Since January 1, 2018 the general minimum wage in Ontario has been $14.00 per hour. As of October 1, 2020, it will increase to $14.25 per hour. Under the Making Ontario Open for Business Act, this increase is tied to the Ontario Consumer Price Index for 2020.
The pending minimum wage rate increase may come at a difficult time for many employers already struggling with the detrimental impact of COVID-19 to their business. Those in the retail and hospitality sector may be particularly hard-hit.
It is important, however, that affected employers be aware of this pending change and take appropriate steps to update their payroll systems and avoid falling afoul of this new requirement.
The new minimum wage rates applicable in Ontario as of October 1, 2020, will be as follows:
General Minimum Wage: $14.25 per hour
Student Minimum Wage: $13.40 per hour
Liquor Server Minimum Wage: $12.45 per hour
Homeworkers Minimum Wage: $15.70 per hour
To ensure compliance with these new rules, Ontario employers need to take into account the following considerations:
Ensure payments are issued in accordance with the applicable minimum wage rate
Most affected employees will be paid in accordance with the general minimum wage rate. This rate applies broadly, with a limited number of statutory exceptions:
Students under the age of 18 who work 28 hours a week or less when school is in session, or work during a school break or summer holidays are entitled to be paid an amount equal to at least the student minimum wage rate.
Individuals who, as a regular part of their employment, serve liquor directly to customers, guests, members or patrons in a licensed premises (which are businesses with an issued permit under the Liquor Licence Act) and who regularly receive tips or other gratuities as a part of their work are entitled to be paid an amount equal to at least the liquor servers minimum wage rate.
Individuals who do paid work in their own homes (such as answering telephone calls for a call centre) are entitled to be paid an amount equal to at least the homeworkers minimum wage rate (this includes students under 18 years of age). Given the ongoing pandemic, and the increased prevalence of remote work, employers that choose to engage staff working from home should ensure that they issue on the basis of this minimum wage rate, rather then the lower general rate.
Calculating Payments to Commission-Based Employees
While it may be relatively straightforward to determine whether an employee in receipt of hourly wages is being paid in accordance with minimum standards, when an employee’s remuneration is purely commission-based, matters grow more complex.
Regardless of the employee’s payment structure, the employer must ensure that the individual is receiving wages at an amount equal to at least the applicable minimum wage rate for all hours worked. As such, if an employee is paid on a commission basis, the employer should take active steps to confirm that the individual is at all times receiving hourly pay at least equal to the minimum wage.
This calculation may be further complicated where the employee is working in excess of 44 hours a week, and (subject to limited statutory exclusions) is thus entitled to receive overtime pay (or paid time off in lieu) calculated at a rate of 1.5 times the employee’s regular hourly wage rate.
Accordingly, employees and employers that operate their business on a commission model should examine this structure to satisfy themselves that pay is being issued in accordance with statutory requirements.
Be Mindful of the Three-Hour Rule
The Employment Standards Act, 2000 requires that when an employee who regularly works more than 3 hours per day is required to report to work, but works less than 3 hours, they must be paid the greater of:
Three hours at their regular rate of pay; or
The amount the employee earned for the time worked and wages equal to the employee’s regular wage rate for the remainder of the 3 hours.
Employers should be mindful of this rule, particularly as the minimum wage rate increases in October, to ensure that they are providing this minimum payment to qualifying staff in all circumstances.
If you are an Ontario employee or employer looking for further guidance with respect to your pay entitlements and/or obligations, please contact our office to speak with an employment lawyer.
Vey Willetts LLP is an Ottawa-based employment and labour law firm that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in Ottawa and across Ontario. 613-238-4430 or info@vwlawyers.ca