Legal loopholes cost workers millions in lost wages: Report
TheStar.com – News/GTA – Exemptions to basic workplace rights have “considerable” social costs, report finds.
Jan. 29, 2017. By SARA MOJTEHEDZADEH, Work and Wealth reporter
Employees lose $45 million in potential earnings each week because legal loopholes exclude them from basic workplace rights like overtime pay, holiday pay, vacation pay and even minimum wage, a government-commissioned study shows.
Almost two million Ontario employees are not eligible for at least one of these entitlements, the research submitted to the Ministry of Labour found. That is because the province’s employment legislation — the main source of protection for the majority of workers — contains more than 85 special rules that exclude some jobs from minimum standards.
For example, building superintendents are not entitled to minimum wage, rest periods or overtime pay. Neither are farm workers. Construction employees aren’t entitled to time off between shifts, termination pay or severance pay.
Removing the special rules would translate on average to an 8-per-cent pay raise for workers, according to the research.
The study, written by York University professors Leah Vosko and Mark Thomas and Ryerson University sociologist Andrea Noack, shows disadvantaged workers are most likely to be exempt from basic rights. These include low-wage and temp workers, women, aboriginals, young people and new Canadians.
“It’s health — physical and mental. And also another thing is you feel a constant struggle,” said Beixi Liu, 53, who spent years working through temp agencies when he moved to Canada from China in 2000.
“Really it’s a financial squeeze,” added Liu, who is now an organizer for the Toronto-based Workers’ Action Centre.
“You really have to stretch every single dollar,” Liu said.
Ontario’s Employment Standards Act was originally designed to create a basic, universal floor of rights for workers. But existing loopholes mean that less than 40 per cent of Ontario employees are now fully covered by it, according to the latest study, which draws on Statistics Canada data.
The loopholes exist “largely in response to employer concerns over the effects of (universal minimum standards) on industry,” the study says.
In a statement to the Star, the Ministry of Labour said its special advisers were “thoroughly reviewing all submissions and commissioned research as part of the Changing Workplaces Review.”
That process, which started in 2015, aims to update legislation to better reflect the rise of insecure work.
“The ministry is committed to responding to the changing nature of work while continuing to protect workers and support business in today’s economy,” the statement added.
Karl Baldauf, vice president of policy and government relations at the Ontario Chamber of Commerce — which has launched a campaign against the proposed updates called “Keep Ontario Working” — said sometimes exemptions were necessary, for example “to recognize the distinct demands of entrepreneurial culture” in knowledge-based sectors like IT.
“Keep Ontario Working believes that abolishing sector exemptions would mark a significant and unacceptable change from Ontario’s long-standing approach to employment standards legislation,” he said.
“Regulatory reform that raises thresholds only to reduce the ability of business to invest in and grow the labour force is counterproductive,” he said.
Baldauf added that some exemptions “should be evaluated and modified if necessary” if “the conditions that existed to justify an exemption to the norm no longer exist.”
But the study says there are “considerable consequences” to legal loopholes, “in the form of “both economic and social costs experienced by individual employees, their families and the province as a whole.”
“The social costs of exemptions and special rules include pressures on work-life balance, which may be particularly acute for employees with dependent children and for single parents,” it says.
The Star has reported extensively on the rise and impact of precarious employment; in the GTA, some 52 per cent of workers now experience some form of insecurity in their jobs, according to research by the United Way and McMaster University.
“In addition to massive lost wages, exemptions create social costs to workers’ health and work-life balance,” said Mary Gellatly of Parkdale Community Legal Services, which runs a workers rights division.
“The Employment Standards Act must provide a universal floor that prevents employers from pushing workers below the socially acceptable minimum standards, particularly those in precarious work.”
The government’s special advisers are expected to make their final recommendations on the Changing Workplaces Review in the coming weeks, with legislative reform expected to be formally introduced at Queen’s Park this fall.
For Liu, the reforms are about “thriving, living, and prosperity.”
“That (money) translates into purchasing power,” he said. “That’s really good. That’s good for the economy. That’s good even for business.”
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