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Changing Workplace Review and Franchising Update

Canadian Franchise Association Law DaySeptember 22, 2016Larry Weinberg, Tim Lawson & Michael Sherrard

CFA Law Day: Changing Workplaces Reviews and Franchising Update –September 22, 2016

Agenda

nOverview of the Changing Workplaces Review Interim Report

nThe “Relevant Menu” of Potential ChangesqLabour Relations Act, 1995qEmployment Standards Act, 2000

nCFA Actions nWhere do we go from here?qNext Steps

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Overviewn Two Special Advisors appointed to lead public

consultations on the changing workplace: qC. Michael MitchellqHonorable John C. Murray

n Initial public engagement sessions gathered input from Ontarians

n Interim Report released July 27, 2016 which identified over 50 different issues and over 225 optionsq Further public submissions accepted until October 14,

2016qRecommendations in a Final Report to be released

February 2017

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Overviewn100’s of submissions made by: qTrade Unions & Employee AssociationsqWorkers’ Advocacy GroupsqLegal Aid ClinicsqEmployer AssociationsqIndividual Employers qChambers of CommerceqGovernment Agencies & Tribunals

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Mandate & Scope of Review

nThe Special Advisors have been asked to determine how the Employment Standards Act, 2000 and the Labour Relations Act, 1995 can be reformed to better protect workers while supporting business in our changing economy

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Context: Changing Workplaces nPublic consultations considered the following: qThe 21st Century Workforce qThe Global Economy qTechnological Change qRestructuring in the Service Economy qNon-Standard Employment n The ‘precarious worker’

qNew Forms of Work Organization qCollective Representation

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The “Relevant Menu” of Potential Changesn Labour Relations Act, 1995n Employment Standards Act, 2000

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LABOUR RELATIONS ACT, 1995

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Overview

“If we can increase trade union density in the province of Ontario we will surely improve the lives of the vulnerable workers who toil in precarious employment working below the poverty line.”

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The “Menu” of Potential Changes

nLabour Relations Act, 1995qScope and CoverageqUnion DensityqCertification ProcessqCollective BargainingqSectoral BargainingqSale of Business and/or Related EmployerqLabour Board

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Scope and Coverage

nExemptions or Misclassifications:qSupervisors and Jr. Managerial employeesqIndependent OperatorsqProfessionals

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Union Density

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Canada

United States


Union Density – Process ???

nChange certification process to card basednP.E.I., N.B. & QUE. nConstruction Only - N.S. & ONT.nFederal – Bill C – 4 (C-377 & C-525)nU.S.nManufacturing sector declinenService sector growth

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The Certification Process

nTheme: if we increase unionization = improved working conditions

nCurrent process: cards + vote = certification nMost common suggestion in consultations is to

change to card based only (no vote)nInformed employee choice

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The Certification Process

nMaybe not quite card based certification but changes to make unionization more accessibleqEmployee lists at 20% supportqOff site or neutral site votingqElectronic membership

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Collective Bargaining

nMicro units v. broader based bargaining structures

nLabour Board power to amend bargaining unit structures:q‘93 combination of bargaining unitsqFederal power to amend the bargaining unit

nAutomatic access to interest arbitrationnBan of replacement workers

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“New Models” of Collective Bargaining nSectoral Bargaining qOntario’s construction sector

nServiceqQuick service restaurant qHotelqDomesticsqJanitorialqHome Care

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Sale of Business and/or Related Employer ExpansionnU.S. - the Fissured WorkplacenNLRB - BFI case & GC initiativesnCWR – Actually broaden the “common

employer” test in legislationqIndirect controlqPotential to automatically deem certain

employment relationships to be joint employersqHeld jointly responsible

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Related Employer Expansion – Joint EmployernSpecial Advisors treat the franchise

relationship the same as temporary agencies and subcontracting, and for “special treatment”

nCite David Weil book on how fissuring is a deliberate strategy to avoid employer liability, and franchising is a form of fissuring

nSection 4.2.2 – Franchisor as joint employer will facilitate growth in unionization

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Related Employer Expansion – Joint Employern Section 4.6 -Special Advisors table the idea of

sectoral bargaining, like in the construction industry. –many possible models tabled

n Example 1: A single “parent franchisor with accompanying franchisees” could be certified as a single bargaining unit

n Example 2: All hotels or fast food restaurants in a single city, perhaps regardless of brand or ownership

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Related Employer Expansion – Joint Employern Ramifications for the franchise business modelqLarge franchisors become liable for franchisees’

employment liabilities qForced to turn stores corporate or “quasi-

corporate”, and stop franchising- level of service may not matter

qNew businesses lose incentive to start franchisingqForeign franchisors (new or old, big and small)

become residents of Canada for tax purposes

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Successor Employer

nBroaden the NDP Building Services legislation (‘93 – ’95):qCleaningqSecurityqFoodqHome Care qWhat Else?

