar, November, 2017

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Bill 148 – fair workplaces, better jobs act, 2017

Changes to the Employment Standards Act

 

14th Annual Employment Law Seminar

 

Presented by: Ned Nolan, Nolan Ciarlo LLP

 

November 16, 2017

 

 

 

 

 

 

 

Prepared by Paul Di Clemente and Ned Nolan

Nolan Ciarlo, LLP

nn@nolanlaw.ca

 

 

Introduction

 

In June of 2017, Kevin Flynn, Ontario’s Minister of Labour, introduced Bill 148, Fair Workplaces, Better Jobs Act, 2017 which proposed a number of changes to the Ontario Labour Relations Act (OLRA) and the Employment Standards Act (ESA). The Bill is not yet law and, at the time of writing, it has been carried past the second reading in the Legislature and is currently before the Standing Committee on Finance and Economic Affairs.

 

This Bill followed the Ministry’s release of the Changing Workplaces Review: An Agenda for Workplace Rights where special advisors Michael Mitchell and John Murray proposed changes to the ESA and the OLRA in an effort to address the changing landscape of Ontario’s workplace.

 

Of course, the ESA legislates various minimum standards for workers in Ontario. A key of the Ministry’s Review was to examine whether changes were needed to the ESA giving special consideration to the needs of vulnerable workers doing precarious work.

 

Precarious work tends to be work where wages and hours are low or variable, where workers are not entitled to any benefits or pension contributions from the employer and where there is no union.[1] Precarious work in Ontario is drastically on the rise and it is estimated that currently approximately 30-32% of workers are vulnerable and employed in precarious jobs. Further, that number appears to set to continue increasing as newly created jobs in Ontario tend to be much more precarious than the jobs we’re loosing.[2]

 

The Ministry’s Review defines “vulnerable workers” as follows:

 

“It is used in many contexts to denote social groups who are defined by their ‘social location,’ that is, by their ethnicity, race, sex, ability, age, and/or immigration status. In other contexts, however, the term ‘vulnerable worker’ denotes groups of workers who have greater exposure to certain risks than other groups, regardless of their social location. In the latter context, the term ‘vulnerable’ describes all those (regardless of the social group(s) to which they belong) whose conditions of employment make it difficult to earn a decent income and thereby puts them at risk in material ways including all the undesirable aspects of life that go hand-in-hand with insecurity, poverty and lower incomes.”[3]

 

It is with the goal of supporting vulnerable workers in precarious jobs that the proposed amendments to the ESA should be viewed. As we work our way through some of the key changes we should ask ourselves whether the proposed changes will meet this goal, whether they will create other challenges, and whether there were other steps that could or should have been taken to meet the ultimate goal of improving the lives of precarious workers in Ontario.

 

Summary of Proposed Amendments

 

The Review made 173 recommendations. 129 were directly related to provisions in the ESA. The current version of Bill 148 would make fewer than 20 changes to the ESA. They are summarized as follows:

 

  • 1) Minimum wage – Under the revised s.23.1(1) of the ESA, the minimum wage would be raised to $14 on January 1, 2018 and to $15 on January 1, 2019 and will be subject to an annual inflation adjustment on October 1 of every year beginning in 2019.

 

  • 2) Misclassification of Employees – Under the revised s.5.1 of the ESA, employers will be prohibited from treating an employee as if they were not an employee. This section  specifically targets the overuse of the classification of “independent contractor.” Further, the onus of proving that a worker is not an employee will be placed on the employer.

 

  • 3) Request for Changes to Schedule or Location – Under the new version of the ESA (new s.21.2) employees will be able to request changes to either their schedule or work location. Employers will have an obligation to discuss the changes and either approve them or provide reasons for the refusal.

 

  • 4) Scheduling – Employers will now be required under Part VII.2 to pay a minimum three hours for shifts that are under three hours and to pay three hours if the employer cancels the employee’s shift within 48 hours. Further, if an employee is on call they must be paid for three hours’ work should they not be called in. Lastly, employees will have the right to refuse requests/demands to work made within four days of the request.

