Simon's Megalomaniacal Legal Resources

Employment Law (Ontario) Legal Guide
(01 January 2016)

Chapter 7 - ESA Administrative Enforcement

1. Overview
   (a) Overview
   (b) ESA Administration
   . The Minister of Labour
   . The Employment Standards Director
   . Employment Standards Officers
   
2. Complaints
   (a) General
   (b) Form of Complaint
   (c) Complaint Procedure
   (c.1) Refusal to Process Complaint on Non-Compliance with Director's Information and Evidence Demands
   (d) Benefit Plan Issues
   
3. Limitations
   (a) Overview
   (b) "Main Two-Year Wage Order" Limitation Period and Variations
   . Overview
   . "Wages" Reviewed
   . "Main Two Year Wage Order" Limitation Period
   . "Collateral Investigation Discovery" Form
   . "Inspection Commencement" Form
   (c) Transition to New Limitations Regime at 20 February 2015
   (d) "Two Year General" Limitation Period on Filing
   (e) Two-Years After Complaint or Inspection General Limitation Period on Orders and Notices of Contravention
   . Overview
   . "Two-Years After Complaint or Inspection General" Limitation Period
   . Where Separate Complaints Based on Same Provisions Respecting Same Employer
   . Amendment or Recission Barred After Limitation Period Expires
   
4. Orders and Related Measures
   (a) General
   (b) "Arrangements to Pay"
   (c) Wage Compensation Orders
   . Overview
   . Maximum Amount of Order
   . Order Surcharge
   . Reasons for Order
   . Service of Orders and Other Documents
   . Verification of Service
   . Finality
   . Refusal to Issue Wage Compensation Order
   (d) Injunction Orders
   . General
   . Service of Injunction Orders
   . Court Injunctive Enforcement of ESO Injunctions and Orders
   . Refusal to Issue Injunctive Order
   (e) Wage Compensation Orders Against Directors of Employer Corporations
   . Overview
   . The Corporations Act Provisions: An Example
   . A Twist: Unanimous Shareholder Agreements
   . ESA Part XX: The ESA Director Wage Liability Provisions
   . Conflict Between the ESA and the Corporations Act Director Wage Liability Provisions
   . ESO Authority to Make Director Wage Liability Orders
   (f) Party-Party Settlements
   . General
   . Application of Settlement Provisions
   . Formalities and Content of Settlement
   . Legal Consequences of a Party-Party Settlement
   . Setting Aside a Settlement
   (f.1) ESO-Initiated Settlements
   . Overview
   . Procedures for ESO-Initiated Settlements
   . Effect of ESO-Initiated Settlement
   . Voiding an ESO-Initiated Settlement
   (g) Amendment or Rescission of Orders
   (h) Arbitrations for Unionized Employees
   
5. Payment and Collection of Orders
   (a) General
   . Overview
   . A Note re "Arrangements to Pay [ATPs]"
   (b) Payment of Order and Review Rights
   (c) Collection Methods
   . General
   . Court-Enforcement
   . Note re Choice of Enforcement Court
   . ESA Garnishments
   . Collector Fees and Disbursements
   (d) Distribution of Monies Received by Collector/Director
   . General
   . Where Paid Without Collection
   . Where Paid on Collection
   (e) Collection Settlement
   (f) Where Employee Cannot Be Found
   (g) ESA Orders versus other Debts Owed by the Order-Debtor
   (h) Reciprocating States
   (i) Bankruptcy of the Employer
   
6. Employment Standards Officer Inspection and Investigative Authority
   
7. Employer Self-Audits
   
8. Service of Documents
   
9. Employers and Employees Act

________________________________________

Important Note:
The Employment Standards Act (ESA) is riddled with many full and partial exemptions to it's provisions, as well as numerous 'special rules' for various industries or types of work. While I may note these variations throughout this Employment Law (Ontario) Guide when explaining individual topics generally, readers facing a specific fact situation should carefully review Ch.1 "Primary, ESA-Special and ESA-Exempt Employment Sectors" to determine if their specific employment situation is governed by any of these exemptions or special rules.

