New compliance strategies: ‘Hard law’ approach

Enforcement Practices of Employment Standards in Canadian Provincial Jurisdictions

Enforcement normally comes into play when a worker notifies the respective regulatory agency of an alleged violation of employment standards.  Following the initial contact, there is investigation and adjudication.  Finally, should the employer be found in breach, remedial action is sometimes required, and/or a penalty issued.   In some instances, enforcement takes place as part of an audit in sectors deemed to be at high risk for non-compliance.  This is often coupled with an outreach or public education program. 
This section reports deals with employment standards enforcement practices in Canadian provinces with a focus on the following:

1.  how the regulatory agency becomes aware of a breach of employment standards-- normally this is through a worker complaint, but in some instances selective audits are also used;
2. how the alleged breach of employment standards is then investigated and adjudicated by the regulatory agency;
3. if there is a breach of employment standards, what remedy is available to the worker, and/or what penalty is assessed to the employer; and,
4. any community outreach or employer education program.

British Columbia[60]

The first step in resolving claims for labour standards in British Columbia is for the employer and the worker to try to work out a solution together.  This is done through a Self-Help Kit that takes the worker through a step-by-step process of identifying the problem, and what he or she wants done to solve the problem.  Although normally the required first step in the process, the completion of a Self-Help Kit can be waived in some cases such as when problems with language or disability might preclude a worker from providing and completing the necessary information.
If no satisfactory solution if found, or if the employer does not respond, a worker can then make a complaint to Employment Standards in writing, fax, mail, in person, or over the Internet.
At this stage an Officer with the Employment Standards Branch will intervene, and attempt to resolve the dispute by mediation either in person, or over the phone.  Should the parties agree on a solution, a “Settlement Agreement” is drafted, and, if necessary, enforced by the BC Supreme Court.
If the complaint cannot be settled through mediation, the Branch will make a determination based on the information on file, or through a short hearing.  If the Branch determines then that money is payable or the employer has contravened the Employment Standards Act, the determination will then include a monetary penalty that is currently applied in a non-discretionary fashion.
Effective November 30, 2002, the key penalties for an employment standards violation in British Columbia found in Sec 29 of the Act are as follows:

• First violation: $500.
• Violation of the same section of the Act or Regulation at the same location within three years of the first violation: $2500.
• Violation of the same section of the Act or Regulation at the same location within three years of the second violation: $10,000. Where a corporation is responsible for the contravention, an employee, officer, director or agent of the corporation who permits the contravention may also be penalized.

The determination is a legal document issued under the authority of the Director that can be then appealed to the Employment Standards Tribunal. For the fiscal year 2004-2005, employers initiated the majority of such appeals, 69%, while the remaining 31% were worker appeals.  Written submissions constituted 99.5% of the Tribunal decisions, with the average decision time being 88 days. Moreover, the Tribunal enjoys a full privative clause of judicial deference by the courts that provides a high standard for any judicial review.[61]
In addition to reacting to complaints, the Employment Standards Branch is also proactive and utilizes a compliance team to undertake selected audits such as in the agriculture sector.  This program is a result of a Memorandum of Understanding developed among the government, the BC Agriculture Council, and its member organizations.  At actual growing sites, a team conducts interviews to determine if farm owners, Farm Labour Contractors, and farm labourers are complying with employment standards.  In addition to conducting interviews and examining records, the compliance team also conducts public education by distributing fact sheets on employment standards.[62]

Alberta[63]

Like British Columbia, Alberta requires workers to first attempt to resolve a dispute directly with the employer through a Self-Help Kit.  Should an agreement not be reached, the regular complaint process is then for a worker to file a written complaint with Employment Standards.
Upon investigation by an officer, and if the officer determines the worker is owed money, the employer is asked to submit the monies owed.  If the employer disputes monies deemed owed, a voluntary resolution will be attempted through the appropriate mediation and dispute resolution efforts.
 If a voluntary resolution cannot be resolved, the officer then issues a formal order to pay.  When such a formal order to pay is issued, a ten per cent fee is then added to the monies owed, with the minimum additional fee being $100.  If the order is not paid by the employer, it then is enforceable as an order of the Court, and may be turned over to a collection agency.
If the employer wishes to appeal the order, he or she can do so through a written request to the Registrar, and giving the reasons for the appeal.  An umpire, who is a provincial court judge, then hears the case in a courtroom, and either revokes, varies, or confirms the order.  Where such conduct warrants, the umpire has the ability to order either party to pay costs, including all or part of the Government’s cost for conducting the hearing.[64]
In addition to a regular complaint, a worker can file a confidential complaint with Employment Standards. Upon receipt of a complaint in this second scenario, an Employment Standards Officer makes an investigation.  Should the employer be in breach, the employer will be informed of the requirements of the legislation, and be required to correct the situation from that day forward.  If a worker wishes to receive payment, however, he or she must waive confidentiality, and change the type of appeal to the regular scenario.[65]
The Alberta Employment Standards Branch also audits workplaces based on the employer’s record of complaints. Each year some 300 to 700 employers are scrutinized.  The Branch is active in a variety of public education initiatives. Finally, like the Canadian federal sector, employment standards practices in Alberta are currently under review.

