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Posts tagged: employment law

Employment Law Update: Mid-Year Report

By , June 26, 2018 3:34 pm

In this blog, as we enter the dog days of summer, I will review five current trends and developments in Ontario’s employment laws.

1.  A New Sheriff is in Town: The PC party has replaced the Liberal party as Ontario’s governing party

I anticipate this change in government will result in less government regulation of Ontario’s workplaces. During the election campaign, Doug Ford promised not to increase the minimum wage from $ 14.00 to $ 15.00 on January 1, 2019. I will let you know in a future blog whether he keeps this promise.

In the meantime, two laws the Liberal government introduced are scheduled to take effect on July 1, 2018 and January 1, 2019.

One law changes the way public holiday is calculated. Bill 148 changed the way public holiday pay was calculated, however, effective July 1, 2018, public holiday pay will once again be calculated using the formula that applied prior to the coming into force of Bill 148. In other words, the employee’s public holiday pay for a given public holiday will be equal to the total amount of regular wages earned and vacation pay payable to the employee in the four work weeks before the work week in which the public holiday occurred, divided by 20.

The second law will require an employer to provide salary information to job applicants and prohibit employers from asking job applicants about their salary history. In particular, on April 26, 2018 the  Pay Transparency Act was passed. Unless Doug Ford repeals this law, on January 1, 2019 all employers will be prohibited from either directly/ indirectly asking candidates about past compensation, they will be required to post a compensation rate or range for all publicly advertised job postings, and they will be prohibited from reprising against employees who make inquiries about compensation practices.

Last year, the Liberal government announced it was hiring 175 employees to make sure Ontario employers are complying with the Employment Standards Act. Many of these people have now been hired, and trained and are conducting inspections of Ontario’s workplaces. The government has stated it intends to inspect 1 in 10 Ontario workplaces each year.

For more information on how we help employers comply with the Employment Standards Act, click here

2.Cannabis Use Will Be Legal On October 17, 2018

The federal government has announced that cannabis use will be legal on October 17, 2018. In the meantime, the Ontario government must decide how to regulate the sale of cannabis in Ontario. Employers need to decide whether or not to introduce or amend a drug and alcohol use policy. An employee who is impaired at work can be a health and safety problem particularly if the employee is working in a safety sensitive position. Drug testing to address this issue is, however, an extremely controversial and complex legal issue. In fact, a number of drug testing cases have been appealed to the Supreme Court of Canada.

To assist employers with this issue, we can draft a drug use policy for a fixed fee.

3. It Is Increasingly Difficult To Predict Whether The Courts Will Enforce A Termination Clause

I have been writing about this issue for a number of years. Despite numerous Ontario court cases including several Court of Appeal decisions I still cannot predict with any degree of certainty whether a termination clause will be enforced. In 2017, the Court of Appeal in North v. Metaswitch Networks Corp. basically overturned its 2016 decision in Oudin v. Centre Francophone de Toronto on the same issue. In the 2018 decision in Nemeth v Hatch Ltd, the Court of Appeal  found that the following clause was enforceable:The Company’s policy with respect to termination is that employment may be terminated by either party with notice in writing. The notice period shall amount to one week per year of service with a minimum of four weeks or the notice required by the applicable labour legislation. Most employment lawyers including myself were surprised by this decision.

We will review and draft needed changes to your employment contract including the termination clause for a fixed fee. For more information on our employment contract service, click here

4. Notice Period For Older Senior Managers May Be Trending Upwards

Since 1960, Ontario judges have been applying the Bardal factors when determining the appropriate reasonable notice period in wrongful dismissal cases. The age of an employee and the employee’s position are two factors that are taken into account.

A couple of 2018 decisions suggest that Ontario judges may be increasing the notice period for older, senior, relatively short service employees. In Chambers v. Global Traffic Technologies Canada Inc a 57 year old general manager with 2.5 years service was awarded 9 months pay in lieu of reasonable notice. In Hale v. Innova Medical Ophthalmics Inc. a  59 year old President with 6 years and 8 months of service was awarded 18 months termination pay. To reduce the litigation risk associated it is a good idea to require these kinds of employees to sign an employment contract with a termination clause – if you can figure out how to draft an enforceable termination clause!