1. Overview

(a) Overview

As is discussed below, in my view the administrative enforcement mechanisms of the Employment Standards Act (ESA) embody several pointless (and - in fairness to ESA staff - usually structural) barriers to robust, efficient and prompt resolution of employee claims on their true legal merit.

Most implicated in this situation are an intimidating array of confusing and arbitrary limitation periods, discussed in s.3 below.

Next - all of the first-instance enforcement means available (wage orders, compliance orders, "arrangements to pay" and "notices of contravention" - amongst others) - being administrative in nature, place an excessive responsibility of procedural advancement and "carriage" on the Employment Standards Director and their staff (ie. employment standards officers or "ESOs"). This situation extends significantly into the collection phase of any proceeding as well. This leaves the employee helpless in the face of any delay or inefficiency of the Director's administrative processes.

Further, the administrative enforcement mechanisms - with the notable exception of s.103 wage orders - are generally restricted to enforcement of "minimum standards" only. Any contractual entitlements above the minimum standard levels must be either abandoned, or pursued in other forums, usually courts. The tactical difficulties posed to employees by such divided remedial jurisdiction are discussed in Ch.2, s.2: "Advocacy: Forum Considerations".

It is primarily for these reasons that I generally - and reluctantly - recommend that employees wishing to assert their legal rights use the civil courts as the preferred medium of redress [see Ch.2: "Advocacy"]. Anyone familiar with the expense, delay and frustrations that are endemic to the civil courts will realize what a sad comment that is on the ESA enforcement regime.

(b) ESA Administration

. The Minister of Labour

ESA administrative enforcement is ultimately the responsibility of the Minister of Labour [ESA s.84], delegated firstly to the Employment Standards Director and then sub-delegated to a range of delegates and employees such as employment standards officers (ESOs) and collectors [ESA s.85,86.87].

. The Employment Standards Director

The ES Director is given various powers and responsibilities throughout the Act [ESA s.88], including the authority to:

• establish policies "respecting the interpretation, administration and enforcement of this Act" (for its own internal purposes and those of its staff, subject to reversal by the OLRB or the courts);
  
  
• delegate its own authority to ESOs;
  
  
• determine the rate of interest and the manner of calculating interest for the purposes of this Act, subject to Ministerial approval;
  
  
• pay out monies (with interest) held in trust for persons, as circumstances required.

Section 88(9) of the ESA expressly eliminates any requirement on the Director to hold a hearing (a common court-mandated requirement meant to maintain basic procedural justice) "in exercising any power or making any decision under this
Act." One consequence of this rule is that the Director is not, in its administrative proceedings, required to have regard to the genereal administrative procedures of the Statutory Powers Procedures Act (SPPA) with respect to the exercise of its powers and duties.

Note:
The SPPA contains a broad range of "default" natural justice procedures which (generally) apply in any situation where a governmental party is exercised a "statutory power of decision" and is required either by statute or by the common law to hold a hearing before such power is exercised. The SPPA is the subject of its' own Isthatlegal.ca Legal Guide, linked here:

Administrative Law (Ontario)(SPPA)
Note that the OLRB is practically exempt from SPPA application in its ESA "Review" capacity as well [see Ch.8: "OLRB Procedures For ESA Matters"], although it's own procedures generally satisfy 'natural justice' requirements.

. Employment Standards Officers

The broad powers and roles of employment standards officers (ESOs) are discussed throughout this Guide, particularly in this chapter [ESA s.89(1)].

Additionally, ESOs have (rarely used) powers to [ESA s.93] "require an employer to post and to keep posted in or upon the employer's premises in a conspicuous place or places where it is likely to come to the attention of the employer's employees:

• any notice relating to the administration or enforcement of this Act or the regulations that the officer considers appropriate; or
  
  
• a copy of a report or part of a report made by the officer concerning the results of an investigation or inspection".

