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5.5 Enforcement and Administration

See also: The Changing Workplaces Review

5.5.1 Introduction and Overview

While we have not reached conclusions about the specific policy responses on enforcement that we will recommend, we conclude that there is a serious problem with enforcement of Employment Standards Act, 2000 (ESA) provisions. While most employers likely comply or try to comply, with the ESA, we conclude that there are too many people in too many workplaces who do not receive their basic rights. Compliance with ESA standards ought to be a fundamental part of the social fabric. Indeed, attaining a culture of compliance with the ESA in all workplaces is one of the fundamental policy goals guiding our recommendations in this Review.

In a society where there is a culture of compliance with ESA standards, both employers and employees would be reasonably aware of their legal rights and responsibilities, while the law would be easy to access, to understand and to administer. It would be culturally unacceptable not to provide workers with the minimum requirements that the law demands, employees would be aware of their rights and would feel safe in asserting them. Widespread blatant abuse of basic rights would not only be legally impermissible but culturally and socially unacceptable. There would be a strong element of deterrence in the system as those who engaged in deliberate flouting of the law would be dealt with by not only having to make restitution and but also being liable for significant administrative monetary penalties.

Enforcement and the need for widespread compliance is one of the critical requirements of a system of employment standards. As Professor Harry Arthurs said:

Labour standards ultimately succeed or fail on the issue of compliance. Widespread non-compliance destroys the rights of workers, destabilizes the labour market, creates disincentives for law-abiding employers who are undercut by law-breaking competitors, and weakens public respect for the law.[250]

Over 90% of the approximately 15,000 complaints made every year are by people who have left their jobs voluntarily or after they have been terminated.[251] When the Ministry investigates those complaints, of the claims that are not settled or withdrawn, they conclude about 70% of the complaints are valid. In addition, when the Ministry proactively carries out inspections of workplaces, they commonly find violations of the Act. In the three years between 2011-12 to 2013-14, the Ministry found violations 75-77% of the time. Where an inspection of the employer was carried out after a complaint was made, violations were found over 80% of the time.[252]

The literature in this area is clear that fear of reprisals reduces the number of complaints that are made. Therefore, absence of complaints from some sectors of the economy or from some workplaces may be as consistent with non-compliance as it is an indication of substantial compliance.

It is apparent there is substantial non-compliance. Misclassification (including illegal unpaid internships) appears to have become widespread and along with some of the most frequent violations of the ESA – failing to pay wages on time or not paying overtime pay – is evidence that there is significant non-compliance with basic legal obligations.

A variety of factors contribute to non-compliance.

Ignorance by both employees and employers of their rights and obligations contributes to non-compliance. Many small employers and employees have no idea what the ESA requires. Educating employers about their responsibilities is as important as educating employees about their rights.

The complexity of the law may contribute to a lack of understanding of the rights and obligations in the ESA, thereby exacerbating non-compliance.

Some employers have an uncaring attitude towards their obligations and responsibilities and do not regard them as important enough to ensure compliance.

Some employers violate the law as part of a deliberate business strategy or because they think their competitors are not complying.

Some employers are confident that because their employees will not complain, and the likelihood of government inspection is very low, non-compliance is a risk worth taking calculating that if they are caught, they can extract themselves from the legal consequences of non-compliance without much difficulty and with trivial costs.

It is all too common for some non-compliant employers to attempt to avoid liability by abandoning their company with no assets and starting up the same business using another incorporated entity.

Unfortunately, there is a widespread fear among employees of reprisals if they complain about violation of their ESA rights[253] and this inhibition contributes to non-compliance.

Accordingly, in considering our recommendations, we need to assess the existing system and try to address in a significant way all the causes of the current state of non-compliance. We will consider the following:

  • whether to recommend measures that contribute to education and knowledge by both employers and employees of rights and obligations in the workplace;
  • whether to recommend changes that remove or reduce barriers to complainants;
  • what can be done to try to deal with the fear of reprisals by providing speedy and effective adjudication of reprisal claims;
  • how to provide greater access to justice for employees and employers;
  • the desirability of providing for greater deterrence for employers who do not comply with the ESA; and
  • the need to find more efficient and effective ways to collect monies owing to employees.

Finally, it is necessary to consider a new strategic approach to enforcement because of many fundamental changes in the workplace. There are many employees in precarious jobs whose basic employment rights are being denied, at the same time as there are limited government resources. Below we explore some dimensions of a strategic shift.

5.5.1.1 Academic Reviews of the Enforcement Regime

As part of the Review, two reports were commissioned on the issues of compliance, enforcement and administration. The first report[254] contains many options to consider regarding compliance and enforcement strategies based on a review of the academic literature. The second report[255] contains options to consider based upon a review and analysis of Ministry data regarding the enforcement and administrative processes.

We will carefully consider both reports and their recommendations. In addition to the options and ideas specifically referred to in this Chapter, we invite interested stakeholders and members of the public to review the reports and comment to us as they see fit.

5.5.1.2 Overview of the Employment Standards Enforcement and Administration

The Employment Standards Program

The ESA is administered and enforced through the Ministry of Labour Employment Standards Program.[256] This program consists of the Employment Practices Branch in Toronto, and five regional operating areas. The Program’s centralized intake centre, the Provincial Claims Centre, is in Sault Ste. Marie.

The Minister of Labour appoints a Director of Employment Standards to administer the Act. The Director of Employment Standards and the Regional Directors report to the Assistant Deputy Minister of the Ministry’s Operations Division.

One of the Employment Standards (ES) Program approaches to administering and enforcing the Act centres on education and outreach, recognizing that education and compliance go hand-in-hand. These educational and outreach activities seek to create an environment where employees and employers (and others with obligations under the ESA) understand their statutory rights and obligations, and employers have compliance tools and resources.

Employment Standards Officers’ Powers

Ministry Employment Standards Officers (ESOs) reactively investigate claims filed by employees who believe their current or former employer has contravened the ESA, and proactively inspects workplaces to check compliance. ESOs are empowered, among other things, to:

  • enter and inspect any place (except for a personal dwelling, which requires a warrant or consent);
  • interview/question any person on matters that may be relevant;
  • demand the production of records and to examine those records and remove them for review and/or copying; and
  • require parties to attend meetings with the ESO for purposes of advancing the investigation of a claim or an inspection.

People are required to answer an ESO’s questions and are prohibited from providing information that they know is false or misleading or from interfering with an ESO’s inspection or investigation.

If an ESO determines that there was a monetary contravention, the employer (or other entity who has been found liable under the ESA) is often given the opportunity to pay the amount owing without an order being issued (this is referred to as voluntary compliance). If the employer does not voluntarily comply, the ESO has the authority to issue an order requiring payment. An administrative fee of 10% of the amount owing (or $100, whichever is greater) is added on to the amount of the order. Orders to Pay Wages are the most frequently issued sanction when employers do not voluntarily comply.[257]

Employees can generally recover money owing under the Act through an Order as long as a claim is filed within 2 years of the contravention. In an inspection, ESOs can issue an Order to recover money owing up to 2 years before the date that the inspection was commenced. There is no statutory limit on the amount of money that can be recovered for employees.[258]

Directors of corporations that fail to pay its employees can be held liable under the ESA for some of the unpaid wages (up to 6 months’ wages and 12 months’ vacation pay, but not termination or severance pay). The ESA’s director liability provisions generally mirror those in the OBCA but provide for enforcement through the ES Program rather than through court proceedings that are typically more protracted and expensive (see section 5.2.2 for the discussion on director liability).

ESOs may also issue compliance orders ordering that a person cease contravening the Act, directing what action (other than the payment of money) the person shall take or not take to comply with the Act, and specifying a date by which the person must do so. Compliance orders may be enforced by injunction obtained in the Superior Court of Justice. Compliance Orders are the primary tool used in response to violations found in workplace inspections.[259]

In some circumstances, for example in cases of reprisal, the ESO can issue an order to compensate and – if the reprisal took the form of a termination – reinstate an employee. The types of damages that can be included in a compensation order include amounts representing the wages that the employee would have earned had there been no reprisal, damages for emotional pain and suffering and other reasonable and foreseeable damages.[260]

The Act also allows separate but associated or related legal entities to be treated as one employer if certain statutory criteria are met, and authorizes ESOs to issue Orders to entities other than the direct employer. This provision may create another source (“deep pocket”) for satisfying an employer’s monetary ESA obligations when the direct employer is insolvent or has minimal assets (see section 5.2.2 for the discussion on the “related employer” provision).

