The city says the Labour Ministry has issued a no board report in regard to its bargaining with the union representing the workers.
That means there can be a legal strike or lockout in 17 days.
The union local represents about 6,000 city employees, including garbage collectors, road and parks maintenance workers and animal control officers.
Toronto City Manager Joe Pennachetti says there are contingency plans in place in the event of a labour disruption.
But he adds both sides are still at the table working to reach a negotiated settlement.
With the report, the workers will be in a legal strike position and the city in a legal lockout position as of 12:01 a.m. on Feb. 5.
Bargaining started back in October between the city and its outside workers. The city is also in talks with the union representing about 23,000 inside workers but there has been no request made by either party for a no board report.
The Toronto Transit Commission, police, fire, libraries, community housing and long-term care services would not be affected by a strike or lockout.
The city and unions also have agreements for maintaining essential emergency medical services.
(The Canadian Press, 680News, AM640)