Minimum Wage Increases and Ontario Employment Shake-up: What Employers Need to Know

Ontario’s Bill 149, Working for Workers Four Act, 2024, received royal assent on March 21 2024, bringing in new changes to Ontario’s employment landscape. Below are some of the key developments that businesses with employees in Ontario should be aware of.

A number of Bill 149’s changes apply to the Ontario Employment Standards Act, 2000 (the “ESA”), including the following that came into effect on March 21, 2024:

• Trial Periods. The ESA now clarifies that a person engaged by an employer in a trial period for the purpose of training is considered an employee under the ESA if the skill in which they are being trained is a skill used by the employer’s employees. Employers must therefore compensate such individuals (and afford them their other applicable entitlements and protections under the ESA) even if the employer is still assessing whether they want to keep the person on. Consequently, employers should consider having such persons enter into written contracts setting out the terms and conditions relating to their training and ensuring that such contracts meet the minimum requirements prescribed by the ESA.
   
• Pay Deductions. The ESA now clarifies that an employer cannot deduct an employee’s wages because a customer left without paying for the goods or services they received. The ESA lists restaurants and gas stations as examples but this prohibition applies to any location in Ontario at which an employer carries on business.

The following changes to the ESA will come into effect on June 21, 2024:

• Vacation Pay. Alternative vacation pay arrangements, for example where an employee is paid their accrued vacation pay each period instead of as a lump sum before they take their vacation time, must be agreed to in writing between the employee and the employer. This can be accomplished in an offer letter or employment agreement with the employee. The ESA is not clear whether this obligation applies to alternative vacation pay arrangements in effect prior to June 21, 2024. Accordingly, where employers do not have such written agreements currently in place and wish to continue to provide for an alternative vacation pay arrangement, a separate agreement with the employee should be entered into.
   
• Tips. Tips or other gratuities may be paid in cash, cheque, direct deposit, or any other method that may be prescribed by regulation. Tips paid in cash or cheque must be given to the employee at the workplace unless the employee agrees to another location. If an employer has a policy in place whereby the employer or a director or shareholder of the employer will participate in the pooling or sharing of tips or other gratuities, that policy must be posted in at least one conspicuous place in the establishment where employees are likely to see it, and the employer must keep a copy of the policy for three years after it ceases to be in effect.
   
• Direct Deposit. Employers must ensure that wages paid via direct deposit are directed to an account that is both in the employee’s name and selected by the employee. Currently, the only requirement is to ensure the account is in the employee’s name. The ESA will also contemplate the introduction of regulations that further prescribe the use of employee accounts for the direct deposit of wages. To meet this obligation, employers should receive written instructions from their employees as to their desired direct deposit accounts. 

On some future date to be proclaimed, the following changes to the ESA will come into force:

• Pay Transparency. Employers will be required to include the expected compensation or the range of expected compensation when publicly advertising an open position. Bill 149 includes language that contemplates the repeal of these job posting pay transparency requirements, so it is unclear how long they will be in effect if they are eventually proclaimed into force.
   
• Canadian Experience. Employers will be prohibited from including any requirements related to Canadian experience in a publicly advertised job posting or any associated application form. “Canadian experience” is not defined in the ESA but we expect it is intended to capture prior work and education experience in Canada. We are hopeful that regulations or other guidelines will be released to clarify.
   
• Artificial Intelligence. If an employer uses artificial intelligence to screen, assess or select applicants for a publicly advertised job posting, the posting must include a statement disclosing this. Regulations may be introduced that define “artificial intelligence” in this context but are not yet in place.
   
• Job Postings Recordkeeping. Employers must keep copies of each publicly advertised job posting and any associated application form for three years after they are taken down.

Bill 149 is the latest in a series of changes to the ESA and other legislation in Ontario, including the Workplace Safety and Insurance Act, 1997 and the Digital Platform Workers’ Rights Act, 2022. See here for our discussion of some changes that came into force in October 2023.

While You’re Here: Businesses that have employees in certain provinces or are federally regulated should take heed of April 1, 2024 changes to minimum hourly wages, as follows: 

Contact Mintz’s Canadian Employment Practice if you require any guidance or assistance in complying with Ontario’s Employment Standards Act, 2000 or any other employment-related laws in Canada.

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