ESOs are empowered to issue a Notice of Contravention (NOC), which involves the imposition of an administrative monetary penalty, where the ESO finds a contravention of the Act. The penalty is payable to the Ministry of Finance (MOF) and becomes part of the province’s general revenues. Details on the NOCs are set out in the remedies and penalties section below.

ESOs may initiate a prosecution under Part I (“tickets”) of the Provincial Offences Act (POA). The ESO may recommend a prosecution under Part III of the POA but the final decision to prosecute under that Part rests with the Ministry of the Attorney General (MAG). Details on the factors considered by ESOs under each Part and the penalties are detailed below in the remedies and penalties section. In general, deterrence tools such as NOCs and POA prosecutions are used less frequently than measures that bring employers into compliance.[261]

Applications for Review

Employers, corporate directors and employees who wish to challenge an order issued by an ESO or the refusal to issue an order are, in most cases, entitled to apply for a review of the order by the Ontario Labour Relations Board (OLRB). The OLRB is an independent, quasi-judicial tribunal that mediates and adjudicates a variety of employment and labour relations matters under a number of Ontario statutes, including the ESA. The details regarding the review process are found in detail below in the section on reviews.

Collections

Many employers, corporate directors and others who are issued Orders or NOCs pay the required amounts without delay. Some, however, do not, and debt collection becomes a necessary part of enforcing the ESA.

The ESA contains several provisions that facilitate the collection of unpaid Orders and NOCs. These provisions:

  • allow the Ministry to demand payment from persons who are believed to owe money to, or who hold money for, an employer, corporate director or other person who owes money under the ESA (bank accounts, accounts receivable, and rental and royalty payments are common sources of funds that are subject to these third party demands);
  • allow the Ministry to file a copy of an Order to pay in court (filing the Order makes available creditors’ remedies such as writs of seizure and sale, garnishments, and directions to enforce by sheriffs or bailiffs. In order to ensure coordinated oversight of the debt, only the Ministry – not the employee who is owed the wages – is able to file the Order in court).

Historically, all collection activity was performed by the Ministry of Labour. In 1998, this function was delegated to private collection agencies. In 2014 the MOF became the designated collector. MOF is authorized to collect a reasonable fee and/or costs from the debtor, which are added to the amount of the debt.

From 1991 to 1997, employees were able to access a provincial Employee Wage Protection Program (EWPP). The purpose of the EWPP was to guarantee employee wages up to a specified maximum (initially $5,000, subsequently reduced to $2,000) where an order for those wages went unpaid by an employer. The program was administered through the Ministry of Labour and funded from provincial general revenues. The government subsequently attempted to recover funds from employers whose employees received money from the EWPP. Further details concerning collections are found in the collections section below.

5.5.2 Education and Awareness Programs

Background

The Ministry engages in several educational and outreach initiatives that are designed to help employees and employers understand the rights and obligations that are set out in the ESA. These include: the provision of videos and explanatory materials on the Ministry website; a call centre to provide general information about the ESA in multiple languages; the giving of seminars to employee and employer groups; and a Policy and Interpretation Manual that sets out in detail the policies and interpretations of the Director of Employment Standards.[262]

The Act requires employers to post and provide employees with a statutory ESA poster that provides a brief description of the Act and provides the Ministry’s web address and phone number if employees or employers wish to obtain more information.

ESA education is not part of the provincial high school curriculum, whereas occupational health and safety education has been part of the provincial high school curriculum since 1999.

Employee advocacy groups, unions and employers have all called on the government to improve educational activities.

Employee advocacy groups and unions recommended that the government ensure that educational materials are easy to understand and are provided in multiple languages. They suggested launching extensive public awareness campaigns about the ESA, with a particular focus on the anti-reprisal protection and the issue of misclassification of employees as self-employed workers. They also suggested that all newly registered businesses be provided information about their ESA obligations and that ESA training be made mandatory for employers, managers and supervisors. Recommendations were also made to make ESA training mandatory for employees and to fund employee advocacy groups to provide educational programs for employees.

Employers argued that the ESA’s complexity makes it difficult for employers to comply. Some employers suggested:

  • ensuring that the Ministry uses simple, clear language in all communications that explain the ESA;
  • public ESA information campaigns in multiple languages;
  • working more with community agencies to maximize outreach;
  • providing easy access to the Ministry’s Policy and Interpretation Manual; and
  • providing links in the online ESA to clear and concise interpretations of the provisions.

It is clear that the Act could be simplified and a variety of new and better ways found to communicate and to increase awareness, knowledge and understanding of workplace rights and obligations and to make such information accessible to all Ontarians. We welcome specific ideas in this regard that anyone may wish to advance.

5.5.3 Creating a Culture of Compliance

Background

Multiple factors contribute to non-compliance with employment standards. Achieving a higher level of compliance will not likely occur merely by amending the legislation or by increasing penalties for non-compliance. There needs to be improved education and outreach to achieve better understanding of workplace rights and obligations. Employees must be able to assert his/her workplace rights without fear of reprisal and the process to access those rights must be fair and effective. In this section we discuss possible new approaches that could assist in achieving greater awareness of rights and obligations directly in the workplace itself by making employers and employees responsible for compliance.

Internal Responsibility System (IRS)

To create a culture of workplace compliance with the ESA, it is necessary to find ways to bring greater responsibility for compliance directly into the workplace itself. Rather than leaving it only to government to carry out inspections to test if there is compliance, and rather than leaving it only to employees to file complaints with the government (which mostly occurs only after they are no longer employed), we will consider a new system in which responsibility is placed directly on employers and employees to increase awareness and compliance.

The impetus for this approach comes largely from the IRS established by the OHSA that has been effective in making Ontario’s workplaces safer and healthier. Under OHSA, both employers and employees have responsibility for health and safety in the workplace and both play a role in endeavoring to achieve compliance with the Act. In this regard, joint health and safety committees or, in smaller workplaces health and safety representatives, have proven generally effective in strengthening the health and safety culture than would otherwise be the case. They have raised employee and employer awareness of health and safety issues and in many workplaces have contributed to the identification and elimination of hazardous conditions and to a safer workplace.

Options:

  1. Implement an ESA Committee, as an expansion of the Joint Health and Safety Committee.

    An Employment Standards compliance IRS could be accomplished by expanding the jurisdiction of existing joint health and safety committees and representatives (a committee is generally not required in small workplaces with fewer than 20 workers; a workplace representative is generally required only in workplaces with 6 to 19 workers):

    • to give them authority to deal with ESA matters; or
    • to have other committees/representatives appointed in the workplace with jurisdiction to deal with ESA compliance.

    It would not be necessary for every member of a health and safety committee to take on responsibility for both health and safety matters as well as ESA matters as some members could be added to deal only with ESA matters. ESA training would have to be made available to committee members and representatives that deal with ESA matters.

    Unlike health and safety committees, there would be no obvious need for an ESA Committee in unionized workplaces as the union already has the responsibility to deal with ESA issues and to monitor compliance. Accordingly it would not appear to be necessary to have an internal ESA responsibility system in unionized workplaces.

    The fundamental obligations of the employer would be:

    • to conduct a simplified self-audit developed and prescribed by the Ministry, to check that the employer is complying with the ESA; and
    • to meet with the committee/representative and review the employer’s compliance audit.

    A copy of the compliance and confirmation of the meeting with the committee/representative may be required to be sent to the Ministry.

    Conducting the simplified audit and meeting with the committee/representative should mean the employer would not only be aware of the requirements of the Act but also review compliance with the representative or the committee. This would raise not only awareness of rights and obligations but also compliance.

    Two possible models for the ESA Committee – a basic model and an enhanced model – are set out for discussion.

    1. Basic Model:

      Under this model, the basic requirement of the committee/representative would be to meet with the employer to receive and review the employer’s compliance audit.

      In addition, if the employee committee members/representative requested that the employer address ESA issues or complaints, the employer would be obligated to do so, but the committee would have no on-going duty to monitor compliance or to investigate any alleged violations discovered by them or brought to their attention.

    2. Enhanced Model:

      Under an enhanced model, in addition to the requirement to review with the employer its compliance audit, the committee/representatives would have an on-going responsibility to promote awareness of – and compliance with – the ESA.

      Committees/representatives would be authorized under the Act to look into any ESA matter identified by them, the employer or by any employee(s) and have the right to be provided by the employer with all information necessary to establish whether there is compliance with the ESA.

      The committees/representatives would have an on-going duty to monitor compliance, to meet regularly with the employer, to communicate to employees and to look into any alleged violations discovered by them or brought to their attention.

