Tough new legislation from Ontario Ministry of Labour introduces unprecedented support for vulnerable workers

Ontario Minister of Labour, Training and Skills Development, Monte McNaugton is making good on his government’s promise to crack down on unregulated temporary help agencies (THAs) and recruiters and business who are using unlicensed operators. The problem of unregulated THAs and recruiters is well documented by ministry officers who have conducted inspections. Their reports show that multiple THAs in Ontario are illegally paying people below the minimum wage and denying other basic employment rights, in an effort to gain a competitive advantage by undercutting rates.

More than 2,000 THAs in Ontario place hundreds of thousands of workers in seasonal and short-term office, agriculture, hospitality, and other sectors. Some of these firms have been caught failing to comply with Ontario employment law on paying workers minimum wage, overtime and vacation pay. Economic uncertainty brought on by the pandemic saw a rise in the use of THAs in Canada. Recent enforcement campaign by Ontario Ministry of Labour investigated temp agencies supplying workers to retirement homes, food processing pants, and warehouses, found evidence of $3.3 million in unpaid wages.

Proposed legislation would require THAs and recruiters to have a license to operate in the province. It would also empower the Ministry to punish those who continue to abuse their workers. A dedicated team of inspectors will be tasked with vetting THAs and recruiters before issuing them a license to operate. Penalties will be issued against unlicensed agencies and recruiters, as well as companies who employ them. THAs and recruiters who want to obtain a license would need to provide an irrevocable letter of credit that could be used to repay owed wages to workers. Businesses who use deceitful recruiters will be required to repay workers for illegal fees charged. A system is put in place to completely shut down agencies who are found to be exploiting staff.

Though this legalization is designed to cover domestic and foreign temporary workers, there is little doubt that the latter group are more susceptible to workplace abuse, as they are often less aware of rights and responsibilities under employment standards and feel less empowered to report transgressions they are experiencing. Illegally operating agencies and employers exploit foreign works by withholding their passports or paying them less than minimum wage. These changes should be a welcome step in a larger effort to combat workplace abuse.

Just because a company is not considered an “employer of record”, for employment purposes, does not necessarily mean they are not subject to other laws when it comes to foreign workers.Companies must still ensure all temporary workers placed by a recruiting company or third party, are legally able to work in Canada and understand if their work permit restricts who they can work for, the type of work they can do and the number of hours they can work. In accordance with the Immigration and Refugee Protection Act (IRPA), it is an offence for a company to employ anyone that is not legally authorized to work in Canada and employers that do not take reasonable steps to determine whether employment is authorized, are deemed to know that it is unauthorized. If you are unsure whether someone can legally work in Canada, contact one of our lawyers or immigration consultant for advice.

If the legislation is passed, the government intends to require licenses as early as 2023.