Due to ongoing pandemic-related uncertainty and what seems like daily regulatory changes, many organizations are shifting to non-traditional workplace structures. Employees are working from home, technology has become a cornerstone to keep teams connected, and businesses are frequently choosing to hire contract workers instead of building traditional employee/employer relationships. When it comes to employment law, one of the biggest risks for any disruptor of traditional workplace relations is the misclassification of employees and contractors (also known as gig workers). Think about Uber, Lyft, and SkipTheDishes and their use of gig workers. There have been many legal battles to figure out whether they are employees, independent contractors providing services, or dependent contractors. Do you know the difference?

Do you know the potential legal and financial pitfalls that can arise if you do misclassify your workers?

Whether businesses are ready or not, the gig economy is a rapidly growing part of the Canadian labour market in our uncertain COVID-19 driven economy. While businesses may reap financial benefits and benefit from short-term commitments, it also comes with a certain level of risk generally associated with unclear contracts and a lack of established boundaries. Before the COVID-19 pandemic hit, a 2019 report from the Canadian government showed the gig economy workforce increased by 70% between 2005 and 2016, from 1 million gig workers to 1.7 million. In Toronto, one out of ten workers depend on the gig economy for at least part of their income. Businesses use the gig economy to disrupt traditional employment models and to achieve tremendous financial success. In the face of COVID-19, many businesses are turning to gig workers as a way to survive. However, this strategy can carry high legal risk, and potential non-compliance costs can be devastating. On October 22^nd, Uber and Lyft lost a critical court case as reported in the New York Times,  when the appeal judge in California ruled that “When violation of statutory workplace protections takes place on a massive scale, as alleged in this case, it causes public harm over and above the private interest of any given individual.” However, Uber and Lyft have sought to change the rules of game by funding and successfully promoting Proposition 22, which unquestionably classifies workers as independent contractors rather than employees.  With $200 million in funding, it is no surprise that the ballot measure was passed in California with 58% support. It is a major win for businesses / huge disappointment to the gig workers, and an outcome that could affect other legal battles in the fight over employee rights in the gig economy.

In Canada, a business with profits driven by gig workers is not exempt from laws that govern the workplace. And no one will turn a blind eye just because of tough times brought on by COVID-19. Minimum employment standards cannot be violated or removed simply by putting someone on a “gig contract”.  An employee by any other name, be it a “contractor” or a “gig worker”, is still an employee. Note that even independent contractors can be deemed “dependent contractors”, a legal space that falls between independence as a full contractor, and dependence as an employee.

You might think you can create business/worker relationships within grey areas of employment laws, but these decisions will catch up to you.

Understanding What Dependent Contractors Are

Courts have recognised the rights of, and have provided protections for, contractors who are deemed to be dependent contractors, sort of a hybrid between a true independent contractor and an employee. Simply put, a dependent contractor has a right to notice of termination of their services – even during a pandemic. A business modeling their worker compensation on the ‘Gig model’ must be wary of potentially facing significant legal fees and damages, and even being forced to shut down.

For instance, in the case of Keenan v Canac Kitchens Ltd, the court awarded the workers $125,000 in damages, since they were found to be dependent contractors. An employer is not required to pay EI and CPP benefits or vacation pay for a dependent contractor. However, a dependent contractor is entitled to notice of termination, which can be the same as or close to an employee’s entitlement. The financial penalties of a court finding a contractor as a dependent contractor can be staggering, and one a business with slim profit margins or reduced operations due to the pandemic may not be able to bear.

Further, as reported in Forbes in 2015, Homejoy, an Uber-like home cleaning company, shut down citing multiple misclassification lawsuits from their independent contractors who argued they were actually employees. Creating more difficulties for businesses in the gig economy is that there is no uniform means of structuring the “gig” contract with the worker. There are as many different forms of “gig” work as there are businesses that have grown through the new gig economy. It’s worth noting that businesses who turn to gig workers out of necessity during the COVID-19 pandemic are often doing so without proper attention to the structure of the relationship and the contractor agreement itself.