  2. Require employers to conduct an annual self-audit on select standards with an accompanying employee debrief.

    Pursuant to this option, employers would be required to audit compliance with select standards identified by the Ministry (e.g., the Ministry may select 1, 2 or 3 standards per year). These standards would be announced to employers and employees in advance with targeted communications and education. To promote accountability and awareness, the results of these audits would be shared with all employees.

5.5.4 Reducing Barriers to Making Claims

5.5.4.1 Initiating the Claim

Background

Employees not covered by a collective agreement can file a claim with the Ministry of Labour if they believe their employer (or former employer) has not complied with the ESA. Unionized employees must generally enforce their ESA rights under the grievance and arbitration provisions of the collective agreement.

In 2010 the Act was amended so that the Director of Employment Standards could require that a complainant employee first contact his or her employer about the employment standards issue before a claim will be assigned to an ESO for investigation. There are template letters and other supporting material on the Ministry’s website that employees can use. This has been referred to as the “self-help” requirement.

As a matter of Ministry policy, there are exceptions to the general rule that employees first contact their employer. These exceptions are identified on the claim form and in Ministry material explaining the claims process and include situations where an employee is afraid to do so because of fear of reprisal. As a practical matter, we are advised that claims are not rejected by the Director because the employee has not contacted his or her employer first, although the claims processor typically asks for the reason the employer was not contacted.

The research study commissioned for this Review suggested that there has been a significant decline in the number of claims filed over a period of years and that some of this decline may be associated with the introduction of the self-help requirement. Indeed the authors of the study concluded that:

The balance of evidence suggests that the decline in complaints corresponds to the introduction of the OBA [the self-help provision] the requirements of which may be dissuading workers from pursuing their rights.[263]

Employees who file an ES claim must provide their name, which is shared with the employer during the claims process. At one time, the Ministry permitted employees to file a claim confidentially (i.e., where the employee’s name was known to the Ministry, but not the employer). This practice was changed in response to an OLRB ruling that employees would have to identify themselves to enable the employer to know the case it had to meet[264]. In comparison, the Wage and Hour Division (WHD) of the US DOL indicates that its policy is to protect the confidentiality of the complainant in their investigations, with some exceptions.[265]

Outside the claims process, individuals can anonymously provide information to the Ministry about possible ESA violations. This information is passed on to Ministry staff for review and could, but does not necessarily, lead to a proactive inspection.

When an employee files an ES claim, he or she can authorize a third party (e.g., legal counsel, family member, or any other person) to act on his or her behalf with respect to the claim.

The majority of ESA claims are filed by former employees after they have quit or their employment has been terminated.[266]

The ESA currently provides broad protection for employees against reprisal by an employer for exercising his/her rights under the ESA, including filing a claim. Reprisal protection is dealt with further in section 5.5.4.2.

The number of claims filed with the ES Program and the number of investigations that were completed in recent years is as follows:[267]

Ministry of Labour Employment Standards Program – Number of claims filed and investigations completed (2006 to 2015)
Fiscal Year Complaints Filed Complaints Completed

2006/07

22,620

15,995

2007/08

20,789

18,533

2008/09

23,286

21,304

2009/10

20,381

20,764

2010/11

17,094

27,637

2011/12

16,140

19,032

2012/13

15,016

12,344

2013/14

15,485

14,656

2014/15

14,872

17,453

As can be inferred from the data, the Ministry has taken special measures at various times, as in 2010-11, to deal with backlogs of complaints.

In the discussion below regarding inspections, we discuss the possibility of a strategic approach to both complaints and to inspections that could have consequences for the complaints process. That section should be read in conjunction with this one.

Submissions

Unions and employee advocates assert that fear of reprisal can significantly deter employees from making timely complaints and that a requirement to inform the employer before filing a complaint exacerbates the problem of accessing ESA entitlements. They point to the large number of claims that are made by employees after they have left the employ of the employer as evidence supporting a conclusion that the obligation to inform their employer is a barrier to accessing justice.[268] They would like to see the requirement eliminated. In addition to suggesting more robust anti-reprisal protection (dealt with in section 5.5.4.2), these advocates recommend that the ESA be amended to permit the Ministry to receive and investigate anonymous complaints and that employee representatives such as legal clinics or unions be permitted to file claims of alleged violation without specifically naming employees who have allegedly been denied their ESA entitlements.

Employers likely will argue that most small and medium employers do not have readily accessible human resources expertise or employment law advice and that most non-compliance is as a result of innocent inadvertence or lack of knowledge of the technicalities of the law. As a result, it is likely that they prefer an opportunity to resolve issues directly with their employees – a practice consistent with good employee relations and which should lead to increased compliance and to increased education of both employers and employees in a non-adversarial environment.

If anonymous or third party complaints are specifically provided for in the ESA, it is clear that employers will have to be advised of the details of alleged non-compliance in order to respond to the case they have to meet and in order to rectify the problem, if any. The facts of alleged violation, including the names of employees allegedly adversely affected, will have to be made known to the employers regardless of how the complaint is initiated. Whether the name of the complainant must be provided to the employer is a separate issue.

Options:

  1. Maintain the status quo with a general requirement to first raise the issue with employers but at the same time maintain the existing policy exceptions and maintain current approach of accepting anonymous information that is assessed and potentially triggers a proactive inspection.
  2. Remove the ESA provision allowing the Director to require that an employee must first contact the employer before being permitted to make a complaint to the Ministry.
  3. Allow anonymous claims, it being understood that the facts of the alleged violation must be disclosed to the employer by an ESO in order to permit an informed response.
  4. Do not allow anonymous complaints, but protect confidentiality of the complainant, it being understood that the facts of the alleged violation must be disclosed to the employer by an ESO in order to permit an informed response.
  5. Allow third parties to file claims on behalf of an employee or group of employees, it being understood that the facts of the alleged violation must be disclosed to the employer by an ESO in order to permit an informed response.

5.5.4.2 Reprisals

Background

The current ESA provides broad protection to employees against reprisal.

The Act prohibits employers, and anyone acting on their behalf, from intimidating, dismissing or otherwise penalizing an employee or threatening to do so because the employee attempted to exercise, or did exercise, his or her rights under the ESA. More particularly, an employee is protected against any reprisal if he or she engages in any of the following activities:

  • asks the employer to comply with this Act and the regulations;
  • inquires about his or her rights under this Act;
  • files a complaint with the Ministry under this Act;
  • exercises or attempts to exercise a right under this Act;
  • gives information to an ESO;
  • testifies or is required to testify or otherwise participates or is going to participate in a proceeding under this Act; or
  • participates in proceedings respecting a by-law or proposed by-law under section 4 of the Retail Business Holidays Act;
  • Employers are also prohibited from penalizing an employee in any way because the employee;
  • is or will become eligible to take a leave;
  • intends to take a leave or takes a leave under Part XIV of the ESA; or
  • because the employer is or may be required, because of a court order or garnishment, to pay to a third party an amount owing by the employer to the employee.

The burden of proof that an employer did not engage in a reprisal against an employee is on the employer.

Assignment workers of THAs are protected from reprisal by both the THA and the client to whom they are assigned to perform work.

Employees who believe they have been subject to reprisal may file a claim with the Ministry, which will investigate.

If an ESO determines that a reprisal occurred, the officer may order that the employee be compensated for any loss incurred as a result of the contravention or that the employee be reinstated, or may order both compensation and reinstatement.

Reprisal claims are currently not given priority by the Ministry. It takes approximately 90 days before claims are assigned to a Level 2 ESO for investigation, and on average it takes approximately 51 days to conclude an investigation.

In recent years, approximately 12% of claims[269] contained an allegation of reprisal (or leave of absence, which almost invariably entails a reprisal allegation). The majority of these involve a termination. Approximately 20% of cases result in a finding of a contravention;[270] however the percentage of contraventions may be higher given that a substantial number of them are settled or withdrawn.

In the Ministry’s experience, most employees who have been terminated do not seek reinstatement.

Submissions

Employee advocates and unions:

  • observe that rights and protections afforded by the ESA are meaningless without effective anti-reprisal protection;
  • are critical of the current system of enforcement; and
  • generally agree that, currently, the cost of reprisal to employers is not a significant deterrent.

Employee advocates assert that many employees do not raise ESA issues with their employer or file a complaint because of fear of reprisal notwithstanding the protections contained in the ESA with the result that many work in substandard conditions.