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Ontario Labour Relations Board PowersnJustice delayed is justice denied:qShorten dispositions timesqAffidavitsqDay to day proceedings

nRemedial authority:qInterim reinstatementqCompensatory v. deterrenceqTreble damages

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EMPLOYMENT STANDARDS ACT, 2000

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The “Menu” of Potential Changesn Sample of Key ESA Issues in Interim Report:

qDefinition of “employee”qExemption categories and exclusionsqWho is the “employee” and scope of liabilityqHours of work and overtimeq Schedulingq Paid sick daysq Part-time and temporary work-wages and benefitsqTemporary help agenciesq Just cause termination

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Who is the Employer?

nTwo main issues:qMisclassification of too many “self-employed”

personsqExpand definition to include “dependent

contractors”

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Exemption Categories and Exclusionsn Increase or narrow the Exemptions?

q IT professionalsq Managers and supervisorsq Pharmacistsq Residential care workersq Residential building supers, janitors, caretakersq Students under 18q Liquor servers

n Increase or decrease the Exclusions?q Two exclusions considered

1. Interns/trainees2. Crown employees

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Hours of Work and Overtime Hoursn Relaxing Hours of Work Rules:qEliminate Director’s approval for excess weekly

hours beyond 48 qEliminate individual agreements for excess hoursqEliminate excess daily hour agreement

n Changing Overtime Rules:qReduce overtime threshold from 44 to 40qCap on overtime averaging periods

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Schedulingn Scheduling changes are afoot:qReporting pay obligationsqJob protected right to request schedule changesqRequiring advance notice of schedule changesqPreference to PT employees for extra hoursqEliminate on-call employees (i.e. causal)

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VacationSpecial Advisors note that Ontario has least generous vacation entitlement in CanadanTwo weeks per year after first year of work nIt appears the question is not whether it

should be increased, but by how much?

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Sick Days

nOptions considered:qPaid sick days (3, 6, more …)qQualifying period for paid sick daysqRequiring employees to pay for doctor’s notes

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Part-time and Temporary Employees

The Report concludes this is a vulnerable low wage/few benefits, non-unionized group in need of protectionnSame pay as FT employeesnSame benefit as FT employees or pro rata

treatmentnLimit duration of number of successive fixed

term contracts

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Temporary Help Agenciesn A wide range of options tabled to correct perceived

flaws in the business model:qExpanding joint liability of clientsqMaking the client the ESA employer of recordqEqual pay for equal workqReduce or eliminate hiring feeqLimit percent of temporary agency employees in a

workplaceqDeeming permanent employment after a period of

time

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Termination and Just Cause

nSeverance pay targeted: Decrease or eliminate 5 year and/or $2.5 million payroll threshold

nJust cause: Introduce just cause protection for non-union employees

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Who is the Employer and Scope of Liability n Special Advisors take specific aim at franchisingn Special Advisors seem to adopt premise that

franchising:qIs designed to avoid ESA liability by insulating

franchisorqMakes ESA compliance less likely

n Currently a franchisor is only liable as a related employer if the structure has the intent or effect of defeating the ESA

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nOptions tabled fall along a spectrum:

Who is the Employer and Scope of Liability

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Automatic ESAliability for franchisors/ Require contract clauses on compliance

Status quo: requiring “intent or effect” to defeat the ESA

Liability of franchisor only when a degree of control exist


Who is the Employer and Scope of LiabilitynOther options:qAbsolute liability for franchisors in only certain

industries where vulnerable/precarious workers are more prevalent

qProvide stronger remedies to enforce non-compliance against insolvent or non-paying franchisees

qLiens against goods produced in violation of ESA

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Ramifications of Joint Employern The idea of joint employer ESA liability, regardless of

extent of control, could very well:qIncrease franchisor liability towards franchisee ESA

violations or non-paymentqIncrease franchisor need to control franchisee

policies and practices (e.g. working conditions)qDecrease franchisee autonomy as employerqIncrease lawsuits/complaints naming franchisor as a

partyqRequire franchisor to take active role in defending

legal claims of franchisee employees38


NEXT STEPS

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Next StepsnFurther public consultations – until October

14th

nEmployer AssociationsnMPPsnRecommendations to be released in Feb ‘17nPotential legislation:qPEL Sept/Oct ‘16 = “quick wins”qSpring 2017 and beyond?

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Next Steps

nYou still have a say!qGet involvedqSubmissions in response to “Menu of Potential

Changes”qContact your local MPqContact a member of the CFA team

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n The information contained in this presentation is provided for general information purposes only and does not constitute legal or other professional advice.

n Reading this presentation does not create a lawyer-client relationship .

n Readers are advised to seek specific legal advice from members of your legal team or the CFA in relation to any decision or course of action contemplated.

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