On May 23, 2017, the Ontario Government released The Changing Workplaces Review: An Agenda for Workplace Rights Final Report. The report reviewed numerous aspects of our workforce and the legislation that applies to it. A portion of the report included a statistic that found a significant increase in the number of individuals that are self-employed without paid help. The report then provided the following assessment of that statistic:
“[S]ome of the growth in self-employment is the result of deliberate misclassification by businesses that do not wish to incur liability for employees and wish to shed liability for mandatory deductions and contributions to public pensions, employment insurance and workers compensation schemes, together with shedding responsibility for employment standards such as maternity and parental leaves.”
Unfortunately, the report did not include further data that supported its view yet recommendations were made to remedy the perceived problem. It suggested that the definition of “employee” within the Employment Standards Act (ESA) include “dependent contractor” to provide workers in a position of economic dependence with protection under the ESA. It also requested that the entity (ie. company or client) receiving the services of the individual in a position of dependence bear the burden of proving an individual is not an employee for the purposes of the ESA.
On June 1, 2017, in response to the report, Bill 148, the Fair Workplaces, Better Jobs Act, 2017 was introduced and the topic of self-employed individuals was addressed. Bill 148 as proposed will not expand the Act’s definition of “employee” to include dependent contractors but it does attempt to prohibit the misclassification of employees. Specifically, in the event of a dispute about whether a worker is an independent contractor or an employee, the burden would be on the entity receiving the services to prove independent contractor status. In fact, an employer that misclassifies employees may be subject to prosecution, fines and disclosure for convictions by the Ministry of Labour through its Employment Standards Program.
If the proposed amendment to the definition of “employee” becomes law, employers will have to be even more comprehensive in their due diligence prior to engaging with an independent contractor. As has always been the case, employers will also have to keep the work relationship with independent contractors adequately separate and distinct from relationships with employees.
Bill 148 passed First Reading on June 1, 2017 and, in an expedited process, was referred to the Special Committee on Finance and Economic Affairs the same day. The Special Committee has since posted a Notice of Public Hearings on Bill 148 to be held:
- the week of July 10, 2017 in Thunder Bay, North Bay, Ottawa, Kingston, and Windsor-Essex. Those planning to make an oral presentation in any of these locations must provide their name and contact information to Committee Clerk by 10:00am on July 4, 2017.
- the week of July 17, 2017 in London, Kitchener-Waterloo, Niagara, Hamilton, and Toronto. Those planning to make an oral presentation in any of these locations must provide their name and contact information to Committee Clerk by 10:00am on July 10, 2017.
Alternatively, written submissions may be sent to the Special Committee by 5:30 pm on July 21, 2017.
This gives employers and other stakeholders a final chance to have their voices heard on the Bill 148 amendments.
If you have questions or concerns about the proposed change to the definition of “employee” in the ESA or any of the Bill 148 amendments to Ontario labour and employment laws, do not hesitate to contact the Norton Rose Fulbright Canada Labour and Employment Team.
Written with Paul Macchione.