Saskatchewan[66]

Labour Saskatchewan attempts to promote and to enforce provincial employment standards through the following: providing information to employers and employees about their rights and responsibilities; investigating complaints of employees; helping employer and employees maintain a positive relationship and avoid formal complaints; and, providing information sessions for educational institutions, community groups, and associations.
Complaints are of two types—individual and anonymous or third party.  An individual complaint is initiated by submitting a complaint report form to a Labour Standards Office.  After gathering sufficient evidence, a Labour Standards Officer makes a determination as to whether money is owed, and then informs the employer.
If the complaint is not resolved, the Director issues a Wage Assessment that sets out the amount of wages deemed owed to the worker.    Either an employer or an employee can appeal this determination.  Should an appeal be requested, an impartial adjudicator hears the case, and issues a decision that can further be appealed to the Court of Queen’s Bench.
Should the decision be in the worker’s favour, the Department can receive monies voluntarily from the employer or the corporate board of directors.  If the employer refuses to pay, a Certificate is then issued that has the status of being a judgment of the Court of Queen’s Bench.
 If a wage assessment is issued to recover monies, in instances of successful prosecution, a ten percent levy ranging from a minimum of $100 to $500 is then added to the said amount as an administrative fee. [67]
Penalties for violations as outlined in Sec 85 1.1 of the Labour Standards Act are as follows:
Every person who is guilty of an offence mentioned in subsection (1) is liable on summary conviction:

1. subject to clause (b), to a fine of not more than $2,000 for an offence; and
2. in the case of an offence that is committed within six years after the person is convicted of any offence:
1. to a fine of not more than $5,000 for a second offence; and
2. to a fine of not more than $10,000 for a third or subsequent offence.

In cases of third party or anonymous complaints with sufficient evidence, the Compliance Response Unit is notified. The primary goal of the CRU is to achieve compliance through effective enforcement.
CRU corrective action includes: “workplace information and education sessions for non-wage violations, off-site information sessions for employees or other interested parties, wage audits for appropriate workplace units initially covering an interval between one pay period and three months, follow-up one year audits if requested by the affected employees (by legislation an audit is limited to a one year period), and prosecutions for persistent and deliberate violations”.[68]

Manitoba[69]

The pattern of enforcement in Manitoba generally follows the outline of the two other prairie provinces.  Either party may contact the Employment Standards Branch to file a claim.  If the workplace parties cannot resolve the issue in dispute, an Employment Standards Officer is then assigned to the claim.  Co-operation between the parties is deemed essential to the resolution of the claim, and the necessary records are solicited from the workplace parties.
If the Employment Standards Officer cannot resolve the dispute, and the employer is found in breach, an Order requiring payment may be issued to the employer, the corporation, and/or its directors.  In the case of a worker failing to give adequate notice of termination to the employer, an Order to pay may also be issued.  An administrative fee is also added to the award.  The fee is $100 or 10% of the monies owing, whichever is greater to a maximum of $1,000.
Either party may then appeal the decision within seven days.  The appeal is then heard at the Manitoba Labour Board.
Other efforts at compliance include employment standards staff engaging in public education, and speaking to groups and associations upon request.[70]

Ontario[71]

