Bill 146 Proposes Crack Down on Temporary Agencies and Limits Freedom of Choice for Construction Workers

By: Ryan Conlin & Jeremy Schwartz

The Ontario Government has proposed legislation which would dramatically alter the legal landscape with respect to the obligations of employers when they use temporary agency workers.  Bill 146 also broadens the definition of “worker” under the Occupational Health and Safety Act, broadens the notification requirements for employers who hire foreign workers and makes it more difficult for unionized construction workers exercise their freedom of choice to decide whether they still wish to be represented by a trade union.

Temporary Agencies-Employment Standards Reforms

The changes proposed in Bill 146 appear to be focused on making it less attractive for companies to use temporary agencies.  Temporary agencies provide their workers to client companies that need staff on a non-permanent basis.  According to the Ontario Ministry of Labour, there are approximately 1,000 temporary agencies operating in Ontario.  Contrary to popular belief, not all temporary workers are employed in low skill and low paying positions.  Temporary agencies supply workers with a broad range of skill sets in a wide range of industries, including manufacturing, construction, service, and information technology.

One of the most ominous changes is the proposal to amend the Employment Standards Act to make clients of temporary agencies jointly and severally liable for unpaid “wages” (which does not include termination and severance pay) to temporary workers.  The Government also proposes removing the $10,000 cap on awards for unpaid wages from Employment Standards Officers and extending the limitations period on complaints from six months to two years.  This means that a client could pay a temporary agency for the services of the workers it provided and be required to pay again if the temporary agency fails to pay workers.

There ought to be no dispute that the law should operate in a manner that takes appropriate measures to ensure employees receive the wages they have earned.  However, the approach taken in Bill 146 opens the door to a miscarriage of justice against clients who have done nothing wrong.

Take the example of a small company who has a business that needs to hire temporary workers to accommodate a seasonal increase in customer demand.  The small employer hires a group of temporary workers from a well-established agency with which it has dealt for years and pays the agency for the workers’ services.  The temporary agency unfortunately falls victim to an unrelated fraud and so it does not pay the workers.  Under Bill 146, the small employer would have to pay a second time for the services of the workers.  Such a payment could be crippling for a small business.

One potential alternative is for the Government to consider employing a similar system to the one used by the WSIB.  The WSIB issues “clearance certificates” to sub-contractors so they can prove to employers who hire them that they have paid WSIB premiums.  Employers are liable under the Workplace Safety and Insurance Act for the unpaid premiums of sub-contractors they hire who don’t have valid clearance certificates.

In our view, some consideration should be given to a process whereby temporary agencies could satisfy the Ministry of Labour that they have sufficient assets to pay their employees and the Ministry could issue “clearance certificates” to such agencies that relieve clients of liability.  Then, only where a client failed to obtain a valid clearance certificate from an agency would the new ESA joint and several liability provisions apply.  Such a compromise would protect workers while at the same time ensuring that law abiding clients are not punished unjustly for the actions of a third party over which they have no control.

Temporary Employees- WSIB Reforms

Under the current law, temporary agencies incur the WSIB premium and accident costs for employees that they hire.  Bill 146 proposes that the premium and accident costs of injuries to temporary workers would be automatically transferred to the employer that retained the workers from the agency.

The WSIB is a mandatory employer-funded “no fault” insurance scheme.  A worker is entitled to benefits when he or she suffers an accident in and of the course of employment.  In most cases, an employer is required to bear the WSIB costs of the injury regardless of whether it was at fault for the accident.  The “no fault” principle has been a cornerstone of the workers’ compensation system since its inception.

The issue of whether an employer is “at fault” and should be punished for a workplace accident is adjudicated under the Occupational Health and Safety Act.  The OHSA imposes joint and several liability on temporary agencies and client employers for workplace safety violations.  This means that the Ministry can charge both the agency and the client employer if a workplace accident or safety violation occurs.  There have been many cases where client employers have been charged for accidents suffered by temporary workers.