Employee advocates and unions advocate creating an expedited process for reprisal investigations in order to prevent compounding contraventions and to minimize the chilling effect of the reprisal on other employees. They also assert that an expedited process for reprisal complaints would emphasize to employers the importance of the anti-reprisal provisions of the ESA and may increase the numbers of successful employee reinstatements.

Options:

  1. Maintain the status quo.
  2. Require ESOs to investigate and decide reprisal claims expeditiously where there has been a termination of employment (and other urgent cases such as those involving an alleged failure to reinstate an employee after a leave).
  3. Require the OLRB to hear applications for review of decisions in reprisal on an expedited basis if the employee seeks reinstatement.

5.5.5 Strategic Enforcement

Strategic enforcement is increasingly important when the workplace environment is becoming more complex and governments with limited resources are faced with high public expectations. In this section we will canvass different strategies for enforcing the ESA.

5.5.5.1 Inspections, Resources, and Implications of Changing Workplaces for Traditional Enforcement Approaches

Background

Inspections

An “inspection” is where an ESO proactively attends an employer’s place of business to ensure compliance with certain parts of the ESA[271]. This typically involves the officer reviewing the employer’s payroll records and conducting interviews of employees and the employer. Proactive inspections are intended to discover and remedy contraventions and bring the employer into compliance going forward as well as to heighten awareness and understanding of rights and obligations. In addition, an effective proactive inspection program should deter non-compliance. Contraventions were detected in 75-77% of inspections in the years between 2011-12 and 2013-14, and 65% in 2014-15.[272]

Until recently, ESOs conducted either inspections or investigations – they did not do both. Most now investigate and inspect.

In determining which employers to inspect, the Ministry relies on a variety of criteria. For example, an employer may be inspected because:

  • an ESO who conducted an investigation believes that there may be contraventions with respect to employees other than the claimant;
  • it has a history of contravening the ESA;
  • a “tip” was received from the public (including employees who may be afraid of reprisal) or from Ministry staff;
  • it is part of a sector that has been targeted for inspection.

The ES Program determines sectoral targets (often termed “blitzes”) based on:

  • input from employee and employer groups;
  • a review of public policy and research papers;
  • analysis of the Program data on sectors contravention profiles; and
  • government priorities.

The Ministry typically announces blitzes in advance on the theory that an industry that knows it will be under scrutiny will move on its own in advance to comply. The ES Program also employs what is called a “compliance check”: an online self-assessment tool that asks employers about their compliance with seven non-monetary standards.

There are more than 400,000 workplaces in Ontario. An average of approximately 2,500 inspections have been conducted annually in recent years. This means that only about 0.6% of workplaces are inspected annually.

Best Use of Limited Resources

There is general consensus that proactive enforcement is a more effective mechanism for ensuring ESA compliance than relying on individual employees to file claims. It has long been a goal of the Ministry of Labour to continually increase the number of proactive inspections it conducts. That goal is, however, balanced with the need to limit wait times for claim investigations. More resources are currently allocated to reactive rather than proactive measures.

There is great pressure on the Ministry to use its limited resources efficiently and to strike the right balance between reactive (claim investigations) and proactive (inspections) work. The wait times for investigations and the number of inspections have both previously been the subject of comment by the Provincial Auditor.[273] The Program continuously revisits its processes and policies with a view to having faster and more streamlined services that will result in shorter wait times for claim assignment, quicker resolution of complaints, and increased proactive activity.

The ESA contemplates that the Ministry will investigate all claims that are filed, as long as the claimant has taken the specified steps to facilitate the investigation. Where a claimant has not taken the specified steps within 6 months of filing the claim, the officer is deemed to have refused to issue an order. The claimant has the right to apply to the OLRB for a review of the refusal. In a world where financial constraints are a constant, budgetary considerations do not permit the hiring of enough ESOs to complete the investigation of all complaints in a timely fashion while also maintaining a significant proactive presence. The result is that there is a backlog of uninvestigated and unresolved complaints.

Quarterly, between 2011-12 and the first two quarters of 2015-16:

  • the average wait time for assignment to a Level 1 ESO ranged from 2 days to 67 days, with an average of 35.4 days. Over the past four quarters in this period the average was 38 days;
  • the average wait time for assignment to a Level 2 ESO for investigation has ranged from 54 days to 189 days, with an average of 119.6 days. Over the past four quarters in this period the average was 89 days.

This problem is not unique to Ontario. In the US in 2010, David Weil described the situation as follows:

The challenges facing the major agencies in the US Department of Labor (DOL) that regulate conditions in the workplace are daunting. Public policies on health and safety, discrimination, and basic labor conditions cover millions of workers, and have to be implemented in hundreds of thousands of disparate workplaces in differing geographic settings. Conditions within those workplaces vary enormously – even within a single industry – and employers often face incentives to make those conditions as opaque as possible. Workers in many of the industries with the highest levels of non-compliance are often the most reluctant to trigger investigations through complaints due to their immigration status, lack of knowledge of rights, or fears about employment security. Even the laws, which set forth the worker protections DOL agencies are charged with enforcing, have limitations in the 21st- century business community. Compounding all of the above, agencies charged with labor inspections have limited budgets and stretched staffing levels, coupled with a very complicated regulatory environment.
These challenges, however, reach beyond the number of investigators available to the DOL or to the Wage and Hour Division (WHD) in particular. Profound changes in the workplace, including the splitting up of traditional employment relationships, the decline of labor unions, and the emergence of new forms of workplace risk make the task facing DOL agencies far more complicated. In addition, expectations and demands on all regulatory agencies to demonstrate progress toward achieving outcomes and the resulting impacts on how government agencies are overseen by Congress, accountability agencies, and the public have created intensified pressure and scrutiny.[274]
The Changing Workplace and Implications for Traditional Enforcement Approaches
  • Revisit approach of investigating all claims:

    There have been fundamental changes in the workplace. The number of employees represented by trade unions has declined. There has been a major change in how many businesses organize their affairs as the direct employment of employees has been shifted to other business entities including subcontractors, temp help agencies and franchisees. It is argued that there are many more vulnerable employees in precarious jobs whose basic employment rights are being denied. This denial of rights and protections occurs for many reasons including fear of reprisal, employees’ ignorance of their rights and for a multiplicity of other reasons. However, it is exacerbated by the overwhelming number of complaints and by the lack of resources required to make timely investigation of all complaints.

    This leads to the question as to whether the traditional approaches to enforcement are sufficient. Ontario may be well advised to consider different enforcement strategies to ensure compliance with the ESA. As Weil concludes: “fissuring means that enforcement policies must act on higher levels of industry structures in order to change behavior at lower levels, where violations are most likely to occur.”[275] New enforcement sector-based strategies may need to be designed to change employer behavior and improve compliance with priority being given to those sectors where non-compliance is most problematic.

    Administrative programs like Ontario’s, which involves government officials investigating and ruling on claims, are in place across Canada. In other jurisdictions, such as the UK, employees are responsible for presenting their own case to an employment tribunal. In the context of new and different enforcement strategies, more worker outreach and education of both employers and employees, the policy of investigating every complaint may have to be modified so that not all complaints are investigated. This does not imply that there should be no avenue for redress for individuals with complaints, nor does it mean that individual complaints would not be important in assisting the Ministry in initiating targeted and proactive inspections. It may mean that some complainants would have to file claims:

    • in small claims court, or if there is a more broadly based OLRB presence for ESA matters (described below);
    • directly with the OLRB; or
    • in some other simplified expedited dispute resolution process where there is either no investigation or a less onerous investigative process.
  • Focusing on the “top of industry structures” and other strategies:

    Any policy shift away from the investigation of all complaints must be accompanied by new enforcement strategies. It has been argued by David Weil and others that changes in the structure of the economy and in the complexity of employment relationships together with the decline in unionization have meant that the traditional complaint driven approach to enforcement is less and less effective. Weil put it this way:[276]

    The employment relationship in many sectors with high concentrations of vulnerable workers has become complicated as major companies have shifted the direct employment of workers to other business entities that often operate under extremely competitive conditions. This “fissuring” or splintering of employment increases the incentives for employers at lower levels of industry structures to violate workplace policies, including the FLSA. Fissuring means that enforcement policies must act on higher levels of industry structures in order to change behavior at lower levels, where violations are most likely to occur.

    Weil recommended designing sectoral enforcement strategies, a central purpose of which – as with all enforcement strategies – is to deter violations before they occur. This involves analysing and understanding the structure of industries to provide insights into why there are higher levels of non-compliance in some industries than in others and to help inform sector-based enforcement strategies designed to improve compliance. It is his view that understanding supply-chain relationships, franchising and other industry structures is an essential first step to the development and implementation of effective enforcement strategies.

