Bill 148 and the ESA – More Than Minimum Wage

by Kyle Shimon


Friday, November 24th, 2017 at 12:47 am


Bill 148 Brings Many Changes

The Government of Ontario has passed a new bill in the provincial legislature commonly known as Bill 148. Bill 148, also known as the Fair Workplaces, Better Job Act 2017was drafted by the current government as a response to a report on the Employment Standards Act, 2000 (ESA) and the Labour Relations Act, 1995 (LRA).

Bill 148 passed its third reading on November 22, 2017 and is now law.

While we will touch on the increase in minimum wage, below is also an overview of some of the other more significant changes coming to the ESA in Ontario.

For a breakdown of the areas of employment law affected by Bill 148, please see our post about the legislated changes.

$15 Minimum Wage

If there is one upcoming change that you have no doubt heard about, it is the rise in the minimum wage. As of January 1, 2018, the general minimum wage in Ontario will make a 21% jump to $14.00 per hour and will increase again at the outset of 2019 to $15.00 per hour. The overall increase in the minimum wage between October 1, 2017 and January 1, 2019 will be 29%. While this increase is significant to employers, particularly smaller businesses, it should be noted that the corporate tax rate for businesses with 100 and fewer employees will drop from 4.5 to 3.5% on the first $500,000 of profits, beginning January 1, 2018.

On the employee side, the new general minimum wage will be a boon. This is particularly so for those employees that find themselves attempting to make ends meet in minimum wage jobs. The higher minimum wage is likely to increase their buying power.

On the employer side, depending on the size of the business and pay structure for employees, the new wage will increase the cost of doing business, as the change is expected to have a ripple effect on compensation.

With that said, and though the minimum wage hike is certainly the most talked part of Bill 148, there are other changes that can and will have significant impacts on employment law in Ontario.

Independent No More

One of the lesser talked about changes to the ESA is an outright prohibition on employers misclassifying persons in their service as independent contractors when they are, at law, employees. This can and will have serious consequences for both employees and employers.

Employees

Classifying an employee as an independent contractor can have benefits for both parties. For the individual person, being classified as an independent contractor can lead to the employee paying less in taxes. Thus, if more ‘independent contractors’ become classified as employees, then those employees may now be bringing home less money once they’ve paid their full income taxes. However, there are also some benefits to being reclassified for the former ‘independent contractors’. As an employee, these people will have access to vacation pay, benefits in some cases, employment insurance, paid and unpaid leaves, notice or severance when terminated, and more.

There are also employees who would certainly be classified as an employee at law but, rather than enter an independent contractor arrangement knowingly for tax purposes or otherwise, were misled with respect to what they were agreeing to or had little choice but to agree as a result of needing an income. These employees often accept these positions without understanding what they are signing away and can find themselves being taken advantage of and having to fight for severance when they are terminated. In addition to the increased tax revenue to be generated by this, protecting these employees may have been a motivating element in the government’s decision to implement this prohibition.

Workers labeled as ‘independent contractors’ should not take this classification for granted. It is not uncommon for a written contract to stipulate that the person is in an independent contractor when, at law, they are an employee. Where the person is in fact an employee, they can find themselves entitled to significant severance and other damages when the employer terminates them. Independent contractors should contact Samfiru Tumarkin LLP at the time of termination to ensure that their designation was, in fact, correct.

Employers

In addition to becoming liable to the former independent contractors for vacation pay, notice or severance, Bill 148 can expose employers to fines and other punishments for misclassifying their workers. These fines now range as high as $50,000.00 for an individual with misclassified employees to as high as $500,000.00 for a repeat-offender corporation. The onus will be on employers to establish that the person in question was an independent contractor and not an employee. This can often make defending these charges more difficult.

It is not impossible to contract for the services of an independent contractor. However, employers will want to be exceedingly careful that the people that they are calling independent contractors are, in law, independent contractors.

We strongly advise employers to review the status of their workers to avoid any potential Bill 148 issues. Employment contracts should be updated drafted now to ensure significant savings on labour costs in the future.

Pay Equity (in Theory)

Another key plank of Bill 148 is an attempt by the government to achieve pay equity, in the form of identical hourly wages, between temporary, casual, part-time, and seasonal workers who perform equal work to that of their full-time, permanent counterparts. Whether or not this is workable in practice is yet to be seen.

The new legislation has a number of exceptions built into it from the get go. These exceptions include:

  • discrepancies in pay based on total hours worked;
  • seniority;
  • merit;
  • the quantity or quality of the employee’s production;
  • another factor that can be justified on objective grounds.

These exceptions can reasonably be viewed as being quite vague and possibly enough to stunt the broad application of this initiative from the outset.

There are other potential avenues through which the pay equity provision could be hindered.

For example, employers may begin to create different titles with somewhat modified work duties in order to argue that the work is not the same and, therefore, not entitled to equal pay.

These are all areas that will need to be defined and litigated in the hope of achieving a greater sense of clarity on the scope of the exceptions and the meaning of ‘equal work’. The hope is that the exceptions and potential methods of avoiding the proposed provision do not lead to a scenario where bringing a pay equity complaint will become so complex that an employee will be discouraged from doing so.

Time will tell if this change has a material impact in the workplace.

Other Notables

Leaves of Absence

There is a new category of leave for victims, or the parents of victims, who are threatened with or experience domestic and sexual violence.

Bill 148 also expands parental, family medical, pregnancy, and child death leave.

As before, most of these leaves are unpaid, though it is worth noting that the first two days of a personal emergency leave must now be paid.

More Vacation

Employees who have been with an employer for five years or more will now be guaranteed at least three weeks of vacation under the new bill. This is an increase from the two weeks that everyone was previously guaranteed.

On-Call Shifts

Bill 148 has made numerous changes to the structure of on-call shifts in Ontario. Employers will now have to pay employees three hours of pay where a regular or on-call shift has been cancelled within 48 hours of its scheduled start time. On-call employees will now also have to be paid at least 3 hours for every 24 hours that they are on-call, irrespective of whether they are actually called in to work.

All of the above, and other changes, will begin on January 1, 2018 with some scheduled for later roll-outs.

To gain a more thorough understanding of the changes made by Bill 148 to Ontario’s Employment Standards Act, and how this affects you as either an employee or employer, please contact the experienced employment lawyers at Samfiru Tumarkin LLP.

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