 

  • 5) Temp Agencies – Under changes to Part XVIII.1 of the Act, temporary help agencies will be required to provide an assignment employee with one week of written notice or pay in lieu of notice if an assignment that was estimated to last for 3+ months is terminated before the end of its estimated term unless another assignment lasting for at least one week is offered to the employee.

 

  • 6) Equal Pay for Equal Work – The new ESA will make additions to s.42 to prohibit employers from having different rates of pay for employees based on their employment status (i.e. part-time vs full-time). The amendments will also strengthen reprisal provisions to prohibit reprisals against employees who make inquiries about their rates of pay or who disclose their rate of pay to help determine if the employer is complying with this new obligation.

 

  • 7) Enhanced Pregnancy and Parental Leave – Part XIV of the ESA is amended so that new mothers will be entitled to start parental leave 12 weeks after birth (an increase from six weeks). Employees who experience still-birth or miscarriage will be entitled to a 12-week leave (previously six). Employees will be entitled to parental leave of up to 78 weeks after the child is born (increased from 52). And parental leave will be extended from 35 to 61 weeks or 63 weeks if the employee also took pregnancy leave (previously 37).

 

  • 8) Personal Emergency Leave – Under the new s.50, all employees will now be entitled to 10 days of personal emergency leave, not just those who work for an employer with 50+ employees. And if the employee has been employed by the employer for more than a week, then two of the ten leave days must be paid. Employers will have a right to request evidence of entitlement to the personal emergency days but will not have the right to request a doctor’s note.

 

  • 9) Domestic Violence or Sexual Violence Leave – The proposed amendments include a new s.49.7 which creates a Leave category called Domestic Violence or Sexual Violence Leave. Employees who are employed for an employer for 13 consecutive weeks or more may take up to 10 days or up to 15 weeks’ leave, without pay, if the employee or their child experiences domestic or sexual violence, or the threat thereof. The leave must be taken for specific enumerated reasons which include seeking medical attention related to the violence, to receive services from a victim services organization, for counselling, to relocate, or to seek legal or law enforcement assistance.

 

  • 10) Family Leaves – Family medical leave (s.49.1) will be increased from 8 to 27 weeks. Additionally, under the new s.49.5, employees will be entitled to 104 weeks of unpaid leave if their child dies for any reason and/or if there is a crime-related disappearance of their child.

 

  • 11) Overtime – Employees who have two or more regular rates of pay will no longer have these rates blended for overtime calculation purposes under the new wording proposed for s.22.

 

  • 12) Public Holiday Pay – The proposed changes to s.24 would simplify the formula for calculating holiday pay. Employees would be entitled to their average regular daily wage. Further, changes to s.27 to 30 would require an employer to give notice to the employee if they are required to work on a public holiday and will be required to state the day off that will be substituted in its place.

 

  • 13) Vacation – Pursuant to changes to s.33-35, employees with 5+ years of service will be entitled to a minimum of three weeks of vacation per year.

 

  • 14) Interest on Amounts Owing– New s.88(5) will allow the Director to impute interest on amounts owed under the ESA and allow monies owing to be held in trust by the Director.

 

  • 15) Elimination of Steps Before a Claim is Assigned – Under the previous s.96.1, an employee was required to take certain steps before a claim under the ESA would be assigned to an investigator. Most notably, an employee was required to raise their issue with their employer. This step has been eliminated under the proposed changes.

 

  • 16) Order to Pay Wages- Under new s.103(1), Employment Standards Officers will be able to issue orders to employers that would obligate them to pay wages directly to an employee. This is a slight change from the current version which allows ESOs to “arrange” with an employer to pay wages to the employee directly or order wages to be paid to the director in trust.

