Ontario Bar Association raises concern on proposed exemption for certain highly skilled workers

The Ontario Bar Association has raised concern about a legislative proposal to exclude certain highly skilled workers from the application of the Employment Standards Act, 2000.

On Feb. 28, the Ontario government introduced Bill 88 or the Working for Workers Act, 2022, which includes proposed ESA changes. These proposed changes aim to exempt highly skilled workers, particularly business and information technology (IT) consultants, from the application of the ESA if they meet the following criteria:

• They provide services either as a sole proprietor that is registered under the Business Names Act or through a corporation of which they are a director or shareholder under a unanimous shareholder agreement;
• They are paid at least $60 per hour for their work, excluding bonuses, commissions, expenses, travel allowances and benefits.

In its written submission, the OBA said that the proposed changes “require more thought and attention.”

“This submission is one of the many the OBA works on where we are able to build consensus between the employee side and employer side bar. Our section is proud to have the voices of and serve both,” says Justin Tetreault, past chair of the OBA’s labour and employment law section.

According to submission, the proposed changes are inconsistent with existing exceptions under the ESA, are “quite broad,” and “appear to presumptively exclude” a significant number of new categories of workers from the application of the ESA.

The OBA noted that s. 3 of the ESA already excludes from its coverage certain employees, such as federally regulated employees, employees of embassies or consulates for a foreign nation, trade union officials, a holder of political, religious, or judicial office, corporate directors, inmates of a correctional institution, and police officers.

“In our view, these exceptions are narrower and often apply to individuals who have access to other workplace protections, such as unions or professional associations or, in the case of office holders, institutional safeguards,” the OBA wrote.

Moreover, the OBA noted that Ontario Regulation 285/01 currently exempts certain professionals from ESA entitlements, such as lawyers, accountants, and registered health care practitioners, and provides exceptions on overtime work for IT professionals whose work is supervisory or managerial.

“The proposed amendments in Bill 88 appear to go further to now fully exclude the same professionals from the ESA as a whole,” the OBA wrote.

The OBA argued that by creating a much larger exempt category of business and information technology consultants, the proposed changes could establish two potentially inconsistent or conflicting definitions of “employee” in Ontario.

“While not qualifying for any of the legislative entitlements under the ESA, at common law, many business and information technology consultants could still meet the test for employee, as set out by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.,” the OBA wrote.

The OBA said that this lack of clarity might lead to public confusion about the law, resulting in contractual disputes and increased litigation risks for both individuals and businesses.

“This could be amplified as there is a divergence of ‘large E’ employees and ‘small e’ employees, that is, people who do not count as ‘Employees’ under the ESA but do count as employees under the common law,” the OBA wrote.

The OBA noted that further clarification about the interplay with the common law is necessary.

In addition, the OBA recommended that the criterion of minimum payment of $60 per hour be indexed.

“In our submission, including a non-indexed dollar amount might cause significant issues in the future, including possible inconsistencies with other entitlements under the ESA, such as the minimum wage,” the OBA wrote.