Category: Employment Law

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Workplace Health & Safety

Defending Charges Under Ontario’s Occupational Health and Safety Act

Employers are responsible for ensuring their continued compliance with the guidelines set out in Ontario’s Occupational Health and Safety Act (OHSA) and regulations. Beyond encouraging a safe and healthy environment, maintaining high workplace health and safety standards can also help promote employee productivity and seamless operations.

However, despite an employer’s best efforts to implement adequate policies and training, employee misconduct may still contribute to a violation of such standards. So, as the party responsible for upholding workplace standards, what defences are available to employers against charges under the OHSA?

An Overview of Ontario’s Occupational Health and Safety Act

In Ontario, the Occupational Health and Safety Act (OHSA) and its corresponding regulations are the primary legislation setting standards and regulations on workplace health and safety throughout the province.

The OHSA sets out various workplace health and safety policies that employers are expected to adhere to and implement to manage and mitigate various health and safety hazards and risks in the workplace.

Application of the Occupational Health and Safety Act

The Occupational Health and Safety Act applies to most provincially-regulated workplaces, employers, and workers throughout Ontario, with limited exceptions.

The OHSA defines an employer as a person who “employs or contracts for the services of one or more workers. The OHSA defines a worker as someone who “performs work or supplies services for monetary compensation.” A workplace is any place on or near where the worker performs their work.

Enforcement, Violations and Penalties

The Occupational Health and Safety Act outlines the legal duties and standards that employers, supervisors, owners, suppliers and workers must maintain. However, employers hold the highest responsibility in ensuring that health and safety guidelines are implemented and risks are mitigated in the workplace. Employers are also required to ensure that workers adhere to certain prescribed measures and that workers are provided with the appropriate equipment, protective devices, and materials to maintain compliance.

The Ontario Ministry of Labour, Training and Skills Development is responsible for promoting, regulating and enforcing the OHSA, often through workplace inspections.

Workplace Inspections

An inspector from the Ministry of Labour, Training and Skills Development may conduct a proactive or reactive workplace investigation to ensure a workplace complies with the Occupational Health and Safety Act.

Under the OHSA, an inspector has the authority to:

  • complete investigations at provincially regulated workplaces;
  • issue administrative orders for violations of the OHSA and/or its regulations; and
  • initiate proceedings for charges made under the OHSA and/or its regulations.

It is important to note that interfering with an inspection (for example, by providing the inspector with false information or failing to cooperate with the inspector) constitutes an offence under the OHSA.

After the investigation, an inspector may provide recommendations to the workplace. Alternatively, the responsible party may be prosecuted if the inspector determines that the workplace has committed an offence under the OSHA.

Notice of Compliance

After an inspection, the employer may receive an order to correct a contravention of the Occupational Health and Safety Act. The employer must provide the Minister of Labour, Training and Skills Development with written notice of compliance within three days of complying with the order. As per section 59 of the OHSA, the notice of compliance and the original order must be posted in the workplace for 14 days after notifying the Minister of Labour, Training and Skills Development.

However, if a party disagrees with the inspector’s order, it can be appealed under section 61(1) of the OHSA within 30 days of issuance. Decisions are appealed to the Ontario Labour Relations Board, which will render a final decision.

Consequences of Non-Compliance With OHSA

Consequences for violations of the Occupational Health and Safety Act can be significant. Employers, supervisors and workers can be prosecuted for a breach of the OHSA or non-compliance with an order of the inspector, Minister, or director. If a party is found guilty and convicted of an offence, they may be subject to a fine and/or jail time.

Fines and Imprisonment

The maximum fine for a corporation that violated the OHSA is $1,500,000. A corporate director or officer who fails to enforce compliance with the OHSA can be found guilty of an offence and face up to 12 months of imprisonment and/or a fine of up to $1,500,000. The maximum fine for non-compliance by an individual who is not a corporate director or officer is $500,000.

In 2022, the limitation period for initiating a prosecution under the OHSA was extended from one to two years.

Aggravating Factors in Sentencing

In 2022, the Working for Workers Act, 2022 was enacted and introduced several aggravating factors to be considered when determining an appropriate penalty for an OHSA conviction. These aggravating factors are in line with previous leading case law and are circumstances that call for an increased penalty for OHSA violations.