5. The Cost Of Health & Safety Violations Is Likely Going Up

The Ministry of Labour investigates most “critical injuries” as that term is defined under Ontario’s Occupational Health & Safety Act (“OHSA”) and the Ministry often charges an employer for a violation of OHSA in connection with such an accident. Fines for relatively minor injuries often exceed $ 50 000. On December 17, 2017,  the maximum fine for a breach of OHSA increased from $ 500 000 to $ 1 500 000. The Ontario Court of Appeal has stated that deterrence and the size of an employer are two factors that trial judges should take into account when determining fines under OHSA. In the future, I therefore expect the Ministry of Labour will be looking for larger fines from large profitable employers when negotiating plea bargains.

We help employers comply with OHSA. For more information on our fixed fee service, click here

For 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Terminating Senior Executives: The Nickels and Dimes Can Really Add Up

By , March 6, 2018 8:50 am

News Flash: An employer who does not specify in an employment contract how much an executive is entitled to receive when terminated can pay much more termination pay than expected.

The Case

UBS Securities Canada Inc. found out the hard way how the nickels and dimes can add up when it terminated the employment of David Bain who was the Managing Director and Head of Canadian Mergers & Acquisition.

The Nickels & Dimes

The Ontario Court of Appeal recently considered four issues that were decided by the trial judge in this case, namely:

  1. Was Mr. Bain owed a deferred bonus by way of notional shares that vested after the expiry of an agreed upon 18 month notice period? This part of the bonus was worth $ 1,200,000.
  2. Was vacation pay owing calculated on base salary or salary and bonus? The difference was $ 81,772.
  3. Should prejudgment interest be based on the “lump sum” approach or the “instalment” approach? The difference was $44,585.81.
  4. Should legal costs be determined using the partial indemnity “grid” rates set out in the preamble to Rule 57, “Information for the Profession”, or by using 60% of the actual rates charged by the employee’s counsel? UBS was seeking a reduction of approximately $70,000 in the costs of the action.

The Decision

The trial judge and the Ontario Court of Appeal sided with the employee on all four issues.

Lessons to Be Learned

  1. A well drafted employment contract and well drafted variable compensation plans can eliminate legal uncertainty and save employers A LOT of money – especially for senior executives.
  2. Variable compensation plans including bonus plans can be drafted to clearly state how much compensation a terminated employee is owed and it can be significantly less than the person’s common law entitlement.
  3. Bonus plans can be drafted so that employees are not entitled to earn vacation pay on bonus income.
  4. Termination clauses can be drafted so it is more likely that pre-judgment interest damages will be awarded using the less expensive installment method.
  5. Litigating a wrongful dismissal case can be very expensive. UBS paid its own legal fees plus 60% of Mr. Bain’s fees or $225 000. If UBS’ legal fees were the same as Mr. Bain’s then UBS’ legal costs to go to trial were about $ 600 000.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

The Latest on the Legality of Random Drug & Alcohol Testing

By , February 20, 2018 9:18 am

In 2013, the issue of whether an employer can unilaterally implement random drug testing was addressed by the Supreme Court of CanadaBottom line: there are very few instances when random drug testing will be permitted.

This blog summarizes a recent arbitration award where a union challenged an employer’s random drug testing policy at a coal mine.

The Facts

The arbitrator found that anyone working in mine operations, the mine maintenance department, and in the coal plant was involved in a safety-sensitive job.

Further, he found  that the work and surroundings involved in all three of these operations required employees to maintain a continuing alertness so that they did not cause an accident that might injure themselves and/or another employee, or were not injured by someone else’s carelessness.

In 2012, the employer unilaterally implemented random drug and alcohol testing that required employees to, among other things,  provide breath or urine samples. If there was a positive result then the employee was required to meet with an additional specialist and disclose personal health information.

The Issue

The issue in random drug and alcohol cases is how to resolve the conflict between an employer’s interest in making their workplaces safe, and an employee’s interest in protecting their privacy.

The Test

  1. Have employees’ privacy rights been infringed and, if so, to what degree;
  2. If so, is there sufficient or adequate cause to justify the search and seizure and resulting privacy intrusions represented by random testing; and, if so,
  3. Is random testing a proportionate response to that “demonstrable workplace problem”?