ESOs are however directly subordinated in the performance of their powers and duties to policies established by the ES Director (above) [ESA s.89(2)]. Employees and their advocates should however always be careful not to accept these policies as law - they are only internal administrative directions from the Director to its staff directing what positions to take in otherwise ambiguous situations. Policies are always inferior to law, even policies about the interpretation of law.

Further, individual ESOs are subject to case-by-case discretionary removal and replacement by the Director [ESA s.88.1]. Likely reasons for use of this authority would be conflict of interest or incompetence.

As is the case with the Director in the exercise of statutory powers and duties, ESOs are not required to hold hearings "in exercising any power or making any decision under this Act" [ESA s.89(3)]. This similarly immunizes them from the application of the SPPA (mentioned above).


2. Complaints

(a) General

The "complaint" is the main form in which an administrative proceeding is commenced under the ESA. Subject to proper form, and compliance with limitation periods (see s.3 below), any person (ie. employee) [and including trade unions representing employees: ESA s.1(1) defns] may file a complaint with the Ministry of Labour (practically with the local ES office) respecting an alleged contravention of the ESA [ESA s.96(1)].

The interaction between ESA complaints (on the one hand) - and civil actions, union grievances and other employment-related proceedings (on the other hand) - as means to enforce ESA and/or common law entitlements is discussed in Chapter 2: "Advocacy". There are important tactical issues involved in such interactions.

(b) Form of Complaint

Complaints failing to comply with the format established by the Director are void [ESA s.96(2)].

ESA Complaint Form
(c) Complaint Procedure

The complaint resolution process is an internal administrative process conducted by an "employment standards officer" (ESO). It is not a judicial or quasi-judicial hearing process. The ESA expressly states that:

s.89(3)
An employment standards officer is not required to hold a hearing in exercising any power or making any decision under this Act.

As noted above [s.1(b)], this legal statement has the effect of exempting the complaint process from the standardized hearing procedural provisions set out in the Statutory Powers Procedures Act (SPPA), a generic Ontario administrative tribunal procedural code which is the subject of its own Isthatlegal.ca program. The SPPA can apply only where the statutory decision-maker is under a legal duty to hold a hearing [SPPA s.3(1)].

ESO investigative and inspection authorities are discussed at s.6 below ["ESO Investigative Authority"], and ESO order-making and notice-issuance authorities are discussed at s.4 ["Orders and Related Measures"] below.

(c.1) Refusal to Process Complaint on Non-Compliance with Director's Information and Evidence Demands

. Overview

As of 29 November 2010 the ESA was amended to introduce new complaint dismissal procedures. Essentially they allow Employment Standards Officers (ESOs, who act on behalf of the ESA Director) to demand that details and evidence (aka 'particulars') respecting the complaint be given to the respondent (typically the employer) and/or the ESA Director. Non-compliance with such demands gives the ESA Director the option of refusing to process the complaint [ESA 96.1(1,2)].

. Demand for Details and Evidence

Details and evidence that the ESO may demand that a complainant provide include, but are not limited to, the following [ESA 96.1(3)]:

• to the employer: "the basis for his or her view that this Act has been or is being contravened and, if he or she is of the view that wages are owed, the amount of the wages" (doing this in writing is not required, but makes things easier for all concerned);
  
  
• to the Director, in writing: "what information was given to the employer (under the first requirement, above), the manner in which it was given and the response, if any, that the employer gave";
  
  
• to the Director, in writing: "such evidence and other information ... as the Director considers appropriate for assigning the complaint to an employment standards officer for investigation".

. 'Notice of Refusal to Process' After Non-Compliance

If the Director is of the view that the complainant has failed to comply with the demand, they shall send the complainant a notice advising that the complaint will not be assigned to an ESO for investigation [ESA 96.1(4)].

. Deemed 'Notice of Refusal to Issue Order' if Continued Non-Compliance

On continued failure to comply with the demand for six months, counted from when the complaint was filed (not after the above 'refusal to process' notice), the law 'deems' (ie. assumes as having happened, even though it hasn't) that an ESO has "refused to issue an order and to have served a letter on the complainant advising him or her of the refusal on the last day of the six-month period" [ESA 96.1(5)].