 

  • 17) Notice of Contravention – An amended s.113(1) will allow ESOs to issue notices of contravention to employers. And perhaps more importantly, the new s.113(6.2) would empower the Director to publish the name of a someone who has contravened the ESA if they have been provided notice. This publication would include a description of the deemed contravention, the date of the contravention and the penalty. This information would then be public record.

 

  • 18) Collection and Enforcement – Proposed changes to Part XXIV include mechanisms to strengthen enforcement of orders under the ESA by empowering the Director to accept security for amounts owing, to issue warrants, and to put liens on real and personal property.

 

  • 19) Crown Corporations – Changes to s.3 of the ESA widens the applicability of the Act to the Crown.

 

Some Central Issues

 

  1. A) Minimum Wage Increase

 

Much has been made of the changes the new ESA will make to the minimum wage. So much so that many of the other changes have been overlooked. Employer advocates claim that changes such as the raising of the minimum wage, increased vacation entitlements and the inability of an employer in some instances to ask for a doctor’s note, will ultimately impact small businesses’ bottom line. Worker advocates on the other hand largely reject the claim that a raise in the minimum wage will impact negatively on Ontario’s economy citing various studies which show that an increase in earning power of minimum wage earners will trickle money back into the local economy. It is yet to be seen how this issue will play out and much of the argument at this stage is conjecture.

 

The Ontario Federation of Labour has taken the position that Bill 148 does not go far enough. In its submissions to the Standing Committee of Finance and Economic Affairs in July, 2017[4] the OFL for example questioned the new minimum wage provisions. Specifically, the OFL took issue with the continued rationale for allowing lower minimum wages for certain classes of workers, specifically liquor servers and students. With regard to Liquor Servers, the OFL points out that the argument that tips augment lower wages is problematic. First, tipping in not mandatory and many establishments require tips to be split with back of house staff (who are also making minimum wage). It is also noted that 20% of servers make less than minimum wage after tips and that 75% of servers are women who, as evidenced by a number of cases, have to tolerate various forms of sexual harassment to get tips in the first place.

 

In the case of students, the OFL points out that Bill 148 would entrench a situation where Ontario is the only province in Canada to pay students less than the minimum wage. The Ministry claims that the rationale is to give incentives to hire younger workers over more experienced, and therefore more productive workers. The OFL argues that this rationale seems to legislate the bias and stereotype that the work of youth is less valuable and less productive and actively promotes age discrimination.

 

Of course the business community has argued that the changes have gone too far and that an increased minimum wage will have the effect of reducing jobs and increasing production and the cost of goods. While this argument is controversial and far from being historically documented, part of the business community’s concern revolves more around the lack of consultation on the minimum wage issue than wage rate itself. Rafael Gomez, a professor at the University of Toronto and current director of the University’s Centre for Industrial Relations and Human Resources, has made this argument and suggested that the government’s failure to consult on the issue of minimum wage specifically could have significant political consequences.[5] Others have pointed out that the Michelle / Murray report did not even speak to the minimum wage issue since this topic was specifically excluded from the Special Advisors’ terms of reference.[6]

 

  1. B) Equal Pay for Equal Work

 

As discussed above, Bill 148 would require employers to pay part-time employees the same as full-time employees for performing “substantially the same work.” Advocates for the business community have argued that, combined with the changes to minimum wage, the disincentive to use temporary agencies, and the increased penalties for misclassification of workers, these provisions will further the economic harm on small business. As such they will again be forced into difficult decisions with regards to reducing their workforce.

 

Worker advocates have claimed that the provisions in the new ESA will not have the desired impact of protecting workers in precarious positions due to the wording of the legislation. The language in Bill 148 mirrors the language in the current ESA which prohibits differential pay based on sex in s.42(1). The problem is that the legislative language is ambiguous enough to allow employers to create minor differences between the duties and job description of a part-time employee as compared to their full-time counterpart which effectively voids the intent of the provision.[7]

 

 

 

  1. C) Misclassification of Workers

 

As discussed above, the revised ESA will make it a violation to misclassify an employee as an independent contractor and will reverse the legal burden of proof and place the onus solely on the employer to prove that a contractor is not an employee.