The aggravating factors now included under section 66(2.2) of the Occupational Health and Safety Act are:

  • The offence resulted in the death, serious injury or illness of one or more workers;
  • The defendant committed the offence recklessly;
  • The defendant disregarded an order of an inspector;
  • The defendant was previously convicted of an offence under this or another Act;
  • The defendant has a record of prior non-compliance with the OHSA or its regulations;
  • The defendant lacks remorse;
  • There is an element of moral blameworthiness to the defendant’s conduct;
  • In committing the offence, the defendant was motivated by a desire to increase revenue or decrease costs;
  • After the commission of the offence, the defendant,
    • Attempted to conceal the commission of the offence from the Ministry or other public authorities, or
    • Failed to cooperate with the Ministry or other public authorities; and
  • Any other circumstance that the OHSA prescribes as an aggravating factor.

Defending Against Occupational Health and Safety Act Charges

Employers must keep up-to-date workplace policies and procedures that comply with the Occupational Health and Safety Act. Further, all workers and other individuals present at the workplace must be adequately trained to maintain a safe workplace. While it is impossible to completely remove the risk of potential hazards, taking time to ensure robust preventative measures are in place can help defend against potential charges if an accident occurs. Working with an experienced employment lawyer is vital to ensure the employer is protected at any stage of an OHSA matter.

Two common defences to charges under the OHSA include “officially induced error” and “due diligence.”

Due Diligence Defence

The due diligence defence is based on court interpretations of section 66(3) of the OHSA. To be acquitted under this defence, the defendant must establish that they took all reasonable and required precautions to avoid the incident, despite the incident occurring.

The case of R. v. City of Sault Ste. Marie (City) states that the defence of due diligence is available in situations where:

  1. The accused reasonably believed in a mistaken set of facts which, if true, would render the act or omission innocent; or
  2. The accused took all reasonable steps to avoid the particular event.

The first portion of the defence requires the defendant to have genuinely believed that they were compliant with the provisions of the OHSA. The second tier of the defence establishes that, despite the violation, the defendant took all reasonable steps and precautions to remain compliant with the OHSA. However, while courts acknowledge defendants may not be perfect in their due diligence efforts, asserting the defence of due diligence comes with a high threshold for the defendant to meet.

No exceptions for the “expense of compliance”

Historically, the defence of due diligence could be allowed when the employer established that compliance with a particular provision in the Occupational Health and Safety Act was cost-prohibitive. However, in the case of R. v. Canada Brick Ltd., the Ontario Superior Court of Justice determined arguments based on “the expense associated with compliance cannot generally be sustained.”

The Defence of “Officially Induced Error”

“Officially induced error” refers to situations where the defendant’s actions were based on advice received from an official. The case of Lévis (City) v. Tétreault; Lévis (City) v. 2629-4470 Québec Inc. set out the elements of the defence of officially induced error by stating that a successful defendant must show that:

  1. An error of law or law and fact was made;
  2. The defendant considered the legal consequences of their actions;
  3. The advice relied upon came from an appropriate official;
  4. The advice was reasonable;
  5. The advice was erroneous; and
  6. The defendant relied on the advice in committing the act.

In Ontario v. Sunrise Propane Energy Group Inc., the Ontario Court of Appeal highlighted reasonableness as a vital component of the defence of officially induced error. The Court affirmed that this defence might be available to an employer who can prove, on a balance of probabilities, that it reasonably relied on the advice of a public official who administers and enforces a particular statute (the OHSA). However, the threshold for this defence is also high and can be challenging to establish.

Contact the Lawyers at Willis Business Law in Windsor for Trusted Defences Against Occupational Health and Safety Act Charges

The skilled employment lawyers at Willis Business Law work with clients to resolve various employment law disputes. We work closely with employers to provide comprehensive legal advice and develop robust legal solutions on matters involving workplace policies and workplace health and safety. When an employer has been charged for an infraction under Ontario’s Occupational Health and Safety Act, our employment law team, led by J.P. Karam, ensures that employers have adequate information and a sound understanding of their options when establishing their defence.

Located in the heart of Windsor’s financial district, Willis Business Law assists clients throughout Windsor-Essex and the surrounding areas. If you have been charged with a violation under the Occupational Health and Safety Act, or have questions regarding workplace policies, contact us online or call us at 519-945-5470 to schedule a confidential consultation.

