The majority of employers in Ontario are required to abide by the Employment Standards Act, 2000 (the “ESA”), legislation that includes standards for, among other things, the provision of a minimum wage, statutory holiday pay, overtime and limitations on hours of work.
Where employees believe that their rights under the ESA have been violated, they may request that an Employment Standards Officer investigate. Where an Officer finds that a violation of the ESA has occurred, the Officer may make an order for the employer to remedy the situation (including paying wages found owing, if applicable). However, recent amendments to the ESA open the door to employers facing significantly greater liability where a violation has occurred and may even require employers to make a determination of whether they have, in fact violated the ESA.
The majority of employers in Ontario are required to abide by the Employment Standards Act, 2000 (the “ESA”), legislation that includes standards for, among other things, the provision of a minimum wage, statutory holiday pay, overtime and limitations on hours of work.
Where employees believe that their rights under the ESA have been violated, they may request that an Employment Standards Officer investigate. Where an Officer finds that a violation of the ESA has occurred, the Officer may make an order for the employer to remedy the situation (including paying wages found owing, if applicable). However, recent amendments to the ESA open the door to employers facing significantly greater liability where a violation has occurred and may even require employers to make a determination of whether they have, in fact violated the ESA.
Recent Changes to the ESA
Currently, where an Officer determines that an employer has contravened the ESA and has failed to pay wages to which an employee was entitled, the Officer may generally only order the employer to pay wages that became due more than six months before the complaint was filed. Furthermore, the total amount an Officer can order in wages is $10,000 with respect to any one employee.
Under amendments to the ESA introduced through the Stronger Workplaces for a Stronger Economy Act, 2014, effective February 20, 2015, employees will be able to recover wages that became due as far back as two years before the employee filed the ESA complaint. Furthermore, the new amendments remove the financial cap on the total wages an Officer may order.
Under separate changes to the ESA that will come into effect on May 20, 2015, Officers may require employers to examine their records and business practices and prepare a report for the Officer to rely on. Employers may also have to include in the report an assessment of whether the employer has complied with the ESA. Where the employer’s own assessment determines that wages are owed to an employee, Officers will be empowered to require that employers pay such amounts. Knowingly providing misleading or false information in a report will be an offence under the amendments to the ESA
What the Changes to the ESA Mean
The removal of the financial cap for monetary orders and the extension of the time period for calculating financial liability represent a significant expansion of potential risk for employers. As a result, employers who believe that they may be non-compliant with any portion of the ESA involving the calculation of wages may wish to conduct an assessment of their practices before the new changes come into effect on February 20, 2015.
It is too early to tell whether the newly added ability for Officers to require that employers self-audit their business practices will result in the downloading of the Officers’ investigative function to employers (at the employers’ expense). However, if used, this new investigation model may create problems, particularly where employers retain legal counsel to assist them in determining whether they have complied with the ESA.
In particular, employers are generally advised to contact legal counsel as soon as possible after receiving notice about an ESA complaint. However, if legal counsel assists the employer in preparing an assessment of potential liability the lawyer may, in effect, be providing a legal opinion may then be used against their clients—a situation that raises a host of potential ethical issues. The degree to which this problem may arise in practice remains to be seen, and we look forward to monitoring the impact of the changes after they come into force on May 20, 2015.