    Such an approach would enable focusing at the top of industry structures – the top of the supply chain for example – where decisions are made that affect compliance by those lower in the chain. Weil suggests that education, persuasion as well as the use of other regulatory tools (like hot goods provisions and other penalties) can found the basis of agreements that will have impact on all the employers in the supply-chain. The strategic use of proactive investigations on a geographic and/or industry basis is also recognized as an essential component of any overall strategy designed to assist in improving compliance. Complaints of individual workers (or their silence) should be used to help set priorities for strategic enforcement initiatives. This may involve developing special complaint procedures for employees in targeted sectors or industries to obtain information about compliance in order to leverage complaint investigations more strategically. Finally, Weil focuses on the sustainability of enforcement and the importance of changing employer behaviour on an on-going basis by combining state enforcement initiatives with private monitoring.

    Given the similarities between the structural changes in the US economy and those in the Ontario economy, the strategic approach of Dr. Weil warrants serious consideration.

Submissions

Employee and labour advocates expressed very strong support for proactive inspections. Their recommendations focused on expanding the scope of what is included in targeted inspections. Some have argued that the Ministry should not give advance notice of inspections to an industry arguing that this allows other industries to know they are not being inspected and also undermines the effectiveness of the inspections in the targeted industry.

More specifically, it has been recommended that the Ministry:

  • inspect all employers that have been found in a claims investigation to have contravened the Act;
  • work with federal agencies to map sectors where the practice of employers falsely classifying or misclassifying employees as independent contractors is widespread or growing, focus inspections on those sectors, and have officers look into the issue of misclassification during inspections;
  • focus proactive inspection resources on workplaces with migrant and other vulnerable and precariously employed workers;
  • hire more officers to increase the capacity to conduct proactive inspections, and/or shift away from the current complaint-driven enforcement process, and allocate more resources to pro-active enforcement initiatives (including spot checks, audits, and inspections).

Some employer groups expressed support for effective enforcement of the ESA. Generally, they spoke of the desirability of providing education and assistance to employers who want to comply and targeting those who are deliberately contravening the Act. Consistent enforcement of the ESA supports a competitive environment based on a level playing field. More specifically, they recommended the Ministry:

  • focus inspections on those with a bad compliance history;
  • facilitate a more consistent approach by officers; and
  • use the inspection process to educate employers.

Options:

  1. Maintain the status quo.
  2. Focus inspections in workplaces where “misclassification” issues are present, and include that issue as part of the inspection.
  3. Increase inspections in workplaces where migrant and other vulnerable and precarious workers are employed.
  4. Cease giving advance notice of targeted blitz inspections.
  5. Adopt systems that prioritize complaints and investigate accordingly.
  6. Adopt other options for expediting investigation and/or resolution of complaints.
  7. Develop other strategic enforcement options.

5.5.5.2 Use of Settlements

Background

The Act permits parties to settle their ESA issues in a number of different circumstances.[277]

Settlements can be facilitated by ESOs, or parties can settle the matter themselves and inform the ESO. If the employee and employer comply with the terms of the settlement, the settlement is binding, any complaint filed is deemed to have been withdrawn and any order made by an ESO in respect of the contravention or alleged contravention is void (except a compliance order).[278]

Labour Relations Officers (LROs) at the OLRB attempt to effect a settlement of applications for review of an officer’s decision. Approximately 80% of ESA reviews are settled. In employer-initiated reviews, we are advised that employees often settle for less than the amount that was ordered by the ESO.

The MOF, as the designated collector of unpaid orders and notices, is authorized to enter into a settlement with the debtor, but only with the agreement of the employee. If the settlement would provide the employee less than 75% of the amount he or she is entitled to, the approval of the Director of Employment Standards must be obtained.

Academic research suggests that the vulnerabilities of employees diminishes the value of ESA settlements that they negotiate.[279]

Submissions

A criticism we heard frequently related to the settlement process at the OLRB. The OLRB has a professional cadre of mediators – LROs – who are assigned to assist the parties to help resolve matters in advance of hearings. The success of this settlement process is very important to the smooth functioning of the tribunal as a high rate of settlement is a critically important part of any adjudicative system. Without settlements, too many cases would go on for too long and there would be an excessive burden on already strained adjudicative resources. Without the possibility of settlements, any legal process becomes more time consuming and more expensive for the parties and for society as a whole.

In labour relations matters the Board officers responsible for mediating interact mostly with sophisticated parties and legal counsel in helping to effect settlements. In ESA cases, however, they often deal with unsophisticated and unrepresented complainants and respondents. One common issue cited to us is that complainants are often very dissatisfied with the settlement process. They may feel out of their depth, unduly influenced, and even pressured in many circumstances to settle in a way that they feel is inappropriate. We are not surprised that this feeling exists. Settlement is never an easy process. It requires honest reflection on the merits of the case and weighing of options. It is especially hard when you are unrepresented and have no advice you can rely on. One of the most important skills lawyers and paralegals bring to clients in the legal process is the ability to help clients assess the strength of their case and to negotiate an appropriate outcome. If more complainants were represented in the settlement process, there would still be some degree of dissatisfaction – as there usually is – but as a society we could expect that overall it would be regarded by all those who participate as a better process.

We heard concerns that employees often compromise claims even where there appears to be strong evidence supporting their entitlement to a higher amount. Unions and employees advocates argue that the likelihood of settlement creates a perverse incentive to violate minimum standards because non-compliant employers, when faced with a valid complaint, are often able to settle claims for less than the cost of compliance.

Employers have not made submissions on this point. It may be that employers, particularly small employers, will express concern about the diversion of resources to litigation if there is a substantive interference with the ability of the parties to settle a case. They are likely to point out that the time, cost and risk associated with litigation often compel parties to consider settlement that is preferable to trial. The reasons why an employee or an employer might prefer a timely settlement are numerous. There are cases where facts are disputed and/or credibility is an issue or where the application of the law to agreed facts is disputed. It would be costly and inefficient to prohibit settlements in such circumstances. Suffice to say, employers are likely to view settlements as a smart and efficient dispute resolution mechanism that should be available to the parties.

Options:

  1. Maintain the status quo.
  2. In addition to the current requirement that all settlements be in writing, provide that they be subsequently validated by the employee in order to be binding. For example, provide that a settlement is binding only if, within a defined period after entering into the settlement, the employee provides written confirmation of her or his willingness to settle on the terms agreed to and acknowledges having had an opportunity to seek independent advice.
  3. Have more legal or paralegal assistance for employees in the settlement process at the OLRB as set out below in section 5.5.6.

5.5.5.3 Remedies and Penalties

Background

Enforcement mechanisms that encourage compliance, deter non-compliance and provide appropriate and expeditious restitution to employees whose ESA rights have been violated are an essential part of an effective compliance strategy.

Thousands of complaints are filed with the Ministry of Labour for ESA violations every year. Approximately 70% of assessed complaints lead to confirmed violations of the ESA.[280]

The Act provides these enforcement tools when an employer[281] is found to have contravened the Act:

Enforcement tools when an employer has contravened the Employment Standards Act, 2000
Tool Primary Purpose Details

“Voluntary Compliance”

Restitution

Employer pays the employee the amount that was owing without an Order being issued.

With voluntary compliance (rather than an Order) the employee may receive the money sooner and the employer abandons its right to apply to review the determination.

Approximately half of the claims where a contravention was found are resolved through voluntary compliance.

Order to Pay Wages (or Fees)

Restitution

The Ministry orders the employer to pay the employee the amount that was owing, plus pay an administrative fee to the government of 10% of the amount owing (or $100, whichever is greater).

Order for Compensation

Restitution

Available only for certain contraventions (e.g. reprisal, leaves of absence).

The Ministry orders the employer to financially compensate the employee (i.e., pay the employee damages for the wages that the employee would have earned, the value of the lost job, emotional pain and suffering, and other reasonable and foreseeable damages) plus pay an administrative fee to the government of 10% of the amount of damages (or $100, whichever is greater).

Order for Reinstatement

Restitution

Available only for certain contraventions (e.g., reprisal, leaves of absence) where the employee’s employment was terminated.

The Ministry orders the employer to reinstate the employee.

Director’s Order to Pay Wages

Restitution

The Ministry orders director(s) of a corporation that has not paid the employee to pay some of the unpaid wages (up to 6 months’ wages and 12 months’ vacation pay, but not termination or severance pay).