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Employment Law

Business & IT Consultants’ Exclusion From the Employment Standards Act: A Primer

When Bill 88, or the Working for Workers Act, came into effect in April 2022, it created amendments and exceptions to the Employment Standards Act (the “ESA”). While many new rights were created under these amendments, business consultants and information technology (IT) consultants in Ontario became exempt from the ESA. Employers hiring business or IT consultants must be aware of the new legislative change and be mindful of its potential impact.

The Consultant Exception Under Ontario’s Employment Standards Act

Under the recently-amended Employment Standards Act, workers meeting the definition of a business or IT consultant are not entitled to the ESA’s minimum protections and standards, including termination entitlements, work hours, leaves of absence, and overtime.

This exception applies to workers who would, but for their status as a business or IT consultant, be covered by the ESA. It does not, however, impact whether a person can be considered an “employee” under the ESA.

“Business Consultant” and “IT Consultant” Under the ESA

Section 1 of the Employment Standards Act defines a “business consultant” as a person who provides services or advice regarding the performance of a business or organization’s “operations, profitability, management, structure, processes, finances, accounting, procurements, human resources, environmental impacts, marketing, risk management, compliance or strategy of the business or organization.”

The same section defines an “IT consultant” as an individual who provides services or advice to an organization or business regarding their technology systems, which may include “advice about or services in respect of planning, designing, analyzing, documenting, configuring, developing, testing and installing the business’ or organization’s information technology systems.”

Exclusion From the Consultant Exception

A business or IT consultant may fall under the Employment Standards Act’s consultant exception only if all four of the below conditions are met:

  1. The individual meets the ESA’s definition of a business consultant or an information technology consultant.
  2. The business or IT consultant provides advice or services either through a sole proprietorship under a business name that is registered under the Business Names Act or through a corporation of which the consultant is a director or shareholder party to a unanimous shareholder agreement.
  3. The business or IT consultant and the employer have a written agreement that sets out specific terms, including how much and when the employer will pay the consultant. The written agreement must state the consultant’s hourly pay rate, which cannot include bonuses, benefits, travel allowances, expenses or commissions, and must be $60 or greater per hour.
  4. The business or IT consultant is paid the appropriate amount at the appropriate time per the terms set out in the agreement.

If the above four conditions are met, the exception will be applied, and the individual will not be covered under the Employment Standards Act. However, if one or more of the four conditions are not met at any point, the exception will not apply, and the individual may be entitled to certain rights under the ESA.

Employers Should Proactively Review A Worker’s Status

In light of the changes to the Employment Standards Act over the past year, employers should proactively review any existing agreements they have in place with consultants to determine whether such relationships may be affected by the exception.

It is essential for employers to determine whether a consultant is an employee or an independent contractor and whether the ESA applies to the individual in question. If a consultant is deemed an employee entitled to the benefits of the ESA, the employer should subsequently assess whether the consultant is excluded from the ESA’s protections based on the four criteria set out above.

The amendments do not specifically create additional requirements or substantial cost impacts for businesses or employers. Instead, the exception provides employers and workers with certainty regarding their employment status and can enhance the options available to impacted consultants within Ontario’s labour market.

Willis Business Law Provides Windsor-Essex County Employers With Robust Advice on Employment Standards & Consultant Status

The trusted employment lawyers at Willis Business Law offer employers across Ontario personalized, comprehensive legal solutions regarding employee, contractor, and consultant status. We remain current on legislative amendments and provide proactive advice to ensure employers remain compliant and mitigate the risk of wrongful dismissal claims relating to worker misclassification. Our employment team also represents employers in all matters relating to employment agreements and workplace policies concerning worker status.

Conveniently located in Windsor’s financial district, Willis Business Law assists clients in Windsor-Essex and the surrounding areas. To schedule a consultation with a member of our team, please reach out to us online or call 519-945-5470.

Categories
Employment Law

FAQs About Employee Electronic Monitoring Policies

As we move into the second month of 2023, it is prudent for Ontario employers with 25 or more employees to remember that they must have a policy to address how the employer electronically monitors their employees. This new requirement became law through amendments to the Ontario Employment Standards Act, 2000, introduced through the Working for Workers Act, 2022 (or Bill 88). Employers who reached 25 or more employees by January 1, 2023, must have this policy in place by March 1, 2023.

Which employers are required to have an electronic monitoring policy?

As of October 11, 2022, all Ontario employers with more than 25 employees as of January 1, 2022, were required to have a written electronic monitoring policy that complies with the requirements of the Employment Standards Act.

