Employers' Advisor

Employers’ Advisor September 2023

Articles:

  1. “Side Hustling” Could be a Threat to Employment: Court Upholds “With Cause” Termination of an Employee Who Worked a Secondary Job During Business Hours
  2. Attention Federally Regulated Employers: Recent Amendments to the Canada Labour Code Now in Effect 
  3. Temporary Help Agency Licensing: What Employers Need to Know 

“Side Hustling” Could be a Threat to Employment: Court Upholds “With Cause” Termination of an Employee Who Worked a Secondary Job During Business Hours

Roza Milani

ˈsīd-ˌhə-səl. noun. Work performed for income supplementary to one’s primary job.

The phenomenon of side hustling is not new. Given rising costs of living and inflation, some employees are increasingly likely to become involved with an external business during their employment. According to a recent survey by Angus Reid, 25 percent of small businesses were started during the pandemic, with 51 percent of those entrepreneurs likely to have multi-hustles rather than one business. New data from Accenture shows that 41 percent of Canadians plan to take on a side hustle in order to supplement their incomes.

However, taking on a second job without an employer’s express permission can come with its own costs. Such was the case in Dove v Destiny Media Technologies where the Supreme Court of British Columbia upheld the with cause termination of a long-service managerial employee.

The employer, Destiny Media Technologies (the “Company” or “Destiny Media”), operated within the technology industry. The employee, Ms. Dove, was hired on August 4, 2009 on a full-time basis. She was responsible for managing the Company’s list management service (“PlayMPE”), a software-based platform for marketing music within the music industry.

Before she was hired on a full-time basis, Ms. Dove was allowed to use the Company’s premises to work on a crystal business she operated, in return for doing administrative work for the Company. Once Ms. Dove became the Company’s full-time employee in 2009, Destiny Media made clear to her that she was no longer allowed to work on her crystal business in the Company’s office. The Court found that Ms. Dove should have understood this to be an indication that all outside work was prohibited during her working hours.

Nevertheless, over a six-month period between January 2017 and June 2017, Ms. Dove worked at a café/general store during the Company’s work hours. Without any prior approval from the Company’s management, she devoted at least three to four hours per week to café-related tasks. This side hustle directly and detrimentally impacted her work for the Company and her ability to execute responsibilities in a timely and productive manner. For example, she failed to respond to emails to her internal PlayMPE email address, struggled to meet her deadlines and was regularly absent from work without prior approval. Additionally, on at least one occasion, she stored goods intended for the café at the Company’s premises and directed another employee to help her produce signage for the café during their working hours.

Ms. Dove was dismissed for cause on June 28, 2017. She brought a wrongful dismissal claim against the Company.

The Court found that the Company had just cause for Ms. Dove’s dismissal in the circumstances. Notably, the Court upheld the dismissal despite the absence of any formal warning to Ms. Dove. The Court ruled that, despite any formal warning, it should have been obvious to Ms. Dove that her employment was at risk of termination. Additionally, Ms. Dove refused to cooperate with the investigation, which eliminated the Company’s ability to use the investigation as a means of alerting her to the precise nature of its concerns.

The Court dismissed Ms. Dove’s argument that she was fitting her café work in and around a full work commitment to the Company, stating that this suggestion was undermined by her inability to meet various deadlines for the Company. In any event, the Court indicated that employees are not free to simply allocate their work time to other commitments without the consent of their employer, whether they are busy or not.

Key Takeaways for Employers

The Dove decision confirms that dismissal for cause may be an appropriate response where an employee is engaged in a side hustle during business hours and without the permission of their employer. Employes should undertake a thorough investigation of any concerns regarding potential side hustling in order to ensure that their eventual response is proportionate and defensible in the event of a challenge.

The Dove case also serves as a reminder that employers should implement clear written restrictions regarding their employees’ use of company time for personal business, which should be set out in a workplace policy or as a term of employees’ written employment contracts.