Compliance Order

Bring into Compliance

The Ministry orders the employer to take or refrain from taking actions in order to comply with the Act. (The order cannot require that money be paid).

This may be used for monetary and non-monetary contraventions.

Notice of Contravention (“NOC”)

Penalty & Deterrence

The Ministry orders the employer to pay an administrative monetary penalty, ranging from a flat $250 upwards to $1,000 per employee affected by contravention.[282] Penalty is paid to the government.

Employers do not have to pay the amount of the NOC into trust in order to apply to have it reviewed by the OLRB.

On review, the Director of Employment Standards has the onus to establish on a balance of probabilities that a contravention occurred; the OLRB usually considers documentary evidence insufficient proof and requires the attendance of the issuing officer at the hearing. Primarily because of the costs associated with this, the policy of the ES Program is for officers to issue “tickets” under the POA where possible, rather than an NOC.

In 2014/15, 65 NOCs were issued in the claim investigation context and 34 were issued in the inspection context.[283]

Provincial Offences Act prosecution – Part I

Penalty & Deterrence

Prosecution for contravening ESA.

ESOs consider the following factors when deciding whether to initiate a prosecution under Part I of the POA: the seriousness of the offence, whether there is a history of non-compliance; mitigating circumstances (for example, whether full and timely restitution has been made for employees affected by the contravention), and whether other steps can be taken to effectively deter future non-compliance.

Generally, Part I prosecutions are used for first offenders where the offence is viewed as being less serious. Part I prosecutions are commenced by serving the defendant with either an offence notice (“ticket”) or a summons within 30 days of the alleged offence. Although a summons can result in a $1000 fine, the ES Program practice is to proceed by way of a ticket in most cases, which can result in a $360 fine.

In 2014/15, 340 tickets were issued.[284]

Provincial Offences Act prosecution – Part III

Penalty & Deterrence

Prosecution for contravening ESA.

Used to prosecute corporate directors, for serious offences, and for repeat or multiple offenders or if Part I is not seen as a sufficient deterrent.

Commenced by the laying of an information. Requires a court appearance. Conviction carries a fine up to $100,000 for a first offence for a corporation, $250,000 for a second offence and $500,000 for a third or subsequent offences, or up to $50,000 and imprisonment up to 12 months for an individual.

Whether or not a contravention is found, ESOs can require an employer to post in its workplace any notice the ESO considers appropriate or any report concerning the results of an investigation or inspection. In practice, ESOs order employers to post documents only in the inspection context, not in the claim investigation context.

The Ministry publishes the name of anyone convicted under the POA of contravening the ESA on its website.

Despite the high rate of confirmed ESA violations, relatively few penalties are issued, as the numbers in the chart above demonstrate.

On some occasions, employers provide the statutorily required payments to an employee after a claim is filed and the employee withdraws the claim and, as a result, the Ministry closes the claim without an investigation. Without a finding that the employer contravened the Act, enforcement tools are not available. Similarly, if the parties enter into a binding settlement, the claim is deemed to be withdrawn and any order made in respect of the contravention or alleged contravention is void. Approximately 14% of claims were settled in the 2014-15 year. Settlements do not terminate prosecutions.

In addition to the above, the ESA provides that the Director of Employment Standards may, with the approval of the Minister of Labour, determine a rate of interest and manner of calculating interest for the purpose of the Act[285] and sets out circumstances in which interest may be payable pursuant to those determinations: when an ESO issues a Director Order to Pay, when the OLRB makes, amends or affirms an Order, and where money is paid from the Ministry’s trust fund.[286] (There is no provision addressing interest awards by ESOs against employers). To date, the Director has not made these determinations. The effect of this is that no interest is payable in any of the circumstances in which the Act mentions interest.

Part III prosecutions are relatively rare. When Part III prosecutions do occur, they are usually for failure to comply with an order to pay.

Submissions

We heard little from employers on how the remedies or penalties might be amended. However, it would seem that employers generally recognize the benefits of effective enforcement and increased compliance. Some supported the imposition of higher penalties on those who intentionally contravene the ESA. Some recommended that warnings should be issued to first time offenders who unintentionally contravene the Act.

This topic received a significant amount of attention in other stakeholders’ submissions. The general thrust of many submissions by employee advocacy groups and labour groups is that the current remedies set out in the ESA are inadequate for protecting Ontario workers in an increasingly turbulent and precarious labour market and that this weakness in legal standards is exacerbated by a consistent failure to effectively enforce the employment standards which are already in place.

It has been submitted, for example, that the current remedies, monetary value of penalties, and ES Program procedures:

…create a perverse incentive for employers to violate the minimum standards of their workers. It is more financially lucrative for employers to withhold or fail to pay a worker their minimum entitlements under the ESA, and if the employee should launch a successful complaint, be put in a position where the employer can potentially settle the debt owed to the aggrieved worker for cents on the dollar, potentially below the minimum standard set by the Legislature.

Unions and employee advocacy groups submitted that penalties for non- compliance should be increased to deter employers from willfully violating the minimum standards under the ESA.

Options:

  1. Maintain the status quo.
  2. Increase the use of Part III prosecutions under the POA particularly for repeat or intentional violators and where there is non-payment of an Order.
  3. Increase the frequency of use of NOCs by the ES Program. This could be supported by:
    1. requiring employers to pay an amount equal to the administrative monetary penalty into trust in order to have a NOC reviewed by the OLRB;
    2. removing the “reverse onus” provision that applies to the Director of Employment Standards when a NOC is being reviewed at the OLRB.
  4. Require employers to pay a financial penalty as liquidated damages to the employee whose rights it has contravened, designed to compensate for costs incurred because of the failure to pay (i.e., borrowing costs), in a specified amount or an amount that is equal to or double the amount of unpaid wages and a set amount for non-monetary contraventions.
  5. Increase the dollar value of NOCs.
  6. Increase the administrative fee payable when a restitution order is made, to include the costs of investigations and inspections.
  7. Use the existing authority of officers to require employers to post notices in the workplace where contraventions are found in claim investigations.

Interest

  1. Have the Director of Employment Standards set interest rates pursuant to the authority to do so in section 88(5) so that interest can be awarded in the circumstances currently allowed for.
  2. Amend the Act to allow employers to be required to pay interest on unpaid wages.

Other Options (as discussed below):

  1. Make access to government procurement contracts conditional on a clean ESA record.
  2. Grant the OLRB jurisdiction to impose administrative monetary penalties.

Since compliance is an important public policy objective, it has been suggested that employers who have a record of contravention of the ESA should be denied the ability to bid on government contracts. It is argued that such a policy would ensure that non-compliant employers are not “rewarded” and that bidders do not build non-compliance into costing estimates. There has been little discussion about this option. Should stale-dated records of non-compliance always disqualify an employer? Should inadvertent non-compliance by an employer who has quickly remedied any issue of non-compliance operate as a disqualifier? There may be many questions that require thoughtful consideration before any policy is recommended. We welcome comments from stakeholders.

As a result of some of the submissions received, there have been discussions about the advisability of giving the OLRB jurisdiction to impose, where appropriate, significant administrative penalties on non-compliant employers. This would be in addition to other remedial authority, for example, the authority to make orders to compensate employees where violations are shown to have occurred and to issue prospective compliance orders.

One of the advantages of giving the OLRB such jurisdiction would be that the Board could – over time – develop consistent jurisprudence and clearly articulate circumstances where non-compliance may result in an administrative monetary penalty against a non-compliant party as well as other remedies to rectify the wrongdoing. This would not only allow the thoughtful and reflective development of jurisprudence by the tribunal with the relevant expertise but also the imposition of administrative monetary penalties in appropriate cases would act as a significant deterrent to all employers as well as providing a penalty for non-compliance to a particular employer.

It may not be prudent or appropriate to give the OLRB jurisdiction to impose administrative monetary penalties in litigation between private parties. The imposition of an administrative monetary penalty would then be seen as an outcome that should be the result of state action and in the public interest. Therefore, we have been considering a model in which complaints could be initiated directly by the Ministry of Labour or by the MAG against a named respondent or respondents where an administrative monetary penalty is one of the remedies sought. Some office, perhaps a Director of Enforcement, would be given responsibility to determine when to initiate a case in which an administrative monetary penalty is sought and to take carriage of such cases as the applicant in the proceedings.

