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Employment Standards




MOL Inspection Blitz - Retail Employers Beware

Practice Areas: Employment Standards

The Government of Ontario is spending $3 Million to double the number of inspectors and double the number of businesses inspected to make sure workers in the Retail Sector are treated fairly. 

Ontario is taking action to protect retail workers’ rights and promote fairness in the workplace by launching a province-wide employment standards retail inspection blitz this fall. The proactive enforcement blitz under the Employment Standards Act, 2000 (ESA) targets “retail services” including retail chains, franchises, gas stations, convenience stores and grocery stores. The blitz is scheduled to last from October to December 2013.

Ministry of Labour inspectors are slated to visit the subject retail establishments between October and December.  The inspections are part of a risk-based strategy that focuses on sectors that employ vulnerable workers, have a prior history of employment standards violations and represent a significant part of the workforce in Ontario, notwithstanding that individual retailers may have no history with the Ministry of Labour themselves.

The proactive inspections are designed to ensure compliance with core ESA standards such as postings, wage statements, and record keeping, hours of work, eating periods, and pay, minimum wage, public holidays, vacation with pay. Inspections are also aimed at educating employers and employees about their rights and responsibilities under the ESA, and helping them to find more information.

The MOL will place particular emphasis on compliance with the overtime provisions of the ESA; specifically,  the MOL is seeking to ensure retail managers and supervisors not currently receiving overtime pay are not in fact “working managers,” which status would entitle them to overtime pay.

In Ontario, an employee is entitled to overtime pay for each hour of work in excess of 44 hours per week. There are exceptions to this general rule, one of which is the Managerial and Supervisory Overtime Exemption. Under this exemption, an employee whose work is managerial or supervisory in character is exempt from the overtime provisions of the ESA. These employees may perform some non-managerial work and remain within the exemption but only if work is performed on an irregular or exceptional basis. Determining whether work is managerial or supervisory requires an evaluation of the actual functions performed. Generally, however, a “manager” exercises discretion and independent judgment in the management of the affairs of the organization and in most cases has the ability to impact the employment of others (such as hiring, shift scheduling, performance reviewing, counseling, disciplining and firing).

In addition, the following areas will be emphasized in the inspections.

  • Calculation of holiday pay.  Statutory holiday pay is owed where an employee agrees to work on a holiday (instead of receiving a substitute day off with pay). Employees are entitled to "public holiday pay" + "premium pay" for the hours worked on the holiday. Employers generally pay the "premium pay" (time-and-a-half) but forget to pay the "public holiday pay" (which is based on a formula of the last 4 weeks' wages divided by 20).  The MOL has a useful public holiday pay calculator.
  • Time off in lieu of overtime pay. Some retailers allow employees to take paid time off work in lieu of overtime pay. This is permissible under the ESA. However, just as overtime pay must be compensated at "time-and-a-half", time off in lieu of overtime must be as well. As an example, if an employee works 2 hours of overtime in a week, that employee should receive 3 hours off (2 x 1.5) with regular pay (not 2 hours off).
  • "Use it or lose it". A common policy in many workplaces forces employees to take vacation or else the vacation entitlement disappears at the end of the year. The ESA provides that employees must receive 2 weeks' vacation and take such vacation within 10 months of earning it. In addition, employees must receive at least 4% of wages as vacation pay each year. Employing a "use it or lose it" policy is not only contrary to the ESA, but potentially costly.
  • Service accrual during maternity/parental leave.  Under the ESA, an employee on leave is entitled to have his or her service recognized for rights/benefits, which period includes the time accrued while on leave.  Therefore, an employee who’s accumulated service, which is employed to determine vacation and or benefit entitlement, includes the period during which they were on maternity/parental leave.

Given the blitz, employers in the Retail Sector, are well advised to review their workplace practices to ensure compliance with the ESA.  This exercise should include a detailed, critical review of all workplace policies, protocols, handbooks, manuals, directives, employment agreements and, of course, practices.  The objective is to identify potentially troublesome language, protocols, and routines, and proactively correct them.

The Employment Standards Act is very technical legislation. It is designed for the protection of employees and is strictly interpreted, which often works against the employer.  MOL Inspectors have a wide array of powers in the event of a violation, including issuing orders to pay wages to affected employees, and even potential prosecution. As noted above, the Ministry of Labour is ramping up their ability to enforce the ESA by increasing the number of inspectors, and, consequently the number of inspections that will be performed.  An audit and revision of your policies, practices and protocols in relation to employment standards, as stated above, will save you from potential prosecution and unwanted expense. The lawyers at CCP specialize in workplace audits and policy alignment and compliance, and can assist in this review and provide guidance to ensure compliance as well as provide representation, in the event that orders to pay or notices have already been issued. 

Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.


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