For employers that did not meet this threshold as of January 1, 2022, there is no requirement to have an electronic monitoring policy. However, this requirement will apply if an employer grows to 25 or more employees (as of January 1 of any future year). An employer who reaches that threshold must have an electronic monitoring policy in place by March 1 of that same year.

How is “electronic monitoring” defined?

The Employment Standards Act does not define “electronic monitoring.” However, the Ontario government has provided guidance that electronic monitoring would be considered to include “all forms of employee and assignment employee monitoring that is done electronically.” Examples include tracking websites visited by employees during working hours or tracking a delivery vehicle using GPS.

Who does an employer’s electronic monitoring policy apply to?

An electronic monitoring policy pursuant to the Employment Standards Act must apply to all “employees” as defined by that Act, which includes:

  • a person, including an officer of a corporation, who performs work for an employer for wages;
  • a person who supplies services to an employer for wages;
  • a person who receives training from a person who is an employer, if the skill in which the person is being trained is a skill used by the employer’s employees; or
  • a person who is a homeworker; and
  • a person who was (previously) an employee.

The electronic monitoring policy would not apply to independent contractors. Employers are not required by the Employment Standards Act to have an electronic monitoring policy for independent contractors.

What does an employer’s electronic monitoring need to include?

An employer’s written electronic monitoring policy must include the following:

  1. It must disclose whether the employer electronically monitors employers.
  2. It must include the date the policy was prepared and when any changes were made.
  3. If the employer does engage in electronic monitoring, the policy must include:
    • A description of how and in what circumstances the employer may engage in the monitoring. This would include disclosing whether the employer is monitoring devices issued by the employer or any other kind of electronic monitoring that occurs within the workplace. However, there is currently no guidance on how specific an employer must be in its disclosure of potential uses of information gathered pursuant to its electronic monitoring policy.
    • The purposes for which information obtained through electronic monitoring may be used by the employer.

An employer is permitted to have multiple electronic monitoring policies that apply to different kinds of employees (for instance, one policy that applies to management and one policy that applies to staff).

Is the employer obligated to share the electronic monitoring policy with its employees?

Yes. The employer must share the electronic monitoring policy with its employees at certain times, set out below.

After the employer meets the 25-employee threshold

In addition to putting in place a written electronic monitoring policy, employers must provide a copy of the policy to its employees within 30 days from the date the employer is required to have it. According to the legislative amendments, this date will be March 1 of each year going forward for any employer that had 25 employees as of January 1 of that year.

After any changes to the policy are made

Any time the employer introduces any changes to the electronic monitoring policy, the new policy must be provided to employees within 30 days of those changes being made.

When a new employee is hired

When a new employee is hired, the employer must provide them with a copy of the policy within 30 days of the earlier of:

  1. The day the employer is required to have the policy in place; or
  2. The day the individual becomes an employee of the employer.

After an assignment employee starts their assignment

If an employer uses assignment employees, if that employer is required to have an electronic monitoring policy, it must be provided to the assignment employee by the later of:

  1. Within 24 hours from the start of the assignment; or
  2. Within 30 calendar days from the date the employer must have the policy in place.

How can employers use the information gathered under its electronic monitoring policy?

Employers are free to use information collected through electronic monitoring for any purpose whatsoever. However, the employer must disclose what those purposes are or might be within the electronic monitoring policy. This is because the Employment Standards Act does not give employees any privacy rights. For instance, an employer could use information obtained through electronic monitoring, pursuant to its electronic monitoring policy, to discipline an employee.

What rights do employees have in relation to electronic monitoring policies?

Employees can access a limited complaints process regarding their employer’s electronic monitoring policies. The only complaint that can be investigated by the Ministry of Labour or an employment standards officer is an alleged failure of the employer to provide the employee with a copy of the electronic monitoring policy within the mandated timeframe. An employment standards officer does not have the authority to investigate anything related to an employer’s electronic monitoring policy, including the employer’s alleged contraventions of that policy.

However, the Ontario government’s guidance on electronic monitoring policies advises employers to seek legal advice about whether such a policy may create additional entitlements that could be enforced by an employee outside of the Employment Standards Act. Before the passage of Bill 88, the Information and Privacy Commissioner of Ontario argued for a more comprehensive framework to regulate electronic monitoring in workplaces by employers, such as that proposed in the provincial government’s 2021 white paper on Modernizing Privacy in Ontario: Empowering Ontarians and Enabling a Digital Ontario. Provinces such as British Columbia, Alberta, and Quebec already have privacy laws that extend additional privacy protections to employees and include investigation and complaints processes for employer non-compliance. However, such protections for employee privacy were not included in Bill 88.