With thousands of contraventions found every year, it is impractical for a Director of Enforcement to have carriage of each complaint that appears meritorious. If a Director of Enforcement were given the authority to have carriage of and to take cases directly to the OLRB, the Director could limit the cases taken on to those where, after receiving advice from the Director of Employment Standards, he/she determines that there is a public policy interest in achieving an outcome that would better reflect the seriousness of the violation(s) alleged, for example – where after an investigation:

  • it appears that there are reasonable and probable grounds to believe a serious reprisal has occurred; or
  • in any other case where the Director of Enforcement determines it is appropriate and advisable to proceed directly to the OLRB (for example, where there are multiple violations disclosed either by an ESO investigation or by an inspection or an audit or where the employer has been found to have violated the ESA on previous occasions).

An employer or other respondent would know in advance the potential risks arising from a Ministry initiated complaint. If the Director of Enforcement were going to seek an administrative monetary penalty over and above a remedy for the claimant(s) or other employees whose rights have been violated, the respondent would be advised not only of the details of the alleged violations but also of the amount of the administrative monetary penalty that is being sought by the Director. At any hearing, the burden of proof would be on the Ministry.

The current complaints driven process is essentially a two-party process with the complainant and a respondent employer/corporate director being the parties. With some exceptions, the parties are therefore in a position to resolve their own litigation. A settlement with respect to one or more employees should not bar the Director from assuming carriage of a case and taking it to the OLRB to seek an administrative monetary penalty and/or compensation for employees with whom there is no settlement and for whom no complaint has been made – for example compensation for others if violations are uncovered during an inspection or during the investigation of an individual claim. In a process where the Director of Enforcement decided to take carriage of a complaint or to initiate a complaint, the employee claimant(s) would not be responsible for preparing the case or for taking the matter to a hearing before the OLRB. Carriage of the case would be the responsibility of the Director.

A complaint initiated by the Director of Enforcement would not – and should not – preclude a settlement agreement between the Director and the employer on the question of remedy for adversely affected individuals and on the question of the administrative penalty – the latter perhaps subject to the approval of the OLRB. The Director will be in the best position to assess the strengths and weaknesses of the case, to assess how best to serve the public interest and to take into account the views and the rights of adversely affected employees all of which would – of necessity – be taken into account by the Director of Enforcement in deciding whether and on what terms to settle. One would assume that – as a matter of policy – counsel acting on behalf of the Director of Enforcement would do his/her best to ensure that the claimants received what they ought to receive based on the proper application and interpretation of the ESA.

Giving the OLRB jurisdiction to impose monetary sanctions for violation of employment standards law would not only underscore the important public policy objectives of compliance, but would also act as a deterrent to respondents and others from engaging in future conduct that violates the ESA.

Other tribunals have statutory authority to impose administrative monetary penalties. The Securities Commission, if in its opinion it is in the public interest to do so, may make an order requiring the person or company to pay an administrative penalty of not more than $1 million for each failure to comply with Ontario securities law (see section 127(1)(9) of the Securities Act). The Securities Commission also has jurisdiction in appropriate cases, after conducting a hearing, to order a respondent to pay the cost of the investigation and the cost of the hearing incurred by the Commission.

Finally, the Securities Act provides that revenue generated from the exercise of a power conferred or a duty imposed on the Commission does not form part of the Consolidated Revenue Fund but can be used for various purposes including: for use by the Commission for the purpose of educating investors or promoting or otherwise enhancing knowledge and information of persons regarding the operation of the securities and financial markets. In Rowan v. Ontario (Securities Commission, 110 O.R. (3d) 492, 350 D.L.R. (4th) 157), at para. 52, the Court of Appeal approved the following statement of the Commission:

In pursuit of the legitimate regulatory goal of deterring others from engaging in illegal conduct, the Commission must, therefore, have proportionate sanctions at its disposal. The administrative penalty represents an appropriate legislative recognition of the need to impose sanctions that are more than “the cost of doing business”. In the current securities regulation and today’s capital markets context, a $1,000,000 administrative penalty is not prima facie penal.

This is language that may resonate with others trying to create a workplace environment in which compliance is the norm and non-compliance is the exception. Unfortunately, non-compliance with the ESA currently affects thousands of Ontarians and is a significant societal problem. Giving the OLRB jurisdiction to impose monetary penalties may have the desired effect and be, as the Securities Commission stated, “appropriate legislative recognition of the need to impose sanctions that are more than the cost of doing business.”

If the OLRB were to be given an expanded jurisdiction to impose significant monetary sanctions up to $100,000 per infraction, there is also reason to consider giving the OLRB jurisdiction to order an unsuccessful respondent to pay the cost of the investigation and the costs of the hearing incurred by Director of Enforcement. Similarly, it may be prudent to consider stipulating that revenue generated from the exercise of a power conferred or a duty imposed on the OLRB does not form part of the Consolidated Revenue Fund but could be used for various purposes including:

  • paying any outstanding orders against the respondent;
  • paying unpaid wages to any other employee of the respondent who has not received his/her entitlement under the ESA;
  • educating employees and employers about their rights and obligations under the ESA;
  • funding legal and other support for employees who wish to file complaints including funding representation costs at before the OLRB; and
  • using the revenue generated by fines and penalties to help fund increased enforcement activity.

5.5.6 Applications for Review

Background

Employers, corporate directors and employees who wish to challenge an order issued by an ESO or the refusal to issue an order are, in most cases, entitled to apply for a review of the order by the OLRB.

The application for review must be made in writing to the OLRB within 30 days after the day on which the order, or notice of the refusal to issue an order, was served on the party wishing to apply for review. The OLRB has jurisdiction to extend the time for applying for review if it considers it appropriate to do so.

In the case of an order directed against an employer, the employer must first pay the amount owing as determined by the ESO, plus the administrative fee, to the Director of Employment Standards in trust.[287] This requirement ensures that the ordered amount will be available to be paid to the employee if the appeal fails.

The OLRB applies a “self-delivery” model to ESA appeals. Under this model, applicants are required to deliver a copy of the application and supporting documents to the responding parties, including the Director of Employment Standards before filing them with the OLRB. If the case is scheduled for a hearing the parties are required – no later than 10 days before the hearing – to deliver to the other parties and file with the OLRB copies of all documents they will be relying on in the hearing.

The OLRB assigns a LRO to work with the parties to attempt to settle the case. Approximately 80% of ESA reviews are settled. If the parties do not settle, it will be referred to a hearing. Recently, hearing dates have been set approximately 4 months after the settlement meeting.

In recent years, approximately 735 review applications have been filed annually (representing an appeal rate of approximately 6.5% of claims in which an officer made a decision). A majority of the review applications are made by employers and directors of companies but a substantial share is made by employees. Approximately 80% of ESA appeals are settled. Of those cases that do not settle and a determination on the merits is made, almost twice as many applications were dismissed than were granted.

The OLRB is required to give the parties full opportunity to present their evidence and make submissions. In essence, the review hearing before the OLRB is like a trial with evidence-in-chief, cross-examination and documentary evidence. This means that if a party wants the OLRB to consider any documentary or other information (including information that he or she gave to the ESO), the party will have to adduce evidence before the OLRB. The OLRB makes its determination based on the evidence and argument that the parties present to the OLRB. The OLRB on a review of an order, may amend, rescind or affirm the order or issue a new order; on a review of a refusal to issue an order, the Board may issue an order or affirm the refusal.

The Board may dismiss an application for review if the applicant does not make out a case for the orders or remedy requested, even if all of the facts stated in the application are assumed to be true. This is a summary dismissal based on the application material filed.

The OLRB generally processes ESA reviews in the order that they are received and ESA cases are not given priority. The Ministry’s Director of Employment Standards is a party to the appeal and the Director’s representative participates in some but not all hearings. The Director’s representative does not directly support either workplace party but advocates for an application of the ESA that is consistent with the Director’s interpretation of the relevant section(s).

Parties to the review may retain a legal advisor. In practice, we are advised that most parties are self-represented.

The OLRB does hear some cases in regional centres in Ontario but there are few, if any, vice-chairs resident in these communities. The cost of travel including the time consumed in travel by vice-chairs from Toronto makes these hearings outside Toronto expensive and impractical for the volume of cases where the vice-chairs always have to travel. For employees and employers living outside Toronto and far from locations where the OLRB holds ESA review hearings, attending such hearings is a very expensive and time-consuming process.

The current regime is essentially a two-party process with a complainant employee and a respondent employer being the parties to the dispute with responsibility for the litigation at the review stage of the OLRB. With some exceptions, the parties are therefore in a position to resolve their own litigation.