 

Attention Federally Regulated Employers: Recent Amendments to the Canada Labour Code Now in Effect

Selina Habib

On July 9, 2023, a number of amendments to the Canada Labour Code (the “Code”) came into force. These changes have a substantial impact on all federally regulated employers in Canada. New amendments to the Administrative Monetary Penalties Regulations also establish administrative monetary penalties for a failure to comply with these new requirements.

The amendments are summarized as follows:

Reimbursement of Reasonable Work-Related Expenses

As of July 9, 2023, pursuant to section 238.1 of the Code, federally regulated employers must reimburse their employees for reasonable work-related expenses. In order to be eligible for such mandatory reimbursement, an expense must meet the four eligibility criteria:

  • Criteria #1: The employee does not have to pay the expense as per a written agreement or collective agreement.

    • This means, among other things, that the expense will not sat reimbursement if a written agreement between a non-unionized employee and their employer requires the employee to pay the expense. Similarly, this also applies to a collective agreement or written agreement between a unionized employee’s trade union and the employer requires the employee to pay the expense.

  • Criteria #2: The employee must have paid the expense out-of-pocket.

  • Criteria #3: The expense must be work-related.

    • The Canada Labour Standards Regulations (the “Regulations”) list factors under section 23.1 (1) to consider when determining whether an expense is work-related, including whether or not the expense is connected to the employee’s performance of work and whether the expense enables an employee to perform work (e.g. travel expenses or mandatory training). All of these factors must be assessed as a whole and weighed based on the specific facts of the case. Some factors may not be relevant, nor will they all carry the same weight, and some facts may support that the expense is work-related and other facts may not.

  • Criteria #4: The expense must be reasonable.

    • The Regulations list factors under section 23.1 (2) to consider when determining whether an expense is reasonable, including whether the expense is incurred at the request of the employer and whether any amount of the expense is incurred beyond the amount necessary to enable the performance of work. Again, all factors must be weighed based on the specific facts of the case.

Provision of Ministry Materials

The Code now requires employers to provide employees with materials made available by the Ministry of Labour (the “Ministry”).

Employers must provide all current employees with materials made available by the Ministry containing information regarding employer and employee rights under Part III of the Code within 90 days after the later of July 9, 2023 or the day on which materials are first made available by the Ministry. Thereafter, employers must provide this information within 30 days of an employee’s first day of work. When the Ministry makes updated materials available, employers must provide updated materials to all employees within 30 days of them being made available.

Employers must also post these materials in readily accessible places where they will likely be seen by employees.

Finally, employers must provide a terminated employee, y no later than their last day of employment, with the materials made available by the Ministry relating to termination of employment.

Employment Statements

The Code also now requires employers to provide employees with written statements regarding certain terms and conditions related to their employment. In essence, this is a requirement that all federally regulated employers provide (even if only in relatively simple form) written employment contracts to their employees.

More specifically, employers must provide a written statement to an employee containing the following information within the first 30 days of employment:

(a) the names of the parties to the employment relationship;

(b) the job title of the employee and a brief description of their duties and responsibilities;

(c) the address of the ordinary place of work;

(d) the date on which the employment commences;

(e) the term of the employment;

(f) the duration of the probationary period, if any;

(g) a description of the necessary qualifications for the position;

(h) a description of any required training for the position;

(i) the hours of work for the employee, including information on the calculation of those hours and rules regarding overtime hours;

(j) the rate of wages or salary and the rate of overtime pay;

(k) the frequency of pay days and the frequency of payment of any other remuneration;

(l) any mandatory deductions from wages; and

(m) information about how the employee can claim reimbursement of reasonable work-related expenses.

Employers must provide an updated statement within 30 days of any change to the information in an original (or prior) statement.

Employers have up to October 7, 2023 to provide an employment statement to employees who were employed as of July 9, 2023.

Federally regulated employers should review their policies and contracts to ensure that they align with these new requirements. Employers should also consider amending their hiring procedures and providing training on these new requirements in order to ensure compliance and avoid possible penalties.