What are record-keeping requirements concerning workplace electronic monitoring policies?

Employers that are required to have an electronic monitoring policy are also required to retain copies of all such policies for three years after that policy is no longer in effect.

Willis Business Law Advises Windsor-Essex Employers on Employee Monitoring Policies

The knowledgeable employment lawyers at Willis Business Law provide expert business law advice and guidance to clients across Windsor-Essex County and the surrounding areas. The firm develops innovative employment law solutions for public and private sector employers and offers comprehensive guidance on employers’ rights and responsibilities with respect to employee monitoring policies. To schedule a consultation, call 519-945-5470 or contact the firm online.

Categories
Employment Law Labour Law Workplace Policies Wrongful Dismissal

Does Mandatory Unpaid Leave for Unvaccinated Workers Constitute Constructive Dismissal?

After COVID-19 vaccines became widely available to the public, many employers in Canada sought to implement vaccination policies for their employees. If an employee did not comply with the policy and did not have a valid medical exemption, they could face significant consequences, including the imposition of unpaid leave. However, many of these policies, and the rights of employers, have since been challenged.

A recent decision from the Supreme Court of British Columbia dealt with an employee who commenced a wrongful dismissal action against her employer after being placed on unpaid leave due to non-compliance with the employer’s vaccination policy.

First Court Decision of Non-Unionized Employee Placed on Unpaid Leave for Failure to Comply with COVID-19 Vaccination Policy

The case of Parmar v. Tribe Management Inc. is the first time the courts have considered whether a non-unionized employee can be placed on an unpaid leave of absence for their failure to comply with an employer’s mandatory vaccination policy.

The employee worked as an accounting professional with Gateway Property Management, which company was acquired by Tribe Management Inc. in 2021. The employee signed a new employment contract with Tribe in July 2021, which required her to comply with all company policies “amended from time to time by Tribe in its discretion.” The contract further stated that if the employee was dismissed by Tribe without cause, she would be entitled to notice (or pay in lieu thereof) of 12 months’ base salary, plus one additional month of base salary for every completed year of employment, to a maximum of 24 months.

Employer Implemented COVID-19 Policy in Response to Public Health Information

In September 2021, Tribe learned that 35 out of 220 employees had not yet been vaccinated. Based on existing public health information, the employer felt this number was unacceptably high. The employer’s Vice President of Human Resources circulated a policy to all employees via email on October 5, 2021, requiring all employees, subject to medical or religious exemptions, to become “fully vaccinated” by November 24, 2021. Only the employee and one of her colleagues failed to comply.

The employee’s objection to the vaccination was based on her review of the literature and her observance of health complications in family members after receiving their vaccines. The employee clarified this reasoning to her employer and suggested alternative accommodations. However, the employer advised that there would be no exceptions to the policy.

Employee Claimed Constructive Dismissal Arising from Unpaid Leave

On November 25, 2021, the employer told the employee she would be on unpaid leave from December 1, 2021 to February 28, 2022. A few weeks into her leave, the employee requested to return to work; failing which, she would commence a claim for constructive dismissal. The employer declined and placed the employee on unpaid leave indefinitely until she complied with the policy. The employee subsequently resigned and filed her claim.

The plaintiff employee claimed she was placed on an unpaid leave of absence due to non-compliance with the policy. She alleged the employer breached its contractual obligations, therefore entitling her to consider the employment relationship as having been constructively terminated. The plaintiff further claimed that the policy was unreasonable as it did not make an exception for employees working almost entirely from home

The employer claimed that the policy was a reasonable response to the uncertainties of the COVID-19 pandemic and was authorized under the employment contract’s terms. The employer argued that the employee chose not to comply with the policy and, as a result, any consequences to the employee were foreseeable. The employer further claimed that any losses to the employee, were caused by the employee’s failure to mitigate her losses by choosing not to get vaccinated. The employer told the employee that she could have returned to her job anytime if she received the vaccination.