Note that a 'refusal' may then be subject of a review application to the OLRB (see Ch.8, s.2).

(d) Benefit Plan Issues

Note that while issues involving employee "benefit plans" can be dealt with under the general ESO administrative procedures discussed in this chapter, they can also be referred to the Ontario Labour Relations Board at the discretion of the ES Director, or pursued in civil court for that matter.

Important tactical issues regarding the choice of procedure for enforcing benefit plan entitlements are discussed at Ch.5, s.1(e): "Benefits Plans, Leaves and Other ESA Rights: Benefit Plans: Benefit Plan Enforcement".

For procedures governing referrals to the OLRB, see Ch.8, s.12: "OLRB Procedures: Benefit Plan Issue Referrals".


3. Limitations

(a) Overview

The ESA regime establishes several different types of limitation periods, explained in turn below. Limitation periods are time-defined bans and barriers on legal proceedings, usually setting out a date by which the proceeding must be commenced, failing which the right to do so is lost. The classic form of a limitation period is in civil actions (ie. lawsuit) where an action commenced after the "limitation period" - counting from when the "cause of action arose", is by that reason barred. Limitation periods are often justified by those who promulgate them as guarding against claims based on 'stale evidence', and providing 'finality' to economic relations. While this rationale is dubious in the ESA context, where employers are required by statute to maintain accurate records of hours worked, it persists.

Below [(b),(d) and (e)] I consider the various limitation period forms in turn. For reference, I have labelled them as follows - though there can be variations within each form:

• the "Main Two Year Wage Order" limitation period, in its main form and in the following variations:
  
  - the "Collateral Investigation Discovery" form,
  - the "Inspection Commencement" form, and
  
  
• the "Two-year General" limitation period.
  
  
• the "Two-years After Complaint or Inspection General" limitation period (on Orders and Notices of Contravention).

At sub-section (c) I explain some transitional rules that apply commencing 20 February 2015, when the main limitation periods were extended from six months to two years in length.

(b) "Main Two-Year Wage Order" Limitation Period and Variations

. Overview

The "main two-year wage order" limitation period applies to the ESO's authority to make orders respecting unpaid wages. If this limitation period expires before a formal ESA complaint has been filed, then the ESO loses authority to make any necessary Order.

It comes in several variations, however all of them are similar to the 'classic limitation period' mentioned in (a) above in that they commence counting when the contravention occured (ie. when the wage debt is due), and expire when the limitation period has passed without a complaint being made (or, in the "collateral investigation discovery" variation, without a contravention having been collaterally discovered in a separate complaint investigation).

. "Wages" Reviewed

I think it best to commence this section - dealing as it does with limitations placed in "wage orders" - by reviewing exactly what is meant "wages":

ESA s.1(1)
"wages" means,

(a) monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied,

(b) any payment required to be made by an employer to an employee under this Act, and

(c) any allowances for room or board under an employment contract or prescribed allowances, ...

[* I have cut out the 'exclusions' as they are irrelevant for present purposes]

Roughly, this includes "regular wages" [whether in hourly, salary, piecework or other form] and any form of premium-type wages such as overtime, vacation or holiday pay - even if the entitlement arose under purely contractual provisions (ie. not just as ESA "minimum standard entitlements"). Also included are room and board allowances, and any benefit plan entitlements which take the form of monetary payments. The definition is, in short, exhaustive of just about all monetary entitlements that an employee could receive.

Now back to limitation period law.

. "Main Two-Year Wage Order" Limitation Period

This first form of the "two-year general wage" limitation is its simplest and most likely to be applied against employees. It bars employment standards officers (ESOs) from issuing Orders for "wages" (see below) unless the matter was formally complained of by the employee (or their union) (ie. by their filing an ESA complaint) within two years of the "wages" becoming due [ESA s.111(1)]. That is, the Order can only 'reach-back' two years from the date that the complaint is made.