 

The business community has argued that this will have some unintended consequences. It is claimed that many in today’s workforce, particularly younger workers, “prefer” to be independent contractors. They allegedly enjoy the freedom that it provides and the tax advantages. If the risk of hiring “independent contractors” becomes too great then many of this growing segment of the workforce will find it hard to find these types of positions.

 

The worker-advocate community claims that these provisions are not targeting the high paid tech sector contractor, but rather those who are in much more precarious positions such as pizza delivery drivers or those working in the catering industry who, because of their employer’s misclassification, are completely without minimum protections – unless they undertake an onerous challenge to their classification. The Ontario Federation of Labour argues that again the provisions do not go far enough and should not exclude “dependent contractors.” The common law is now clear on the issue of dependent contractors, yet Ontario’s minimum standards legislation remains silent on the point.[8]

 

Conclusion – Does Any of This Matter?

 

Many commenters on the new proposed changes have made the same observation: If we can’t enforce the ESA then what’s the point? The Employment Standards Enforcement process in Ontario is largely reactive as opposed to proactive. This means that the regime is primarily dependent on people who have had their rights violated coming forward and making complaints. Proactive inspections of workplace standards are still a very minor part of the process. However, amongst all of Ontario’s workers, it is the most vulnerable who are the least likely to come forward with complaints. If the goal of the Review and the new ESA is to protect vulnerable and precarious employees then why are we still relying on them to take the time and have the wherewithal to initiate complaints?

 

Further, even when violations of the ESA are found by inspectors, in most cases this leads to very minor sanctions or no sanctions at all. There is often an option for the employer to voluntarily comply and only when they blatantly refuse an Employment Standards Officer’s Orders or refuse to pay fines are there ever any substantial sanctions imposed. As such the system itself does not sufficiently deter those who will violate the ESA.

 

It has been argued that as long as the Employment Standards enforcement regime remains largely reactive and is not focused on actively deterring violators with stringent penalties, then many of the changes and alterations to the standards themselves will have little impact for precarious workers in Ontario. It could also be argued that as long as the means of production remain concentrated in the hands of a profit-driven bourgeoisie, no amount of regulatory legislation can truly affect the inherent imbalance of power in the labour market and the corresponding plight of the working class in capitalist society – but that is surely a topic for another paper!

[1] Andrea M. Novack and Leah F. Vosko, “Precarious Jobs in Ontario: Mapping Dimensions of Labour Market Insecutiry by Workers’ Social Location and Context”, commissioned by the Law Commission of Ontario for its report on Vulnerable Workers and Precarious Work, November, 2011 [Novack and Vosko]

[2] See chapter 4 of the Final Report: Special Advisors C. Michael Murray and John C. Murray, The Changing Workplaces review: An Agenda for Workplace Rights, Final Report, May 2017, available online: https://files.ontario.ca/books/mol_changing_workplace_report_eng_2_0.pdf.

[3] Ibid at p. 42

[4] “Make it Fair: Amendments to Bill 148, Fair Workplaces, Better Jobs Act”, Submission to the Standing Committee of Finance and Economic Affairs, Ontario Federation of Labour, July 2017: http://ofl.ca/wp-context/uploads/2017-07-19-OFL-Submission-Bill-148-1.pdf

[5] TVO’s The Agenda, originally aired on August 14, 2017.

[6] “Bill 148 Fair Workplaces, Better Jobs Act, 2017. Executive Summary.” Sherrard Kuzz LLP, June 2017.

[7] Both the Ontario Federation of Labour and the Ontario Equal Pay Coalition in “Building Employment Standards and Labour Relations Protection to Close the Gender Pay Gap: Equal Pay Coalition Submissions to the Standing Committee of Finance and Economic Affairs,” (July 21, 2017) have made this argument and point to the lack of application of the current s. 42(1) as proof that the language ought to have been strengthened.

[8] See OFL submission at fn 4.