B.C. Supreme Court Finds Employee Not Constructively Dismissed

The Court found that the vaccination policy was reasonable and lawful. The Court also took judicial notice of the transmissibility and potential effects of COVID-19. After a consideration of relevant arbitration cases, it held that the employer’s decision to place the employee on unpaid leave was reasonable in the unprecedented times during which the policy was implemented.

Consequently, Justice MacNaughton dismissed the employee’s claim, finding there was no constructive dismissal as it was the employee’s choice not to get vaccinated.

Ontario Arbitrator Upholds Mandatory Vaccination Policy Despite Government Directive Being Lifted

Meanwhile in Ontario, Arbitrators have been asked to consider similar fact scenarios involving the employer’s implementation of mandatory vaccination policies. In Maple Leaf Foods Inc., Brantford Facility v UFCW, Local 175, an Arbitrator upheld a mandatory vaccination policy requiring all employees and contractors to be fully vaccinated by March 31, 2022, barring exemptions per any human rights grounds. The Arbitrator found the policy reasonable and enforceable and noted that other health and safety measures were insufficient to protect the workplace absent the vaccination policy. Further, the policy was consistent with the collective agreement and remained reasonable in light of recent changes to COVID guidelines adopted by the government and the employer.

In August 2022, the Arbitrator in the case of Regional Municipality of York v Canadian Union of Public Employees, Local 905 (Long Term Care Unit) upheld a mandatory vaccination policy in a long-term home care facility that required employees to have three doses of an approved COVID-19 vaccination. The employer implemented their policy after the Government of Ontario directed that all long-term care home workers must have three doses of the COVID vaccination. The policy was upheld despite the Government of Ontario revoking the directive in March 2022.

When mandatory vaccination policies began to roll out during the height of the COVID-19 pandemic, the Ontario Human Rights Commission indicated that mandates are “generally permissible under the Human Rights Code as long as protections are put in place to make sure people who are unable to be vaccinated for Code-related reasons are reasonably accommodated.” Workplace mandates must also comply with privacy laws.

Reopening Ontario

Under the Plan to Safely Reopen Ontario, mandatory vaccination policy requirements have mostly been revoked. However, when faced with policy cases, decision-makers will review any applicable employment or collective agreements, the employer’s statutory obligations, the nature of the workplace, and the health information available when the policy was implemented.

Employers must take every reasonable precaution to protect the health and safety of their employees under Ontario’s employment and labour laws. In doing so, they can maintain some of the precautions put in place to address COVID-19 but must be wary that precautionary measures taken in 2021 may not be regarded as such in 2022 and beyond. Therefore, employers should understand that these cases are fact-specific, and additional considerations may be relevant when determining the reasonableness of policies and enforcement measures in the future.

Willis Business Law Provides Advises Employers on Wrongful Dismissal Claims and Vaccination Policies

The knowledgeable employment lawyers at Willis Business Law have extensive experience guiding employers through various employment law and labour law matters, including wrongful dismissal claims and navigating workplace policies. Our lawyers remain current on the latest legal cases to help ensure that employers understand their rights concerning workplace policies to ensure they effectively mitigate risk and litigation.

Willis Business Law is located in Windsor and serves clients throughout Windsor-Essex and surrounding areas. If you have questions or concerns regarding workplace policy implementation or are defending a termination claim, contact us online or call our office at 519-945-5470 to speak with a member of our employment law team.

Categories
Employment Contracts Employment Law Wrongful Dismissal

Unenforceable Termination Clauses & Worker Misclassification: A Cautionary Tale for Employers

As an employer, it is critical to ensure that an employment agreement is properly drafted in accordance with the applicable legislation and correctly sets out the intended employment relationship. If not, there could be serious consequences for an employer in the event of a wrongful dismissal claim.

A recent decision from the Ontario Superior Court of Justice illustrates such consequences and the dangers of an employer not complying with minimum legislative standards regarding an employee’s termination. The Court allowed the employee’s claim in part and awarded damages of approximately $70,000.

Plaintiff Claims He Is Employee of the Defendant, Not Independent Contractor

In the case of Baker v. Fusion Nutrition Inc., the plaintiff formerly worked for the defendant, Fusion Nutrition Inc. The parties’ relationship was governed by a fixed term contract that stated the defendant hired the plaintiff as an independent contractor. The contract also contained a termination clause.

The plaintiff claimed that he was an employee misclassified as an independent contractor under the agreement. He also claimed that the termination clause was unenforceable as it contradicted the minimum standards of the Employment Standards Act.

