Misclassification of workers under the new bill (Bill 148)

The rights of all workers in Ontario are protected under the Employment Standards Act, 2000 (ESA). However, the Act failed to address the unique concerns of precariously employed Ontario workers. In January 2018, Bill 148, Ontario’s Fair Workplaces, Better Jobs Act, 2017 became law. This bill introduced major reforms to fill in the gaps in our employment laws. The new legislation required employers to be clear about an employee’s status of their temporary work. With the passing of this bill, it is now unlawful for an employer to misclassify a contract worker as an independent contractor.

A decline in full-time permanent jobs

Over the years, the number of temporary workers employed in institutions has greatly increased. In Ontario alone, there has been a 20 per cent growth in the number of temporary agencies in the last decade. Employers in the province (both large and small) now prefer to hire temporary workers for two main reasons:

  • To access highly skilled and flexible workers from temp agencies in the province.

  • To save money by classifying workers as independent contractors instead of employees. Employers save money in taxes and also avoid costs commonly associated with full-time jobs such as vacation pay, termination pay, overtime pay and disability benefits.

Unlike a generation ago, many workers today do not enjoy employment benefits, job security or even wage growth that their parents were taking for granted for so long at a similar stage of life. Consequently, Ontario workers are facing a low quality of life.

How are contract workers classified?

To help you better understand how contract workers are classified, let’s look at a typical example.

An individual has been working as an employee. Later, some changes were made to his employment terms and he begins to work as a contractor. This new “contractor” title only brought in some little changes to his employment terms. The employer continues to treat him as an employee in every other way. One day, the employee is terminated and the employer denies him a reasonable notice or severance pay. The employer declares him an independent contractor.

The employee visits an employment lawyer to assess the matter. The case proved that the employee did not fit the “independent contractor” title as stated by the employer and is considered a “dependent contractor.”

There are several aspects that distinguish an independent contractor from an employee. To start with, independent contractors operate more like businesses by declaring their profits and losses, using their own tools to provide the services required and they have more control of their own schedule. Distinctively, independent contractors can provide their services to other parties and aren’t financially dependent on one employer.

The rights of a dependent contractor

Bill 148, Ontario’s Fair Workplaces, Better Jobs Act, 2017 provided a much clearer framework for dependent contractors in Ontario. According to this bill, employers have a responsibility to accurately classify their employees. If an employer deems an individual as an independent contractor and not an employee, they are required by law to prove their case. The law now imposes hefty fines on any employer who is found to have misclassified contract workers.

The bill has a provision for “Equal Pay for Equal Work,” which requires employers to pay their part-time workers (which includes temporary, casual and agency employed dependent contractors) wages that are equal to their full-time counterparts who perform the same work. It’s important to understand your rights as a dependent contractor and safely raise concerns regarding your wages, overtime and vacation pay. Employers cannot threaten or terminate you for raising such concerns. The law requires employers to address these concerns, in writing.

Can dependent contractors receive termination pay?

The new bill addresses concerns over termination pay for dependent contractors. Any dependent contractors whose work lasts for more than three months are entitled to termination notice of one week. Keep in mind that ESA guidelines provide the minimums but the termination pay, severance pay or notice will depend on your age, position, length of service as well as employability.

Misclassifying contract workers: The case of Scotiabank

George Fawcett was a 31-year-old who was placed at Scotiabank by a temporary employment agency. George went to the downtown bank office every morning, on a scheduled time set by his supervisors, was trained and directed on his day-to-day activities. After working for a short period, Mr. Fawcett raised concerns on why he isn’t receiving any vacation or overtime entitlements as the rest of the staff taking up similar roles at the bank. However, neither the bank nor the agency that placed him there claims George as their employee. The agency attempted to reprimand him for raising those concerns. George filed a complaint with the Federal Ministry of Labor to determine if the said bank is guilty of misclassification.

Understand your federal employee rights

To start with, Mr. Fawcett shouldn’t be harassed or threatened by the employer or agency for inquiring about his rights. The new bill clearly states that any employer who is found reprimanding an employee for inquiring about his rights would be sanctioned. Secondly, the relationship that George has had with the bank is economically dependent. He would be entitled to reinstatement and damages. Unfortunately, many Ontario workers have been in a similar position as Mr. Fawcett but fail to know their rights as employees or dependent contractors. Some live in fear that they could raise their concerns and be dismissed.

If you or a loved one has been unjustly dismissed without cause, you need a reputable employment lawyer by your side to develop a strong case. Federally legislated employees can only be terminated for just cause or with redundancy in position. This new law entitles you to superior job protection, similar to what unionized workers have enjoyed for decades. If you get work primarily through temporary agencies, it’s important to consult a lawyer who will help you review your status and ensure that your employer hasn’t wrongly classified you as an independent contractor.  Employment lawyers understand this area of law and can provide all the legal assistance you need. 

Stacey Reginald Ball, Barrister & Solicitor has spent his entire career in the practice of employment and labour law, as well as civil litigation. Considered to be one of Canada’s leading experts in the field of employment & labour law, Stacey is also author of the definitive and authoritive text – Canadian Employment Law. As a lawyer of the firm of Ball Professional Corporation he has acted as counsel in numerous leading Canadian employment law decisions at all levels of our judicial system, including the Supreme Court of Canada, where he has had Federal, Ontario and Manitoba Court of Appeals reversed. Contact him by phone at 416-921-7997 x225 or email srball@82scollard.com. Read more at https://www.wrongfuldismissal.ca or make an appointment to see him at 82 Scollard St., Toronto, ON, M5R 1G2.