Wages come due in accordance with the practice of the employer respecting "pay periods" and "pay days" [ESA s.11(1)]. Basically, if a pay cheque or deposit is absent or short on the regularly established "pay day", then it is overdue the next day:

s.11(1)
An employer shall establish a recurring pay period and a recurring pay day and shall pay all wages earned during each pay period, other than accruing vacation pay, no later than the pay day for that period.

. "Collateral Investigation Discovery" Form

Similarly, if back wages are discovered owing to an employee in the course of a separate (collateral) complaint investigation (ie. a complaint initiated by or on behalf of some other party), ESOs may not issue wage Orders respecting the 'discovered' wages unless the separate complaint was made within two years of the "discovered" wages becoming due [ESA s.111(2)].

Essentially it allows ESOs to make wage orders respecting co-workers of the complainant (even if they have not complained themselves), for any wages falling due two years before the filing of the 'collateral' complaint.

. "Inspection Commencement" Form

This form of the two-year wage order limitation period relates to the date of the commencement of any "inspection" in which contraventions were discovered.

To clarify this, let's first distinguish "inspections" from "investigations". As these terms are used in the ESA, "investigations" stem from - and are thus initiated by - a formal complaint, invariably from an employee or their union. "Inspections", on the other hand, are activities of ESOs initiated under their general "inspection" authority [see s.6: "ESO Inspection and Investigative Authority", below], and as set out here [ESA s.91(1)]:

s.91(1)
An employment standards officer may, without a warrant, enter and inspect any place in order to investigate a possible contravention of this Act or to perform an inspection to ensure that this Act is being complied with.

For explanation purposes I'm assuming there are no complications involving simultaneous "investigations" and "inspections". That's a situation waiting for a lengthy court case.

The "inspection commencement" form of the two-year wage order limitation period bars an ESO from making an unpaid wages order if the inspection which discovered the contravention started more than two years after the wages became due [ESA s.111(3)]. In this respect it is similar to the main form of this limitation period in that it 'allows' only two years between wages becoming due and the commencement of the formal ESO examination of the situation.

(c) Transition to New Limitations Regime at 20 February 2015

Until amendments in force 20 February 2015, the standard limitation applicable to unpaid wage claims [as discussed in (b) above] was six months, an absurdly short period of time considering the circumstance of any employee with a greater claim, who - in order to commence timely ESA proceedings against their employer - was put in the position of having to advance them while employed.

With these amendments, the standard limitation is now extended to two years, subject to the following complex transition rules that limit unpaid wage claims for periods before 20 February 2015:

• unpaid wage claims (other than those listed below) can only 'reach-back' six months from the point that proceedings to claim them are initiated [ESA 111(3.1)]
  
  Note that where another employee has also alleged unpaid wages, the date of the earliest complaint amongst them shall apply to all such complaints: ESA 111(6,7)]. However an earlier contravention may not be relied upon to achieve this extension if it has already been resolved (by either order issuance, or notification of refusal to issue an order) [ESA s.111(8)].
  
  
• for claims for unpaid vacation pay, this 'reach-back' period is extended to twelve months [ESA 111(3.2)], and
  
  
• the 'reach-back period' is also extended to twelve months in the case of 'identical repeated contraventions' for unpaid wage.
  
  'Identical repeated contraventions' arise when at least two identical ESA contraventions for unpaid wages (or contraventions of identical contractual provisions) are found against an employer with respect to the currently-complaining employee, at least one of which occured within the six-months preceding the current complaint or current investigation [ESA 111(4,5)].

Readers who have found themselves afoul of any of this complex 'old limitation regime' (or for any reason for that matter) may want to consider the option of advancing their case in civil court, with its standard two-year limitation period [see Ch.2, s.2: "Advocacy: Forum Considerations"]. These 'old limitations regime' concerns only (and blessedly) relate to the ESA administrative wage recovery processes, not to civil court proceedings (ie. lawsuits).

(d) "Two Year General" Limitation Period on Filing

No complaint (of any sort) may be filed more than two years after the "contravention ... occurred" [ESA s.96(3)]. Note that while this provision has general application to ALL potential complaints to the Ministry, the more specific "wage" limitation period/s discussed in (b) above apply a shorter limitation period for wage order purposes.