Compliance through enforcement of the Employment Standards Act in Ontario is done through claims investigation, targeted inspections (audits) and, if necessary, prosecutions.
Given an alleged breach of the Act, enforcement through claims investigations begins with a worker completing and filing a claim form.[72]  However, a formal investigation is not usually started immediately.  First, if possible, workers are encouraged to resolve the issue with their employer, and Ministry of Labour staff may help to define the issues and/or issue a self-help kit.
If there is no resolution between the worker and the employer, Ministry staff informs the employer that a claim has been filed, and encourages the employer to resolve the matter.  If the matter is still not settled, the file is assigned to an employment standards officer for a full investigation. The employment standards officer conducts investigations by telephone, through written correspondence and/or in a fact-finding meeting with the worker and the employer.
After fully investigating the claim, the employment standards officer makes a decision about whether and employer has complied with the Act.  If in breach, and if the employer is unwilling or unable to comply with the employment standards officer’s decision, the officer can issue one or more of the following: an Order to Pay Wages (the employer must pay wages owed); a Compliance Order (the employer must take or stop certain actions so it is no longer violating the law); a notice of Contravention (the employer must pay prescribed penalties for violating a section or sections of the ESA); and/or an Order to Pay Compensation or Reinstate e.g. for violations of rights related to leave, or for dismissal over exercising rights under the Act.
An employer or worker can apply for a review of any of the above by applying within 30 days of the date the decision is served.  The appeal is then heard at the Ontario Labour Relations Board.  A random sample of applications to the OLRB suggests that the vast majority do not go to a full hearing, and are either withdrawn, or dismissed on procedural issues such as failure to attend.
If the employer does not pay the required amount, the file is typically sent to a collection agency.  The employer is then required to pay the collection agency fees, as well as the Ministry’s administrative fees.
Other enforcement procedures that may be used to gain an employer’s compliance include issuing a ticket, or prosecution under the Provincial Offences Act.  In cases of voluntary compliance with the Act, employers may also be required to post a notice in the workplace containing information about the administration or enforcement of the Act.
In the 2004-2005 Fiscal Year, Ministry of Labour staff investigated some 15,950 claim files.  The top five complaints involved vacation pay, unpaid wages, termination pay, overtime, and public holidays. [73]
A second component of the Ontario Ministry of Labour enforcement activity is targeted inspections that focus on high-risk sectors and repeat violators.  The purposes of targeted inspections are to enforce the Act and its regulations, to communicate and raise awareness, and to promote self-reliance in the workplace.  In the Fiscal Year 2003/04 there were 2,355 such inspections conducted in sectors deemed to have a relatively high risk of non-compliance.  The three targeted ‘high risk’ sectors were restaurants and taverns, retail and business management services, and the garment industry.  As a result of such audits, the top five employment standards violations discovered were unpaid wages, public holidays, overtime, vacation pay, and, minimum wage.
The third component of the Ministry enforcement programme to ensure compliance and advance deterrence is prosecution of persons, including corporations, for violations if the Act and its regulations.  For the years 2000-2003, total prosecutions were 18.  In 2004, prosecutions totaled 226.[74] Key penalties for non-compliance, as provided in Sec 132 of the Ontario Employment Standards Act, are as follows :
A person who contravenes this Act or the regulations or fails to comply with an order, direction, or other requirement under this Act or the regulations is guilty of an offence and on conviction is liable,

1. if the person is an individual, to a fine of not more than $50,000 or to imprisonment for a term of not more than 12 months or to both;
2. subject to clause (c), if the person is a corporation, to a fine of not more than $100,000; and
3. if the person is a corporation that has previously been convicted of an offence under this Act or a predecessor to it,
1. if the person has one previous conviction, to a fine of not more than $250,000, and
2. if the person has more than one previous conviction, to a fine of not more than $500,000.

For the years 2002-2005, Ontario developed a three-phase plan to maximize compliance and to increase self-awareness with employment standards by the workplace parties.  Phase 1: 2002-3 began by holding introductory meetings with key stakeholders such as the Centre for Spanish Speaking Peoples, the Canadian Federation of Independent Business, and other key provincial and federal agencies.  Phase 2:2004 involved a more direct engagement with community and cultural groups serving vulnerable workers, particularly immigrants.  Stage 3:2005 involves a more aggressive application of all enforcement tools, including more pro-active inspections.[75]  Benchmarks have been created, and there are initial indications of program success. Over the period 2003-4 to 2004-5, the number of claims filed grew from 13,000 to 16,000 attributed to an increase in outreach and awareness program delivery.[76]

http://www.hrsdc.gc.ca/eng/labour/employment_standards/fls/research/research20/page06.shtml