How the Pandemic Has Affected the Gig Economy

Economic shutdowns due to the pandemic temporarily shut down certain gig worker services such as ride share workers, but it has also increased the need for other gig workers such as food delivery workers. Earlier this year, Canadian Foodora workers won the right to unionize and to be classified as dependent contractors and the company promptly pulled out of Canada. In August, former workers reached a $3.46M settlement with Foodora – a cost that the business was hoping to avoid.

With uncertainty comes temporary solutions to fill gaps. With so many businesses forced to shut down due to the pandemic, short term gig workers seem like a good temporary solution.

How To Protect Your Business From Risk

High profile legal challenges against companies like Uber and Foodora have been in the public eye, and businesses that rely on gig workers should think carefully about the risks. There are legal risks – and the ensuing costs – associated with misclassification of workers. The potential of such labour liabilities can also deter future investors that may be needed for both growth and exit strategies beyond the pandemic.

This is not to say that businesses can never have independent contractors. Prudent business risk management mandates proactive assessments be conducted upfront. This should include an assessment of the worker or services model if the business contemplates being ensconced in the “gig economy”.

If using independent contractors to provide services, the business must enforce policies to proactively maintain the independent contractor relationship. Businesses using the services of gig workers must take extra precautions to protect themselves from legal penalties more than their traditional employer counterparts. Fail to do so and the only “gig” in your company could be the “gig”antic payments to your improperly classified employees.

At Hum Law we work with you to proactively design policies to mitigate risks associated with your worker or employee contracts. If you want to make sure that you haven’t misclassified your workers or that your contracts are set up to protect your organizational rights, contact us today.

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Can I refuse to work to home school my kids to avoid them going back to school?

As schools in Ontario are going to open, many parents may still want to keep their children back home to avoid Covid-19. As a result, we have received questions regarding whether their parents can refuse to work because they want to take care of their children back home.

A parent may lose their job if they refuse to work. Employers have a duty to accommodate their employees, including accommodating their family needs, such as taking care of their children. At the same time, employees also need to take reasonable alternatives in order to work.

As Ontario is gradually reopening, putting children back to school can be regarded as a reasonable alternative to home schooling. An employee who refuses to work simply because they prefer their children to stay at home may be regarded as resigning from their job. The consequences can be severe. You will not be entitled to termination pay, such as pay in lieu of notice, and the employees will not access to government benefits such as CERB, EI or future programs that require the employees lose their job involuntarily.

There may be exceptions. Children with compromised immune system, going back to school may not be a reasonable alternative, if under a doctor’s advice.  In such a situation employee should consult a qualified and experience employment lawyer before refusing to work. While accommodation is possible, incorrectly assuming it is required may be a costly mistake.

At Hum Law we are committed to prompt action to protect your rights.

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The challenges related to the Covid-19 pandemic and economic challenges have prompted the Ontario government to once again extend protection to prevent temporary layoffs from automatically becoming permanent job losses until January 2, 2021.

Previously, the Ontario government had suspended the effect of temporary layoff provisions until September 4, 2020, deeming all non-unionized employees laid off from work to be on emergency leave.

Until January 2, 2021  employers benefit from extended maximum temporary layoff periods without fear of having to pay out significant termination and severance pay, giving some businesses the chance to regroup and be financially viable.  Employees will also benefit from continued job protected leave until at least January 2, 2021, and not be deemed terminated.

This announcement also included an extension of job protected Infectious Disease Emergency Leave for parents who believe it is still unsafe to send their children to school.

With the frequent changes related to COVID-19, both employers and employees need to understand their rights. If you are unsure how Ontario’s Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 affects you, contact Hum Law Today.

Editors Note: On September 3rd the Ontario government issued a press release changing the date and extending the suspension until January 2021. 