 

Temporary Help Agency Licensing: What Employers Need to Know

Liam Billings

The Ministry of Labour, Immigration, Training and Skills Development (the “MLTSD”) has revealed a new licensing system for Ontario temporary help agencies (“THAs”) and recruiters. The new licensing requirements will be enforced starting January 1, 2024. The system falls within the ambit of the Employment Standards Act, 2000 (the “ESA”) and O. Reg. 99/23 (the “Regulation”) made under the ESA.

The Licensing System

The new regulations require both THAs and recruiters to hold a licence, and for those licenses to be renewed yearly. Under the ESA and the Regulation, “THA” and “recruiter” are defined as follows:

  • A THA is defined as “an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer”; and
  • A recruiter is defined as “any person who, for a fee, finds, or attempts to find employment in Ontario for prospective employees”, subject to certain exemptions listed in the Regulation.

In order to obtain a license, the party must apply through the MLTSD online application portal, which opened in July of 2023. Applications must be accompanied by an electronic irrevocable letter of credit in an amount of up to $25,000.00 as security, a $750.00 non-refundable application fee, and certain documentary information. A comprehensive list of application requirements can be found here.

The Regulation also lists specific circumstances under which a licensing application will be refused, namely where the applicant:

  • has ever unlawfully taken possession of or retained a passport or a work permit of a foreign national;
  • has been convicted of certain criminal offences related to human trafficking;
  • is not registered with the Workplace Safety and Insurance Board (the “WSIB”) or has failed to provide the WSIB with certain required information or has failed to pay WSIB premiums;
  • is in default of filing a tax return; or
  • has contravened the Ontario Immigration Act.

Furthermore, licenses can be revoked or suspended in a variety of circumstances, such as where a THA or recruiter has filed to make the necessary WSIB or tax payments.

Implications for All Employers

The new licensing scheme affects not just THAs and recruiters, but also has important implications for employers that utilize heir services. Three issues are particularly pertinent: (1) the use of unlicensed THAs and recruiters; (2) the transition period for the licensing scheme; and (3) the impact of the new system on terminations.

Using or Engaging Unlicensed THAs and Recruiters

The licensing system prohibits employers from knowingly engaging or using THAs or recruiters. These prohibitions are not without consequence. If an Employment Standards Officer determines that an employer has knowingly engaged or used an unlicensed THA or recruiter, they may issue a “notice of contravention” accompanied with the following fines:

  • $15,000.00 for a first offence;
  • $25,000.00 for a second offence in a three-year period; and
  • $50,000.00 for a third offence in a three-year period.

With real consequences like this, employers should ensure that they solely utilize licensed THAs and recruiters. But, with all the misinformation that exists in our world today, how can one be sure that a THA or recruiter is licensed? Luckily, the MLTDS has set up an online database to check licensing statuses. This database is available here.

The Transition Period

Some employers may utilize the services of a THA or recruiter that has properly applied for a license, but which has yet to receive that license by the January 1, 2024 effective date. In that case, special transitional rules apply to allow the THA or recruiter to operate as if it were licensed until the actual license is issued or its application is refused. In this scenario, employers should monitor the status of their preferred THAs or recruiters to ensure that they do not continue to use those services after a licensing application has (potentially) been refused. Notably, transitional period does not apply to THAs or recruiters that only file their application after January 1, 2024. In that case they will only be permitted to operate once the actual license is issued.

Termination and Severance of Employment

Finally, the new licensing system also necessitated an update to O. Reg. 288/01: Termination and Severance of Employment. That regulation lists certain circumstances under which terminated employees will not be entitled to notice of termination or severance pay. However, it has been amended to clarify that no employee becomes disentitled to notice or severance by reason of the Director of Employment Standards refusing to issue or renew, or revoking or suspending the license of a THA or recruiter.

Concluding Remarks

Like any new government initiatives, the regulation and licensing of THAs and recruiters is likely to undergo periodic changes. Stakeholders should not expect the new licensing system or the rules around THAs and recruiters to remain stagnant. We will continue to provide updates as developments unfold.

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This newsletter is not intended as legal advice.  Any employer or organization seeking assistance should feel free to contact a Mathews Dinsdale lawyer for assistance.

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