Plaintiff Sues Employer for Breach of Contract and Employee Entitlements

The plaintiff served the Statement of Claim on the defendant and despite emails from the plaintiff’s counsel to the employer, a Statement of Defence was not filed, and the defendant was noted in default. The plaintiff sought default judgement and damages for breach of contract, unpaid wages, unpaid vacation, unpaid holiday pay, and punitive, aggravated, bad faith and/or moral damages.

Two key issues were before the Court. The first was deciding whether the plaintiff was an employee or an independent contractor, and the second was assessing whether the termination clause was enforceable.

Nature of Working Relationship Found to Be Employer-Employee

The Court found that although the plaintiff had been labelled as an independent contractor in the agreement, the evidence was that the plaintiff met the criteria for the definition of employee and was therefore entitled to damages. The Court’s conclusion was based on various factors, including:

  • The plaintiff worked full-time, five days a week, from the employer’s premises;
  • He performed work activities that the employer controlled;
  • He could not refuse or contract out of the employer’s work;
  • He had no opportunity for profit or loss in the performance of his work tasks;
  • His pay did not fluctuate regardless of the quantity or quality of his work; and
  • He was required to advertise himself as a representative of the employer to customers.

The Superior Court noted that an agreement purporting to describe the nature of the relationship is not determinative on the classification of whether an individual is an employee or independent contractor. Instead, this classification is a question of fact to be determined by the evidence.

Termination Clause Deemed Unenforceable

The plaintiff argued that the termination and notice provisions in the agreement were vague and ambiguous, rendering them unenforceable. He further claimed that the termination clause contracted out of the requirements of the Employment Standards Act when it provided for termination for cause without further payments, and termination with notice, with a fixed notice payment of four months.

The Court noted that a termination clause must comply with the minimum standards under the Employment Standards Act and found that the termination clause in question was unenforceable as it allowed the employer to terminate the plaintiff for cause without complying with such minimum standards. Further, the clause must be clear and unambiguous, but the Court did not need to decide on this matter given that they found the clause to be unenforceable due to its lack of compliance with the legislation.

Court Allows Claim in Part, Employee Awarded Damages

Since the plaintiff was found to be a fixed-term employee, he was entitled to reasonable notice under the Employment Standards Act. Further, as an employee, he was entitled to the earnings he would have received up to the end of the fixed-term contract in the absence of a notice period.

Overall, the Court awarded the plaintiff approximately $70,000 in damages representing the balance of the contract term, unpaid vacation and unpaid holiday pay to the date of termination. The employer was also ordered to pay partial indemnity costs to the plaintiff.

The Court dismissed the plaintiff’s claims for future vacation, future holiday pay, and punitive, aggravated, bad faith and/or moral damages.

Contact Willis Business Law for Trusted Advice on Navigating Employee Termination

The trusted employment lawyers at Willis Business Law provide employers with proactive advice and unique solutions on a variety of employment law matters, including employment contracts and employee termination. The firm’s knowledgeable litigators also skillfully advocate for employers in wrongful dismissal claims.

Located in the heart of Windsor’s financial district, our firm proudly serves clients throughout Windsor-Essex and the surrounding areas. To schedule a confidential consultation with a member of our employment law team, contact us online or call us at 519-945-5470.

Categories
Employment Law

The Importance of Worker Classification

The classification of a worker as either an employee or independent contractor is significant because it determines the worker’s entitlements and the employer’s responsibilities. The existence of a third category of worker (the dependent contactor) and the recent passing of the Working for Workers Act 2022, which creates rights and protections for digital platform workers, makes worker classification a complex area for employers to navigate.

This article looks at the various categories of workers, along with a decision of the Ontario Superior Court of Justice from earlier this year in which a worker argued that he was a dependent contractor and therefore entitled to reasonable notice.

Employee vs. Independent Contractor

While many employees in Ontario enjoy the entitlements set out in the Employment Standards Act, 2000 such as minimum wage, reasonable notice for termination without cause, sick leave, and vacation time, these do not apply to independent contractors.

Independent contractors tend to have more control over how they perform their work and can work simultaneously for multiple clients. Unlike employees, they are responsible for paying tax and pension contributions. 

In determining whether a person is an employee or independent contractor, courts look at a range of factors, including:

  • Whether the worker can control the method of completing their work;
  • Whether the worker works exclusively for the employer;
  • Whether the worker uses their own tools; and
  • Whether the worker bears the risk of loss and chance of profit. 

