Issue What has changed? Recommended action
Independent contractor class action certified
In July 2016, the Ontario Superior Court certified a class action in which 7,000 sales agents claim they were misclassified as independent contractors. The case is the first of its kind to be certified in Canada. The overall merits of the claim were not assessed at the certification stage. However, if the sales agents are successful, the company (Just Energy, a natural gas and electricity retailer) could face large liabilities relating to unpaid wages (including overtime, vacation and public holiday pay) and unremitted income taxes and other required deductions.
Employers who retain service providers as contractors should be cognizant of the risk of misclassifying actual employees as contractors, particularly where collective action could be taken in relation to such misclassification.
Employers should also be reminded that a service relationship is not defined by the terms used by the parties but by how the parties actually conduct themselves, i.e., the use of contractor language in an agreement is not definitive.
Employers should now:
• audit their workforce to identify potential misclassifications of service providers;
• take steps to remedy misclassifications, including reclassifying and addressing unpaid liabilities, where appropriate; and
• review agreements with contractors and update these where needed, particularly where roles have evolved or changed over time.
Canadian multinational corporations facing claims in Canadian courts alleging human rights violations and/or unsafe working conditions in their overseas supply chains – marking a recent
There has been a developing trend in litigation against Canadian multinational corporations with groups of defendants alleging abuses flowing from overseas supply chains.
Most notably, a Canadian court ruled in October 2016 that a lawsuit brought by six men who allege they were forced laborers in a mine in Eritrea owned by Nevsun Resources Ltd, a Vancouver-based mining company, can
As large civil claims for alleged overseas human rights violations may find receptive courts in Canada, it is critical for Canadian multinational employers to take action. Employers need to understand and act upon the emerging risks because they can have a significant negative impact on profitability and undermine a 1
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Issue What has changed? Recommended action
trend in such litigation
foreign claimants have been able to proceed to trial in Canada against a Canadian company for alleged violations of customary international law for human rights abuses in overseas operations.
Litigation is also pending against Toronto-based Hudbay Minerals Inc. (brought by a group of indigenous Guatemalan Mayans for human rights violations related to a mining venture) and against the Loblaw Companies Limited and affiliates (class action launched by Bangladeshi garment workers in response to the 2013 Rana Plaza collapse in Dhaka, Bangladesh).
This emerging trend in litigation is taking place against the backdrop of hardening and expanding international business and human rights standards and norms.
company's social license to operate.
While there is no "one size fits all"
solution, demonstrating respect for human rights, knowing the direct and indirect impacts of business activities and supply chains, and establishing effective due diligence processes are increasingly essential for large and small businesses alike.
In terms of preventative measures, employers should:
• conduct a legal risk analysis of current activities and operations;
• implement human rights policies and supplier codes of conduct;
and
• take swift action to investigate and remedy problem areas.
By undertaking these measures, multinationals will minimize their financial, brand and legal risk.
Confirmation that most federally-regulated, non-union employees can only be dismissed for "just cause" after 12 consecutive months of service
Employees who are regulated under Part III of the Canada Labour Code cannot, following their first year of employment, simply be provided with termination notice or pay in lieu, absent a compelling reason for termination – this is now clear from the Supreme Court of Canada's ("SCC") decision in Wilson v. Atomic Energy, 2016 SCC 29. Federal employers may nevertheless dismiss an employee who has been laid off due to a "lack of work" or
"discontinuance of a function".
Federally-regulated employers who had embraced "without cause dismissals" as a result of the Federal Court of Appeal's decision in Wilson v.
Atomic Energy of Canada Limited, 2015 FCA 17 must re-adjust. It is now more important than ever for federal employers to implement rigorous and well-documented performance management processes – processes which are crucial for proving just cause if litigation ensues.
Practically speaking, the SCC's decision also increases the importance of:
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Issue What has changed? Recommended action
• establishing carefully-crafted written employment agreements for all non-union employees;
• implementing an effective probationary period; and
• administering redeployment policies where appropriate.
Public disclosure of private facts creates new risk for employers
New developments in privacy law are rapidly emerging, including novel responses to disturbing social trends on the internet. In 2016, a new privacy tort, "public
disclosure of embarrassing private facts", was introduced by the Ontario Superior Court in the Court’s decision on an undefended motion: Jane Doe 464533 v. N.D. The decision has since been set aside in order to be determined at a full hearing with both parties in
attendance, due to the significant nature of the matters to be determined.
The law in this area is still developing. The above case suggests however that employers can be named as co-defendants in cases where an employee publicly discloses embarrassing images of, or information about, a coworker – this is because the employer may be held vicariously liable for acts committed by its employees in the course of their employment, and employers will be presumed to have deeper pockets than the other defendant(s).
The above case also suggests that if liability for public disclosure of private facts is established, damages awards may be much higher than damages for the tort of intrusion upon seclusion.
It is now more important than ever for employers to ensure that employee information is protected and only disclosed, with consent, on a need-to-know basis. For example, human resources files and workplace computer systems often contain very sensitive, confidential information about employees. This information must be kept secure.
To reduce the risk of litigation occurring, employers should establish and review their privacy policies and practices to ensure employees understand they are expected to respect their coworkers' privacy – both inside and outside the workplace. In short, employers must take all reasonable steps to ensure its employees' private facts are not publicly disclosed.
Protections against workplace harassment strengthened in Ontario
Increased legislative protections against workplace harassment, which now expressly includes workplace sexual harassment, are now in effect in Ontario as a result of amendments to the Occupational Health and Safety Act ("OHSA"). Central to these amendments are more robust workplace investigation requirements.
We anticipate that the Ministry of Labour will conduct inspections to ensure employers are complying with the new legislative requirements. Employers who do not
Employers who have not already done so should expeditiously do the following:
• In consultation with the committee or health & safety representative, if any, amend their existing workplace harassment policies and programs to comply with OHSA requirements. Among other 2
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compliance, which may include a substantial fine. – specifically including
"workplace sexual harassment" in the policies and programs;
– ensuring investigations
"appropriate in the circumstances" are
conducted into incidents and complaints of workplace harassment;
– setting out how
investigations will be carried out, including how a worker who has allegedly experienced workplace harassment and the alleged harasser "will be informed of the results of the
investigation and of any corrective action that has been taken or that will be taken as a result of the investigation";
• Ensure sufficient information and instruction is provided to incoming and existing employees regarding policies and practices against workplace harassment; and
• Set a timeline to review the policies and programs at least annually.