Ontario’s Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 (the “Act”) came into effect on July 24, 2020 and the Declared Emergency ended on the same day.

The new regulation under the Employment Standards Act, 2000 (ESA) deemed an employee to be on a job-protected Infectious Disease Emergency Leave when the employer has temporarily reduced or eliminated their hours of work because of COVID-19.  The regulation affects how the termination, severance and constructive dismissal rules under the ESA apply during the COVID-19 period.  These temporary rules will expire six weeks after the Declared Emergency ended, i.e. on September 4, 2020.  They do not apply to employees represented by a trade union.”

This has set off a chain reaction for most employers and could very well trigger costly severance and termination obligations. Employers are strongly encouraged to review all  employee contracts with an experienced employment lawyer to protect the interests of all involved, there are a number of major changes employers should be aware of including the recent  Waksdale decision from  the Ontario Court of Appeal.

Although many emergency orders remain in effect, Section 17 of the Act defines a new stage in the pandemic trajectory by terminating the COVID-19 Declared Emergency in Ontario. The termination of the Declared Emergency has a direct impact on both the Declared Emergency Leave (the “DEL”) and the Infectious Disease Emergency Leave (the “IDEL”). With everything that employers need to consider for reopening regarding health and safety measures, it can be easy to ignore employment law issues until there is a problem. However, in doing so, employers leave themselves open to costly lawsuits and reputational issues.

Understanding the DEL and the IDEL

Declared Emergency Leave (the “DEL”)

The DEL entitles employees to “an unpaid, job-protected leave of absence” for various reasons during a declared emergency. Once a Declared Emergency has been terminated, employees are no longer entitled to the leave after the date that the emergency is terminated. The only exception is when an order made under s. 7.0.2 of the Emergency Management and Civil Protection Act (“EMCPA”) that applies to the employee is extended beyond the duration of the declared emergency.

When an employee can no longer rely on the DEL, the employee may still be entitled to another similar situational leave such as sick leave, family responsibility leave, family caregiver leave, family medical leave, critical illness leave, bereavement leave, or infectious disease emergency leave.

When a leave is not available to an employee to deal with a situation caused by COVID-19, employers still have a duty to accommodate. For example, an employee may have difficulties putting their kids into day-care due to their limited capacity. Employers may need to accommodate the employee’s need to take care of their children by offering alternative options.

Infectious Disease Emergency Leave (the “IDEL”)

Under this temporary rule, “a non-unionized employee whose employer has temporarily reduced or eliminated their hours of work because of COVID-19 is deemed to be on a job-protected IDEL.” The IDEL expires six weeks after the Declared Emergency ends. In this case, the six-week period will end on September 4, 2020. After the six-week period, the employee will no longer be deemed on leave. In this situation, you have three ultimate options as an employer – to call back the employee, to terminate the employee and end your relationship, or you can lay off your employee, which leaves the door open for a return to work.  Effective September 4, 2020, the temporary layoff rules start again.

As of September 4, 2020, the employer must call the employee back to work, or the employee could claim constructive dismissal unless there is a written contract or internal policies allowing temporary layoffs.

Unlike the DEL, the IDEL remains effective until September 4, 2020, six weeks after the termination of the Declared Emergency in Ontario

What this means for employers

Most businesses are entering into uncharted territory as the economy reopens. Employers are responsible for keeping up to date with legislative changes and the legal ramifications if those changes are not adhered to. Regarding employment contracts, the COVID-19-related changes, in addition to the recent game-changing Waksdale decision invalidating many termination clauses, has made well-drafted contracts a necessity. Relying on outdated, vague, and template contracts will leave many employers in a difficult situation resulting in costly termination payouts. All employers must consult an experienced employment lawyer and be prepared make immediate changes to contracts.

With the frequent changes related to COVID-19, both employers and employees need to understand their rights. If you are unsure how Ontario’s Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 affects you, contact Hum Law Today.