Bill 148 Is More Than Minimum Wage
You’ve probably heard by now that minimum wage is on the rise in Ontario. This is due to The Fair Workplaces, Better Jobs Act, 2017, which is now in effect as of November 27. With this act -also known as Bill 148 – the provincial government aims to balance employee rights and stimulate economic growth.
Although the minimum wage hike is a hot topic, that’s only one change employers must be aware of. They must also be ready to soon implement such changes to stay compliant with these updated labour laws.
According to Statistics Canada (Business Register, December 2015), there are over 415,000 small- and medium-sized enterprises (SMEs) in Ontario. These SMEs employ over eighty-seven percent of the workforce in the province. With so many jobs at stake, let’s explore some scenarios involving the changes from Bill 148.
Bill 148: New Staffing Challenges for Small Businesses
A locally owned spa has been operating in a large town for nine years. The spa employs five full-time workers, and twelve casual workers. The casual workers cover vacation and sick days for the regular staff, and also help with coverage at peak times. With the new changes imposed by Bill 148, the spa owners have some new challenges.
First, the basic minimum wage increases to $14 an hour by January 1, 2018. On January 1st, 2019, the minimum wage will reach $15. The spa could save some costs by shrinking their staff, but that would mean offering a lower quality service to their customers. Instead, the spa opts to maintain service and increases service prices.
The spa had a two-hour bachelorette ‘Pamper Party’ booked for Friday afternoon, with twenty spots reserved. The spa owners scheduled four additional staff to provide French manicures and facials to the large group. The party host never confirmed the final list of attendees, and only seven people show up for the party. The rest of the spa is quiet that afternoon, so two of the extra staff are sent home after an hour.
With the new rules, shifts cannot be cancelled without at least 48 hours notice. In addition, a minimum of three hours pay must be offered to anyone who shows up when called in to work. All four extra workers still get paid a minimum of three hours each, even though two had their shifts cut short.
More Personal Emergency Days and Vacation Days Creates More Scheduling Work
The spa’s receptionist has suddenly asked for time off for an undisclosed reason. She has been there less than a year, and she’s eligible for ten personal emergency days, two which are paid. Management must find someone to cover her shifts and can’t ask for a doctor’s note. Anyone asked to cover these shifts can refuse, without penalty, if given less than four days’ notice.
Several employees have worked for the spa for over five years, but previously received the minimum of two weeks of vacation time. They are now entitled to three weeks vacation with pay. The staff is pretty excited to have an extra week for rest and rejuvenation, and this helps boost morale.
The spa needs to ensure they’re hiring the right people for the job. They also need to take a closer look at their operational highs and lows to plan better staff schedules. They might consider creating more full time positions, but that could also mean cutting some part-time employees.
No sector is immune to the changes, as a prosperous medium-sized tech company learns. Its staff of forty-two is all full time, except for one temporary. Minimum wage isn’t an issue in this company, but there are other new challenges for management to consider.
Three staff members are pregnant. Previously, these women could take up to fifty-two weeks after having a baby. Now, all three could potentially be gone for sixty-three weeks, leaving management to cover their roles for over a year. They could use a temp agency to supply personnel during these maternity leaves. Under the new legislation, agency supplied personnel must be paid at the same rate as full-time employees, if they are essentially fulfilling the same role.
Retaining an employment agency becomes more expensive as the personnel provided by them must receive the same pay as employees. Additionally, the company must pay the agency’s service fees for their role in supplying the personnel, or they could hire replacements on term contracts.
These contract employees are not eligible to receive benefits such as vacation and health benefits, so this may be the more cost effective solution. The company would be responsible for the recruitment, instead of delegating that to the employment agency as they might have done in the past.
For the new mothers, they are excited to have more time with their babies. They will also be able to delay daycare costs just a little longer before returning to work.
More Family Medical and Maternity Leave for Employees
Another staff member has an aging father with end-stage cancer, and is so distracted by this stress that his productivity has been waning. The family has decided to bring the patient home during his remaining time, and the employee will need to take an extended leave to look after him. The employee is now entitled to an unpaid Family Medical Leave of up to twenty-eight weeks in a fifty-two-week period to care for a critically ill adult family member. His job is protected so he does not face the risk of unemployment when he is ready to return to work. He is grateful to have this time to focus on his father. Management will need to plan how to cover this employee’s responsibilities while he’s away.
The company has one independent contractor who was initially brought in for three months to help a regular staffer with a backlog of data entry. The job term has since extended past ten months. She sits at a desk beside the staffer, and does substantially similar work. It’s now up to management to prove this worker is an independent contractor; otherwise, she may be considered an employee and would be classified as permanent. If the compliance officer deems that she is a permanent employee and not a contractor, then she will be eligible to receive benefits. And the employer will be required to pay all deductions required by law retroactive to her first day of employment in order to correct the company’s error in hiring her as a contractor rather than as an employee.
These scenarios cover just a few of the upcoming changes with Bill 148. Companies must review their employment contracts and revise them to be complaint. They must also give thought to their communications strategy to their staff. Staff will have questions regarding changes to their pay-cheques. The company must put in place new processes around leaves and scheduling. There will also be questions and concerns on the part of both workers and management on implications of all the changes to both the company and their employees.
The new legislation has both benefits and challenges. The changes roll out intermittently between now and January 1, 2019. In fact, as of November 27, companies should already be compliant with employee classification (i.e. employee versus independent contractor) and with extended parental leave.
Bill 148 Cash Flow Challenges in the Face of Compliance
Then there’s the impact on cash flow for smaller companies to closely consider. A company needs to ensure they have sufficient funds to cover the first wage increase from $11.40 to $14.00 on January 1, 2018, and the next jump to $15.00 a year later. As costly as the wage increase might be, it pales in comparison to the penalties for non-compliance.
The government is taking this seriously; it’s adding 175 new employment standards officers to educate, investigate complaints, and sniff out the companies with outdated employment policies. If caught, a non-compliant company faces stiff fines up to $1,500. The names of individuals who have been issued a penalty may also be published, along with a description of the offense. The potential reputational and financial fallout is significant, but avoidable.
These significant changes require that you, as a business owner, are ready. With so much change happening so quickly, small business owners are advised to review and align their policies with The Fair Workplaces, Better Jobs Act as soon as possible.