This general limitation both partakes and varies from the classical "limitation period" form mentioned above [see (a) "Overview"]. Firstly it differs in that it is jurisdictional, not just a potential employer's defence. The language used in the statute [ie. "shall be deemed not to have been filed"] plainly allows an ESO to refuse to accept the complaint if the facts as alleged unequivocably show that the limitation period has expired.

Secondly, this form of limitation is similar to conventional limitation periods in that it's "counting" (ie. the running of time) is triggered by the occurrence of the contravention (ie. the "cause of action arising").

This limitation period - except for its "jurisdictional" nature - is very similar to the general two-year civil litigation (lawsuit) limitation period established by the Limitations Act, 2002. Limitation periods respecting lawsuits are not jurisdictional in the sense that they have to be expressly pleaded by the defendant.

(e) Two-Years After Complaint or Inspection General Limitation Period on Orders and Notices of Contravention

. Overview

This limitation period is similar to that discussed in (c) above (ie. the "two-year general limitation period") in that it operates jurisdictionally. However, unlike (c) above it does not operate to bar the filing of a complaint, but to bar the issuance of Orders or a Notice of contravention ("Notice") respecting a contravention ["notices of contravention" are similar to administrative fines, see Ch.9, s.3: "ESA Offences and Contraventions: Notices of Contravention"].

Those reviewing the ESA provisions establishing this limitation period [ESA s.114, 115] will find themselves facing obscure, ambiguous and unnecessarily complex legal drafting.

. "Two-Years After Complaint or Inspection General" Limitation Period

No Order (for any of wages, compensation or fees to be reimbursed) or Notice of Contravention may be issued for contraventions in respect of any of the following [ESA s.114(1)]:

• stemming from a complaint that is more than two years old,
  
  
• discovered in the investigation of a complaint filed by a separate employee against the same party if that investigation that is more than two years old ["collateral investigation discovery"], or
  
  
• discovered more than two years after an "inspection" to determine whether a contravention occured has commenced.
  
  Note the distinction between complaint "investigations" and general inspections discussed in (b) above [re: the "Inspection Commencement" form of the two-year wage limitation period].

Note further that the expiry of two years after a complaint has been laid, without the matter being resolved, legally results in a 'deemed refusal' of the ESO to issue an Order or Notice respecting the alleged contravention, as well as 'deemed service' of notice of such refusal) [ESA s.110(2)].

. Where Separate Complaints Based on Same Provisions Respecting Same Party

Where separate complaints are made against the same party with respect of "substantially the same" contravention (and the first is not yet resolved by order or refusal), then the above rule does not apply to the second complaint [ESA s.114(2-3)]. This prevents the "two years after complaint or inspection general" limitation being avoided by filing a second, later complaint regarding the same type of contravention. Thus the filing of the second, "same" complaint will not re-start this limitation period.

For these purposes, contraventions are "substantially the same" if they give rise to specific compensation entitlements grounded in the same ESA provision or "identical or virtually identical" contractual provision [ESA s.115(1)]. However - 'similar contraventions' for these purposes does not include the general 'duty to pay' wage entitlement provisions [s.11] or the general source deductions provision [s.13] which themselves are grounded in different ESA provisions or contractual entitlements: ESA s.115(2)]. The specific entitlement provisions to which this rule applies are those listed here:

s.22(1) overtime payment duty
s.23(1) minimum wage duty
s.24 public holiday pay
s.35.2 vacation pay duty
s.42 equal pay for equal work duty
s.44 benefit plan discrimination prohibited
s.61 termination pay in lieu of notice
s.64 entitlement to severance pay
s.81 corporate director's liability to pay wages

. Amendment or Recission Barred After Limitation Period Expires

Further, without consent of the involved parties, no order may be amended or rescinded after this limitation period has expired [ESA s.114(4)]. Similarly, without the consent of the party subject to the Order, no notice of contravention may be amended or rescinded after this limitation period has expired [ESA s.114(5)].

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