Changes to Ontario’s Employment & Labour Laws: Implications for DS Sector Employers

On June 1, the Ontario Government introduced new legislation which includes sweeping changes to the Employment Standards Act, 2000 (ESA) and Labour Relations Act (LRA).  Bill 148, also known as, the “Fair Workplaces, Better Jobs Act, 2017”, will have significant implications for Developmental Services (DS) Sector employers.  We hope you will join us for a Lunch n’ Learn Webinar on June 16th or 19th to review the proposed changes in detail (register here).   Until then, the following is a brief overview of the changes and their implications for the DS Sector…

  1. Increased Minimum Wage

The most talked about feature of the new legislation is the proposed 34% increase to the minimum wage over 18 months. If the new legislation is passed the general minimum wage will rise to $11.60 on October 1st, 2017, $14.00 per hour on January 1, 2018; and $15.00 per hour on January 1, 2019. While most employers in the DS Sector have wage rates significantly above those proposed, we anticipate that unions will press for a corresponding percentage based increase to base rates and the wage grid in collective bargaining. In addition, these rates will have implications for families who use their passport, other forms of direct funding or pay out of pocket for respite and other services at below the proposed rate.

  1. Eliminating the “Simulated Workplace” or “Sheltered Workplace” Exemption

Existing language under the ESA provides that persons who perform work in a “simulated job or workplace” for the “primary purpose of rehabilitation” are not employees for the purposes of the ESA and therefore are not entitled to the minimum wage or other benefits and protections associated with employment under the ESA. This exemption has, in limited circumstances, been deemed to apply to certain sheltered workshops outside the DS Sector, but has never been judicially tested in the DS Sector. It is the principal defense advanced by agencies in human rights and ministry of labour complaints related to social enterprises and other operations in which persons supported perform work-like activities for less than the minimum wage. It remains to be seen whether this exemption will be an effective defense to complaints currently underway, particularly in circumstances where paid staff work along-side persons supported.

The proposed amendments to the ESA would remove this exemption effective January 1, 2019, thereby eliminating the most viable defense to complaints related to sheltered work operations. Consistent with the MCSS “Supporting the Transition to Greater Inclusion: Guidelines for Impacted Programs” (the “Transition Guidelines”) introduced in September 2016, all agencies should be working towards transitioning sheltered work operations, ideally before 2019.

  1. On-the-Job Training Exemption Repealed

The ESA currently provides that a person who receives training from an employer is an employee unless:

  1. the person does not receive training in skills used by employees of the employer; or
  2. the training meets 6 conditions, including that the training is similar to that received in a vocation school, is for the benefit of the employer, does not materially benefit the employer, does not displace employees, does not come with the right to employment and is without remuneration.

The proposed language eliminates (b) above.  Practically speaking, this means that all “on-the-job” trainees will need to receive at least the minimum wage.  This appears to go one-step further than the MCSS Transition Guidelines, significantly restricting the types of training programs that DS Sector agencies are permitted to operate for the benefit of persons supported.  As agencies work towards building alternative programming, it will be important to keep in mind these changes.

  1. New Prohibition on Mischaracterizing “Independent Contractors”

Bill 148 makes it an offence for an employer to improperly classify a person as a “contractor”, “volunteer”, “trainee” or other “non-employee” when the person is actually an employee.  Contravention of the act can be subject to a complaint an investigation by an Employment Standards officer who has the authority to issue orders to pay back wages, compensation, fines of up to $50k and the possibility of imprisonment for individual offenders, and fines of up to $500k for repeat offender corporations.

It has always been a contravention of the act not to provide a person who is an employee with their employment entitlements under the ESA.  Employers who have deemed workers who are actually employees to be independent contractors (and therefore not paid vacation, public holiday pay, termination or notice etc.) have always been at risk under the ESA.   In that respect, not much has changed.  What has changed however, is an increased awareness, focus and scrutiny of employers who treat workers as independent contractors.

DS Sector employers should carefully consider their relationships with workers they treat as “non-employees” or “independent contractors”.  In PooranLaw’s experience, the Ministry of Labour is only too happy to find an employment relationship in any service arrangement that comes close the line.  DS Sector agencies providing advice and supports to families in relation to Direct Funding should also be wary of advising families to enter into ‘contractor’ relationships with workers, or paying funds to ‘contractors’ on behalf of families without the appropriate paperwork in place.

  1. Equal pay for part-time, casual (relief), temporary, and seasonal employees

The new legislation will implement a general rule that part-time, temporary employees and agency workers must be paid equally to full-time employees when performing the same job for the same employer. These employees would be able to request a review of their wages and the employer would have to respond to the request by adjusting pay or providing a written explanation for the wage difference. There would be anti-reprisal protections for such requests. Pay systems that differentiate based on seniority, merit, or quantity and/or quality of production/work would be exempt.  These rules would come into effect on April 1, 2018.