It’s important to note that the wording used in an employment contract is not necessarily determinative. Under section 5.1 of the Employment Standards Act, an employer must not treat a person as an independent contractor if they are in fact an employee.

Dependent Contractors Under the Common Law

The common law also recognizes the concept of a dependent contractor. While not employees, they primarily work for one employer and are entitled to reasonable notice of termination.

Again, courts look at various factors on a case-by-case basis, such as whether the worker is subject to the employer’s control, whether the worker owns their tools, whether the worker has undertaken any risks, and whether the worker’s activity is part of the employer’s business organization.

Rights for Digital Platform Workers

The new Working for Workers Act, 2022 in Ontario creates the Digital Platform Workers’ Rights Act, 2022. This new Act will provide rights to digital platform workers; i.e., workers that provide ride share, delivery or courier services through the use of a digital platform, such as an app. These “gig” workers are normally classified by companies as independent contractors.

Under the Digital Platform Workers’ Rights Act, digital platform workers have the right to be provided with certain information relating to the work to be undertaken, the right to receive minimum wage for each work assignment, and the right to tips and gratuities.

The Digital Platform Workers’ Rights Act will come into force on a day set by the Lieutenant Governor (not yet set). 

Plaintiff Sought Reasonable Notice of Termination, Arguing He Was a Dependent Contractor

In 1159273 Ontario Inc. v. The Westport Telephone Company Limited, the plaintiff corporation, which was controlled and owned by an individual by the name of Tom, provided contracting services to the defendant prior to being terminated. There was no written agreement between the parties.

Tom, on behalf of the plaintiff provided engineering and technical advice on telecommunication network design. He was also responsible for supervising the defendant’s employees. While Tom used his own laptop and vehicle, he was granted the use of the defendant’s office space, support staff, and tools. He was also a shareholder, officer, and director of the defendant.

In 2019, the plaintiff was told that its services were no longer required. The defendant was prepared to pay three months of consulting fees after terminating the arrangement. The plaintiff commenced proceedings against the defendant, arguing that it was a dependent contractor and was therefore entitled to reasonable notice of termination. 

Factors Pointed to Independent Contractor Status

The Ontario Superior Court of Justice applied various factors to determine whether the plaintiff was a dependent or independent contractor.

Exclusivity

Firstly, the Court considered whether the plaintiff worked exclusively or near exclusively for the defendant, such that he was economically dependent. The Court found that the plaintiff did not work for the defendant on a near-exclusive basis. Upon review of the plaintiff’s income tax returns for 2014 to 2019, the Court noted that only 70% of consulting fees received by the plaintiff were from the defendant.

Control & Provision of Tools

Secondly, the Court found that the plaintiff was not controlled by the defendant as he also worked for other companies. Further, the plaintiff’s ownership of shares in the defendant’s business provided it with a certain amount of control over the way the defendant operated. The plaintiff also had some control as an officer and director of the company. The fact that the plaintiff held these positions explained why the defendant provided an office and tools.

Business Risk & Integration

On the issue of business risk or expectation of profit, the Court found that there were sources of revenue that provided an expectation of profit, such as its shares in the defendant’s corporation.

Finally, the plaintiff argued that it was not differentiated from the defendant and was presented as part of the defendant’s organization to the public. The Court rejected this argument, noting that while the plaintiff’s owner appeared on organizational charts, his company was not integrated in this way.

As a result, Justice Kershman decided that the plaintiff was an independent contractor and dismissed the claim. 

This case is illustrative of the importance of employers to understand the consequences that flow from worker classification and why proactive legal advice on this issue is key to avoiding liability in the future.

Willis Business Law Provides Proactive Advice to Windsor-Essex Employers on Worker Classification

The knowledgeable employment lawyers at Willis Business Law provide forward-thinking legal solutions to employers throughout the Windsor-Essex region. The firm helps clients reduce risk and increase productivity through careful review of all worker contracts and provides robust advice on employee and contractor status. The employment law group ensures clients receive attentive, responsive service and is invested in each client’s success.

Willis Business Law is located in the heart of Windsor’s financial district, overlooking the beautiful riverfront. The firm proudly serves clients throughout the entire Windsor-Essex region and surrounding areas. To schedule a consultation, please reach out online or call 519-945-5470.

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