By: Jordan Rodney, Rodney Employment Law
On June 1, 2017, the Ontario government introduced in the legislature, The Fair Workplaces, Better Jobs Act, 2017, also known as “Bill 148”. Bill 148 proposes significant amendments to Ontario’s Employment Standards Act, 2000 (ESA) which, if passed, will substantially impact how businesses operate in the province of Ontario.
Bill 148 continues to move through the legislative process, with the Second Reading recently commencing on September 12, 2017. It is widely believed that Bill 148 will receive Royal Assent in late Fall 2017, with significant amendments that could come into effect as early as January 1, 2018.
These amendments, once in effect, will undoubtedly present new costing and compliance challenges for employers across Ontario. Given Bill 148’s accelerated timeline and far-reaching impact, it is imperative that organizations across Ontario prepare in advance of the enactment of this new legislation in order to minimize operational disruption to their business.
Here are compliance strategies to address the six most significant ESA amendments proposed by Bill 148. These changes are:
- A significant minimum wage hike,
- An increase to paid vacation entitlements,
- Enhanced “personal emergency leave” entitlements,
- Added restrictions to temporary workers’ rate of pay,
- Numerous adjustments to scheduling; and
- New penalties for employers who misclassify independent contractors as employees.
The proposed amendment which seems to have evoked the most debate in the media and amongst industry stakeholders, is in regards to minimum wage. Bill 148 proposes a 32% increase to the overall minimum wage scheme over an 18-month period. If Bill 148 is passed, general minimum wage will jump from $11.40 per hour to $14.00 per hour on January 1, 2018. There would also a second minimum wage hike on January 1, 2019 to $15.00 per hour.
This amendment may impact an organization’s overall wage scales and will result in increased operating costs. Organizations should proactively assess these increased costs and consider potential cost-cutting strategies that can be used to absorb the significant financial impact going forward.
An additional amendment that may also come into force on January 1, 2018 stipulates that employees with five or more years of service with the same employer will be entitled to three weeks of vacation or 6% vacation pay for each entitlement year. This represents a significant increase from the standard two weeks of vacation or 4% vacation pay currently set out in the ESA.
This amendment will result in higher operating costs for employers in two ways: First, employers will have to cover the employee’s increased vacation pay entitlement and second, employers will have to ensure adequate coverage for the increased periods that employees will be off on vacation.
Organizations must determine which employees will be impacted by this change. In addition, it would be prudent to proactively begin considering alternate coverage arrangements needed to mitigate the loss of senior employees for an extra week per year.
Personal Emergency Leave
A final proposed amendment that may come into effect on January 1, 2018 involves a substantial revision to s. 50 of the ESA. Presently, a “personal emergency leave” (PEL) is only available to employees if their employer has 50 or more employees. However, Bill 148 proposes that all employees to be entitled to 10 days per year, regardless of the organization’s size. In addition, the amendment further stipulates the first two PEL days must now be paid.
To further complicate matters, while employers can request evidence that is “reasonable in the circumstances” to confirm that an employee is entitled to the leave, employers cannot request documentation from qualified health practitioners to substantiate PEL days. The inability to request medical notes makes this change susceptible to abuse. Unfortunately, this is an amendment that may pose challenges for employers with respect to managing absenteeism.
Equal Pay for Equal Work
Bill 148 also proposes an amendment which stipulates that organizations will be required to pay temporary employees the same rate of pay as the organization’s permanent employees when they perform substantially the same kind of work in the same establishment, their performance requires substantially the same skill, effort and responsibility, and when their work is performed under similar working conditions.
This amendment, which may come into effect on April 1, 2018, may effectively eliminate the benefit of cost reduction gained by organizations who typically use temporary workers. If your organization still depends on leveraging temporary workers, one strategy to consider is to use temporary workers only for those jobs which existing employees do not perform. This will allow the organization to continue varying a temporary worker’s rate of pay without being subject to these new restrictions.
Bill 148 proposes particularly extensive amendments to the scheduling rules found in the ESA. If enacted, the following changes would come into effect on January 1, 2019:
- After three months of employment, employees will be able to request changes to their schedule or work location;
- Employees will be entitled to three hours’ pay at their regular rate if they are required to attend work, but work less than three hours;
- Employees will be entitled to three hours’ pay if the employer cancels their shift with less than 48 hours’ notice; and
- Employees can refuse a request to work a shift or be “on call” if the employer makes the request with less than 96 hours’ notice.
These changes pose a considerable challenge to an organization’s scheduling flexibility. In preparation, organizations should conduct an extensive review of their scheduling practices to ensure compliance and avoid incurring unnecessary costs.
Lastly, Bill 148 intends to address worker misclassification by proposing a provision which expressly prohibits employers from treating “employees” as if they were “independent contractors.” Employers found misclassifying employees as contractors will face significant penalties including prosecution, public disclosure of a conviction and monetary penalties.
This provision may potentially come into force immediately upon Bill 148 receiving Royal Assent. This particular change amplifies the need for organizations to have written agreements in place, confirming a particular worker’s status as an “independent contractors.”
Employment Agreements alone, however, are not sufficient. Employers should proactively engage in a review of worker classifications on an ongoing basis to ensure the organization’s independent contractors actually fit within that classification. If the worker is deemed to fit more appropriately within the classification of “employee,” they should be treated as such and be provided with the minimum ESA entitlements.
While Bill 148 has not yet been passed as law, it is widely believed that these amendments will be approved and receive Royal Assent within the proposed timelines set out above. For this reason, employers are well advised to begin taking proactive steps today to save themselves headaches in the rapidly approaching future.
Rodney Employment Law is a boutique law firm which offers practical legal advice on a wide range of employment law matters, including Employment Standards, Employment Contracts, Termination of Employment, Severance Packages, Department or Company Closures and Compliance Issues
MaxPeople is a professional Human Resources consulting firm that offers premium HR services and Employment Law support for organizations in need of an effective people strategy to grow their business.
Thank you to Articling Student Arjun Dhir for the assistance with the research and writing of this article.