One exception to this principle from the Schedule 1 employer perspective relates to situations where the negligence of another Schedule 1 employer contributed to the accident.  In such circumstances, the employer can apply to the WSIB to transfer some or all of the accident costs to the employer who caused the accident (the worker’s benefits are not impacted by cost transfer decisions).

Simply stated, the Government is proposing to reverse the current situation and make the employer who retained the workers from the agency responsible for the accident.  Presumably, the employer could apply for a transfer of costs to the agency in appropriate cases.  We appreciate that there are certain merits to the approach proposed by the Government.  It seems likely that the employer who controls the worksite is more likely to be “responsible” for the worker’s accident and thus some would say that it should bear the cost consequences.  However, this ignores the reality that entitlement to WSIB benefits is not based on “fault”.

For example, consider the example of a worker who has been working at a number of different employers through an agency and suffers a gradual onset injury to his back at a particular employer.  Under the Bill 146 reforms, the employer who retained that particular employee from the agency on that given day is responsible for the accident costs.  There is virtually no chance that the employer could seek a cost transfer, and SIEF cost relief (based on a pre-existing condition) has become increasing difficult to obtain.  There is no good reason that the true employer of the worker (the agency) should not the bear the costs of the claim.

The reality that many claims are not the “fault” of any particular employer is the inherent problem with the approach being taken by the Government.   It is our view that temporary agencies should continue to be treated like everyone else in the system and incur the costs of a claim unless it can be shown that the claim was caused by another employer.  It is our view that the current cost transfer provisions provides an adequate remedy for temporary agencies when the accident is truly a situation involving the negligence of a client employer.  The proposed amendments distort the historical cornerstone principle of the workers’ compensation system in Ontario and at the end of the day will have no impact on actual compensation to workers.

OHSA Reforms-Expanded “Worker” Definition

Under the current OHSA, the definition of “worker” limits the protection of the Act to individuals that are employed for wages.  This means that interns, coop students and other unpaid individuals are not currently protected by workplace safety legislation, although employers could be subject to criminal or civil liability for unpaid persons.

The Government has proposed expanding the definition of “worker” to cover interns and other unpaid persons which is consistent with OH&S legislation in some other jurisdictions.  This change will represent an important development for those who use unpaid individuals and will be welcomed in many circles.  It will be interesting to see if the Ministry takes the position that the new definition covers volunteers for non-profit associations (i.e. unpaid “door to door” charity canvasser s and volunteers on humanitarian construction projects).  The general approach of Courts it is to interpret the OHSA broadly and thus it seems likely that such individuals would be covered.

Foreign Worker Reforms    

Bill 146 proposes broadening foreign worker protection legislation to cover all foreign employees.  The legislation is currently confined to live-in caregivers.  This amendment dovetails with recent actions by the federal government (which has jurisdiction over immigration) to enhance protections for temporary foreign workers in Canada.  We doubt that this proposal will be controversial.

Proposed Reforms Limit Associational Rights of Construction Workers

Bill 146 is proposing to make it harder for construction workers to exercise their legal right to decide they no longer wish to be represented by a union.  As a matter of law, employees have the right to decide whether or not to be represented by a trade union, or by a different trade union than the one they currently have.

Bill 146 proposes to amend the Labour Relations Act, 1995 to shrink the window for the expression of that choice from 90 days to 60 days before the end of an applicable collective agreement.  The Government has suggested in a public comment on the Bill that this amendment would, “…allow our skilled workers to spend more time building the roads, bridges, schools and hospitals to grow our economy and ensure a prosperous Ontario for generations to come.”

It is our view that there is little merit in this argument and we believe that the main practical effect of this amendment is to reduce the window of opportunity for employees to express their wishes and engage in their constitutionally protected freedom of association.

For more information, please contact:

Ryan Conlin at rconlin@stringerllp.com or 416-862-2566.

Jeremy Schwartz at jschwartz@stringerllp.com or 416-862-7011.