The Decision

After a 39 day hearing, the arbitrator concluded:

  1. Random drug and/or alcohol testing is a prima facie privacy violation
  2. The fact that an employer’s workplace is dangerous does not, in and by itself, establish a legitimate need for random drug and alcohol testing. There was no evidence of a “demonstrated workplace problem” or “a general problem with substance abuse in the workplace.” In this regard, in the five years leading up to the random testing, the number of positive tests were relatively low for post-accident testing, averaging between one and two positive post-incident drug tests per year.
  3. Neither a positive breathalyzer test at .02% BAC nor a positive urinalysis test for the presence of cannabis or cocaine metabolites establishes that an employee was under the influence of, or impaired by, any of those substances.  Such positive tests only establish that the employee has used those substances in the past, not that he was impaired at the time of the test.

The arbitrator also noted that no evidence was led on whether or not there were any less intrusive means of measuring impairment that would be equally as effective such as “computer-assisted employee performance testing” which is more commonly known as “impairment testing.”

Lessons to Be Learned

  1. It is possible but extraordinarily difficult to justify a random drug and alcohol policy.
  2. Unionized employees will almost certainly grieve the policy under the applicable collective agreement, and non-unionized employees can file an application under human rights legislation.
  3. The onus is on the employer to justify the need for the policy.
  4. The employer must demonstrate an actual problem with substance abuse in the workplace; not a theoretical problem.
  5. The employer’s testing protocol needs to prove impairment; not use.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

Patrick Brown: Could the Alleged Sexual Harassment/Assaults Have Been Prevented?

By , January 25, 2018 5:04 pm

Yesterday, CTV reported that two women alleged Ontario Progressive Conservative leader Patrick Brown sexually harassed and/or sexually assaulted them. Shortly after the story broke Mr. Brown resigned as party leader.

I don’t think Mr. Brown will deny he met either women. Instead I think he will claim that whatever happened was consensual.  In other words, classic “he said, she said” situations. If criminal charges are laid against Mr. Brown then the Crown will need prove the charges beyond a reasonable doubt. The same burden of proof as in the Jian Ghomeshi case.

This blog considers whether either situation could have been avoided from an employment law perspective.

If the federal government had addressed sexual harassment and sexual assault in the federal civil service and the House of Commons prior to 2013, then I think the 2013 incident could have been prevented. The Prime Minister could have stood up in the House of Commons and said the federal government is going to take a leadership role on this issue and take proactive steps to redress this societal problem. First, by saying it won’t be tolerated; second, by requiring all employees and MPs to comply with a sexual harassment policy; and third, by introducing a complaint procedure and encouraging employees to use it. This would have put MPs on notice of the cultural change the government was committed to leading and would have made all MPs think twice about sexually harassing staff. It would also communicate a very strong message to staff that the employer wanted people to bring forward sexual harassment complaints. In this climate, I think Mr. Brown would have thought twice before allegedly bringing a staff member back to his home or into his bedroom.

I don’t think the incident that took place over 10 years ago could have been prevented through workplace policies. According to the CTV report, the 17 year old female high school student did not appear to have any connection to Mr. Brown’s workplace and they do not appear to have met at a workplace event.

Given the societal change that has taken place in connection with sexual harassment and sexual assault over the last 5 years I do not believe nearly as many employees or politicians will put themselves in compromising situations in the future. The adverse consequences associated with sexual harassment and sexual assault allegations in 2018 is staggering.  Without these allegations, polls show Mr. Brown would have been premier of Canada’s largest province in June.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

Wal-Mart Employee Awarded $250,000 in Moral Damages and $500,000 in Punitive Damages

By , January 23, 2018 9:00 am

When deciding whether to settle a case, a lawyer assesses the risks and uncertainties inherent in the litigation process including the quantum of damages that a judge will likely order for each head of damages claimed. I call this litigation risk.  

As I have written beforeemployees seldom claim only wrongful dismissal damages in an employee termination case. Additional heads of damages include human rights damages, moral damages, punitive damages, and damages for the intentional infliction of mental stress. This results in more litigation risk but despite this increased risk more than 90% of cases still settle.