Currently the ESA review process is a de novo process meaning that the parties can call evidence and what occurred at the ESO stage does not strictly matter. This distinguishes an ESA review from a pure appeal where, save in very unusual circumstances, an appellate tribunal does not hear evidence but decides an appeal on the basis of the written record which often includes a record of the evidence heard by the court or tribunal whose order is being appealed.

The ESOs, in fulfilling their roles to investigate alleged ESA violations, do not hear evidence in the traditional sense of hearing testimony under oath and receiving into evidence document filed by the parties in accordance with rules of evidence. The ESOs will have done their best to investigate a complaint by speaking with the complainant, perhaps with other employees and with the employer and anyone else who may have relevant information, and will also review the relevant records. If, based on his/her investigation, the ESO concludes there has been a violation, the employer is typically given an opportunity to pay the amount owing without an order being issued. If payment is not made, the necessary order issues. The fact that an enforceable order has been made (or not made) may give rise to an application for review by the party against whom the order has been made or by the person denied relief that he/she believes is warranted. At that review, either party may put evidence before the OLRB either by oral testimony or relevant documentary evidence.

The record currently before the OLRB consists of the ESO’s order, the reasons for the order that may refer to relevant employer records.

Options:

  1. Require ESOs to include all of the documents that they relied upon when reaching their decision (e.g., payroll records, disciplinary notices, medical certificates) when they issue the reasons for their decision. This will ensure that the OLRB has a record before it of the documents relied on by the ESO in making an order or in denying a complaint. Such a mandatory process should lead to a more consistent quality of decision-making by ESOs and would help explain the decision to the affected parties and to the OLRB as well as providing a more complete record to the OLRB sitting in review. For an employee who seeks a review of a decision, this procedure would also alleviate – at least to some extent – any obligation to produce some, or all, of the documentary evidence relevant to a review.

  2. Amend the ESA to provide that on a review, the burden of proof is on the applicant party to prove on a balance of probabilities that the order made by the ESO is wrong and should be overturned, modified or amended.

  3. Increase regional access to the review process. To facilitate this, the Ministry of Labour might appoint part-time vice chairs in various cities around the province (perhaps in the main urban centres in each of the 8 judicial districts in Ontario or in the 16 centres where the Office of the Worker Adviser (OWA) has offices) who would have training and expertise in the ESA only (not in labour relations) and who could conduct reviews on a local basis. This would make attending and participating in the review process more accessible and less expensive for both employees and employers.

    Special procedures, like pre-review meetings with the parties could be scheduled in advance to ensure narrowing of the issues, agreement on facts and perhaps settle cases, much like pre-trials in civil cases. The appointment of local ESA Vice-Chairs of the OLRB is similar to a proposal Professor Arthurs made to the federal government to deal with the special needs of distant communities (see: Fairness at Work, p. 207).

  4. Request OLRB to create explanatory materials for unrepresented parties. There will always likely be a significant number of unrepresented parties at the OLRB. One straightforward way to assist is by ensuring that memoranda in plain language are prepared to assist self-represented individuals, both employees and employers, with respect to both the procedure and the applicable principles of law, including the burden of proof and basic rules of evidence. These sorts of memoranda have proven to be of great assistance to self-represented individuals in other legal proceedings including in criminal prosecutions where an understanding of the burden of proof and the rights of the accused in a criminal prosecution are of fundamental importance to the accused.

  5. Increase support for unrepresented complainants. The criticism of the settlement process at the OLRB set out above in section 5.5.5.2 would be addressed at least in part if currently unrepresented complainants were represented in the review process at the OLRB. We set out below two possibilities that have been raised with us.

    Increase resources and expanded mandate for the Office of the Worker Adviser

    The OWA is an independent agency of the Ministry of Labour. Its mandates are set out in the WSIA and the OHSA. Its costs are paid by the WSIB.

    The OWA currently provides free and confidential services to non-unionized workers (advice, education, and representation) in workplace safety insurance matters (formerly called workers’ compensation) and on occupational health and safety reprisal issues. The OWA delivers all of its services in English and French. In addition to representing workers at the WSIB, and the Workplace Safety and Insurance Appeals Tribunal (WSIAT), it also represents workers in proceedings before the OLRB in health and safety reprisal cases. It provides self-help information for workers to handle their own claims where appropriate. The OWA develops community partnerships with other groups that assist injured workers or who promote health and safety in the workplace. The OWA also provides educational services in local communities on topics related to its mandates. The OWA has offices in Toronto, Scarborough, Ottawa, Downsview, Hamilton, Mississauga, St. Catharines, London, Sarnia, Waterloo, Windsor, Sault Ste. Marie, Sudbury, Thunder Bay, Timmins and Elliot Lake.

    The OWA could be given an enhanced jurisdiction and a new funding model developed to help employees with claims under the ESA and to represent such employees on reviews. An expanded mandate would be consistent with their current mandate to assist workers with workplace issues. If the mandate of the OWA were expanded, the result would be legal or paralegal support for employees and some employees would be able to have representation at the review proceedings before the OLRB where self-represented individuals find themselves in unfamiliar territory.

    Pro Bono Assistance

    To supplement the Office of Worker Adviser, lists of lawyers willing to provide pro bono legal assistance on review cases could be established. There are many lawyers in Ontario who deal with, and many specialize in, employment matters, who may well be prepared to act in cases where the OWA cannot or should not. Many younger lawyers, and paralegals, especially in large firms, do not always get sufficient opportunities to advocate in legal proceedings and it may be that there are a significant numbers of professionals who would make themselves available for one or more days per year and who could take on the handling of several cases to be heard or dealt with on the same day.

5.5.7 Collections

Background

Over the past 6 fiscal years, the Ministry has assessed an annual average of $21.5 million of unpaid wages and other monies owing under the Act[288]. Through voluntary payment and collection activity, an annual average of $13.6 million was recovered, representing an average recovery rate of 63%.

On average, 300 to 400 unpaid Orders (worth about $1 million in total) are assigned by the Ministry of Labour to its designated collector, the MOF, which recovers about 10%.

Submissions

Employee advocates and unions observe that, without an effective collections system, employees who have gone through the entire Ministry process may end up with a hollow victory if the employer refuses to comply with the order to pay. They recommended faster and more effective collection.

Some possible suggested improvements are:

  • the Ministry should be authorized to impose a wage lien on an employer’s property when an employment standards claim is filed for unpaid wages;
  • the Ministry should be authorized to request the posting of performance bonds in cases where there is a reasonable likelihood that wages will go unpaid in the future based on an employer’s history of previous wage claim violations or for employers in sectors demonstrated to be at high risk of violation;
  • the Ministry should re-establish a wage protection plan, funded by employers;
  • claimants should be permitted to file and enforce orders as an order of the court;
  • the Ministry should have the authority to revoke the operating licences, liquor licences, permits and driver’s licences of those who do comply with orders to pay.

We have also been made aware of some hurdles that impair ability of the MOF to collect ESA debts. We received advice to consider making recommendations to mirror some collections-related provisions in the Retail Sales Tax Act such as:

  • remove the requirement to file a certified copy of an order in court in order for creditors’ remedies to be made available, and instead make an order valid and binding upon its issuance;
  • allow for the issuance of a warrant;
  • allow liens to be placed on real and personal property;
  • allow the Ministry to consider someone who receives assets from a debtor to be held liable for the debtor’s ESA debt. This provision would allow the recovery of assets that have been transferred to a family member/spouse in an attempt to avoid paying an order.

Options:

  1. Maintain the status quo.
  2. Amend the ESA to allow collection processes to be streamlined and to provide additional collection powers in order to increase the speed and rate of recovery of unpaid orders. This could include incorporating some of the collections-related provisions in the Retail Sales Tax Act – which is another statute under which the MOF collects debts – into the ESA, such as:
    1. removing the administrative requirement to file a copy of the Order in court in order for creditors’ remedies to be made available;
    2. creating authority for warrants to be issued and/or liens to be placed on real and personal property;
    3. providing the authority to consider someone liable for a debtor’s debt if he/she is the recipient of the debtor’s assets, in order to prevent debtors from avoiding their ESA debt by transferring assets to a family member.
  3. Amend the ESA to allow the Ministry to impose a wage lien on an employer’s property upon the filing of an employment standards claim for unpaid wages.
  4. Require employers who have a history of contraventions or operate in sectors with a high non-compliance rate to post bonds to cover future unpaid wages.
  5. Establish a provincial wage protection plan.
  6. Provide the Ministry with authority to revoke the operating licences, liquor licences, permits and driver’s licences of those who do not comply with orders to pay.

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