Fortunately, no corresponding equal entitlement to benefits has been proposed.

It is very likely that this change will have a significant impact on agencies in the DS Sector, which typically have different compensation schemes in place for different classes of workers.  Transition language in legislation deals with circumstances where a collective agreement is inconsistent with these requirements.

  1. Temporary Help Agency Employees

Effective April 1, 2018, temp agency workers will now need to be paid the equivalent of what regular staff are paid. Temporary agency workers are a necessary contingent of many DS Sector agencies’ operations.  One significant implication of this change is that temp agencies will have to charge significantly more in order to maintain their margins while paying their workers as required. For DS Sector employers, this will likely mean that temp agency workers will be more costly than regular staff.

In addition, effective January 1, 2018, a minimum 1 week notice period or payment in lieu will be required for the early termination pf a temp agency work assignment, which cost we expect temp agencies will pass along to their DS Sector clients.

  1. Scheduling

A number of modifications to the scheduling practices of employers will be mandated by the new legislation.

  1. After being employed for 3 months an employee will have a right to request a scheduling or location change, and if the change is denied, to be provided with written reasons by their employer.
  2. Employees will have the right to refuse work without a penalty unless provided with 4-days’ notice, unless an applicable collective agreement provides otherwise.
  3. Employees scheduled for a minimum of 3 hours, will have a right to be paid s minimum of 3 hours pay, even if their shift ends earlier.
  4. There will be a 3-hours’ pay penalty for cancelling a shift on less than 48-hours’ notice, unless an applicable collective agreement provides otherwise.
  5. On call employees who do not get called in will be entitled to 3 hours pay for every 24 hours on call, unless an applicable collective agreement provides otherwise.

Most DS Sector employees have a legitimate need for flexibility in scheduling and have developed complex scheduling systems to address 24-hour staffing requirements in residential settings and 1:1 supports. While collective agreements prevail in respect to many of these requirements, it is anticipated that unions will negotiate hard for the ESA requirements to be adopted into the collective agreement in future rounds of bargaining.

  1. Vacation and Public Holidays

Under the proposed legislation, vacation entitlement would increase to 3 weeks’ vacation time and 6% vacation pay after 5 years of service with an employer.  The government would also be amending the formula for calculating public holiday pay to clarify that employees are entitled to their “average daily wage” and to simplify other aspects of this entitlement. Both of these changes would come into effect on January 1, 2018.  Most DS Sector employers have vacation and public holiday pay practices that are more generous than those proposed here.  We anticipate however that unions will use the new minimum as a basis for attempting to negotiate increased vacation entitlements for employees.

  1. Personal Emergency Leave

Effective January 1, 2018, all workplaces will now be subject to the 10-day personal emergency leave entitlement, with 2 of those days being paid.  Most DS Sector employers have sick and leave policies that are significantly more generous than that proposed here.

The change that is more troubling however is the prohibition on employers requesting a sick note from an employee for taking a personal emergency leave day, which, depending on the wording, may significantly fetter an employer who is attempting manage problem absenteeism.

  • Changes to the LRA that affect the DS Sector

The government is proposing to introduce card-based certification (certification without a vote) for employees in a number of industries, including the temporary help agency industry, the and the “home care and community services industry”.  Non-union agencies receiving funding from the Ministry of Health and Long-term Care for home care and community service supports should be aware of the increased risk of unionization.

The government will also introduce a number of other changes which will make it easier for unions to certify employers and negotiate a first collective agreement, and provisions allowing for the consolidation of bargaining units of a single employer.

All non-union organizations should be aware of these changes and the increased risk of being certified.  As always, positive employee relations and open communications are your best bet for remaining union free.

More Analysis to Come….

Bill 148 was introduced into the legislature on June 1, 2017 and, without any discussion or debate, referred to the Legislature’s Standing Committee on Finance and Economic Affairs for public hearings over the summer, in the hopes that debate and resulting amendments may take place in the Fall when the Legislature resumes.

Coordinated data driven response from the DS Sector and collaborative participation in committee hearings are the best bet for ensuring that the complexities and interests of sector employers are represented and considered in the new legislation.

We invite you to join PooranLaw’s free Lunch n’ Lean Webinar on June 16th or 19th further discussion:

Time:                     12 p.m. to 1 p.m.

Speaker:              Cheryl Wiles Pooran

Registration:      Register online here


In the meantime, please contact Cheryl Wiles Pooran if you would like to discuss the proposed legislation and its implications for your organization.