Every once in a while a case goes to court and the decision increases the litigation risk for all subsequent cases. This is one of those cases. Based on the reported facts in this caseI would never have predicted that Wal-Mart would have been ordered to pay the employee $ 250 000 in moral damages and $ 500 000 in punitive damages.

Until this case is appealed or followed/considered/distinguished by other trial judges, I will need to consider this decision when assessing the chances a judge will order moral damages and punitive damages in my cases. And in the meantime, litigation risk has increased for employers in employee termination cases.

The Facts

In September 2002, Gail Galea started working at Wal-Mart and about 8 years later her employment was terminated without just cause. About 10 months before her employment was terminated, her position was eliminated because of a re-organization. During her last 10 months of employment, Wal-Mart tried to find her another position within the organization and sent her to Harvard for an 8-week executive management program. When Wal-Mart couldn’t find her a suitable position she was terminated without cause. Instead of paying her the two years pay she was owed, Wal-Mart continued her benefits and the equivalent of her salary for 11.5 months.

Trial Decision

The judge concluded that an agreement between Ms Galea and Wal-Mart obliged Wal-Mart to pay her damages equal to the compensation and benefits she would have earned during the two year period after her termination.

As far as paying Ms. Galea damages for variable compensation during the 2 year period after her termination was concerned, Wal-Mart took the position it owed her no monies under a Management Incentive (Bonus) Program, Deferred Profit Sharing Plan, Executive Retirement Plan and a Long Term Incentive Plan. The trial judge disagreed except for damages claimed under the Long Term Incentive Plan.

Ms. Galea claimed moral damages because of the manner of her termination. The trial judge awarded her $200,000 for the treatment she received from Wal-Mart during the last 10 months of her employment including the 2 months she spent at Harvard. “She was made to suffer repeated humiliation, starting with the announcement of her re-assignment from Vice President, General Merchandising to that of a roving vice president of little substance.”

Ms. Galea claimed damages for the way Wal-Mart acted after her termination. The judge awarded her an additional    $50,000 damages for the following behavior. “I consider Wal-Mart’s decision to stop the continued payment of her base salary and the health and dental coverage to her and her family (after 11.5 months) to be unduly insensitive, and to have caused her mental distress. I consider Wal-Mart’s delay in answering its undertakings until the eve of trial, and the torrent of productions made in the course of the trial,… capable of causing Ms. Galea  prolonged anguish about the case.”

Ms. Galea provided no medical evidence that these actions caused her mental distress.

Ms. Galea claimed punitive damages. The trial judge awarded her $ 500 000 punitive damages for the following behaviour: “ All of Wal-Mart’s conduct that justifies an award of punitive damages occurred between January 29, 2010 and November 19, 2010 when Wal-Mart would make representations to Ms. Galea about her career prospects while making decisions that detracted from, or even defeated that purpose. It is not that Wal-Mart set Ms. Galea up to fail; it is that Wal-Mart built her up, only to let her down that much more. That corporate behaviour was not just unduly insensitive, it was mean.”

Lessons to be Learned

  1. Wal-Mart’s decision to stop termination payments after 11.5 months instead of continuing the payments for the contractually prescribed 24 months was a reason the judge ordered Wal-Mart to pay Ms. Galea moral damages. Accordingly, in this case, damages flowing from the breach of contract was more than would normally be awarded in a case like this which is the difference between the 11.5 months and the 24 months.
  2. If an employer does not want an employee to receive damages for the variable compensation that she would have earned had she received notice of termination then the variable compensation plan must clearly say so. For earlier blogs on this issue, click here
  3. If an employer implements a re-organization and does not immediately offer a new job to a person whose position has been eliminated then the employer should provide a reasonable road map to the displaced employee on how her continued employment will be handled and act consistently with this plan. In this case, the judge stated: “Conduct that can trigger moral damages includes an employer’s conduct that is untruthful, misleading or unduly insensitive, and a failure to be candid, reasonable, honest and forthright with the employee.” He found that Wal-Mart breached this duty as it was trying to find a new position for Ms. Galea. I don’t know if this case will turn out to be an outlier but in the meantime employers should be very careful when dealing with an employee who is between jobs within the organization.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

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