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Ontario Workers Deserve A Wage-Theft Protection Program With Teeth

03/27/2017 11:30 EDT | Updated 03/27/2017 11:32 EDT

"The more things change, the more they stay the same."

There could not be a more fitting description for the painful and perpetual struggle for labour market justice in Ontario.

Later this month, the most comprehensive review of employment and labour laws in a generation -- the Changing Workplaces Review -- is scheduled to be released to the Government of Ontario. In that report, Minister of Labour Kevin Flynn will have an opportunity to effect great changes to Ontario's employment and labour regime.

Much of the discussion during nearly the two-year-long consultation process has revolved around how much the labour market has changed over the years: automation, outsourcing, student debt, the knowledge economy, etc.


One thing however that has not changed over time is the problem of worker exploitation by unscrupulous employers who fail to abide by the Employment Standards Act (ESA). Although the purpose of the ESA has always been to provide a minimum level of employment protection to all workers in the province, in reality, enforcement of its provisions has been lacking, particularly for Ontario's most vulnerable workers.

Nowhere is this problem more egregious than in the enforcement and collections of orders to pay issued by the Ministry of Labour under the Employment Standards Act.

According to an investigative series conducted by the Toronto Star, from 2009 to 2016, only $19 million of a total $47.5 million in Ministry orders was ever recovered for out-of-pocket workers. This means that even when a worker files a successful complaint for unpaid wages to the Ministry of Labour and the violations are validated by the Ministry in the form of an order to pay, 60 per cent of these wages are never collected -- they simply remain in employer coffers. Furthermore, despite these chronic and widespread violations of the ESA, only a mere 0.18 per cent of law breaking employers were subject to prosecution.

We have repeatedly witnessed time after time the dire need of a wage protection program such as the EWP over the years.

This problem is nothing new, and neither are the solutions. We already know how to protect the most vulnerable workers in our society from getting their wages and entitlements stolen. In fact, the Ontario government used to have a crucial piece of the protection puzzle in place when it created the Employee Wage Protection Program (EWPP) in 1991.

The purpose of the EWPP was to guarantee employee wages up to a specified maximum (initially $5,000) where a Ministry order for those wages went unpaid by an employer. The government is then subrogated to the claims of a worker against the employer to the extent of the payments given to the worker under the EWPP.

The system was simple, targeted, easy to understand, and easy to administer.

At the Metro Toronto Chinese & Southeast Asian Legal Clinic, we have repeatedly witnessed time after time the dire need of a wage protection program such as the EWPP over the years. In fact, two landmark cases at the clinic, over 20 years apart, serve to perfectly illustrate why workers are in need of protection from wage theft.

garment factory

(Photo: Kzenon via Getty Images)

The earlier of the two is the case of Lark Manufacturing, [1992] OJ No 819. Lark Manufacturing was a sportswear garment company which employed some 140 workers at its Toronto factory, the vast majority of whom were Chinese. The company shut its doors suddenly in September 1988, leaving its 140 or so workers not only without a job, but also without over $500,000 in owed wages, as confirmed by the Ministry of Labour and a 1992 court decision.

Rather than pay the workers their owed wages, the directors at Lark refused to comply with the orders to pay and fought the case tooth and nail through the courts to avoid liability. Incredibly, they even set up another garment factory right down the street from the original factory whilst simultaneously pleading insolvency. Despite years of court battles concluding in a 1995 Ontario Court of Appeal decision ([1995] OJ No 3903) in favour of the workers' position, not a single cent was recovered for the workers in that case.

Political scrutiny over the injustice and indignation suffered by the Lark garment workers helped paved the way for the creation of the Ontario Employee Wage Protection Program in 1991. The EWPP was created to solve the very specific problem of wage theft and went a long way towards alleviating its effects on workers. Despite its success, the Ontario government dismantled the EWPP completely in 1997, again leaving its most vulnerable workers behind.

Twenty-five years later, in 2013, our clinic came across Lark Version 2.0 -- the case of Regal Restaurants. Regal involved a chain of large Chinese restaurants in the Greater Toronto Area that shuttered its doors without paying its workers and staff their owed wages under the ESA.

chinese restaurant

(Photo: Ipandastudio via Getty Images)

Our clinic represented over 60 workers in making claims to the Ministry of Labour. In the end, the Ministry found that the restaurant bosses owed its workers a grand total of $676,693.79 under the ESA. However, through a combination of accounting wizardry (the primary owners of the restaurants operated a complex structure of at least 19 related companies) and declaring personal bankruptcy, the Regal workers, like their Lark counterparts 25 years ago, didn't end up seeing a single cent of what was owed to them.

The Lark and Regal cases demonstrate that the current employment regime in Ontario leaves our most vulnerable workers footing the bill on employment standards violations. For low-wage workers, this can often lead to great hardship and the inability to meet basic living expenses.

The need for a wage protection fund in 2017 is just as strong, if not stronger, than the need for such a program in 1991, when the EWPP was first introduced in Ontario.

The public needs to stand up and declare with one voice that they will no longer permit these affronts to justice to go on. Ontarians need to demand that their government reinstate the Provincial Employee Wage Protection Program immediately so we never see a Lark Version 3.0.

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