Workers owed $60M in unpaid wages Ontario failed to collect since 2017

November 8, 2024 Canuck

Workers in Ontario are owed tens of millions of dollars in unpaid wages that the provincial government has yet to collect from employers, according to internal government records.

The records, obtained by CBC Toronto through a freedom of information request, provide a snapshot of the prevalence of wage theft in Ontario, which worker advocates say is a major issue.

The records show there’s around $60 million in unpaid wages the provincial government has yet to collect from employers, between the 2017-2018 fiscal year and July 2024.

The figures include Ontario Labour Relations Board orders and notices of contravention, which can include penalties for violations such as not keeping proper payroll.

If the Ministry of Labour orders an employer to pay wages and they don’t comply within 30 days, the case gets referred to the Ministry of Finance for collections.

The records show that, since the 2017-2018 fiscal year, on average, less than 30 per cent of that money has been paid.

The numbers are disappointing but they aren’t surprising, say a workers’ rights organization and employment lawyer.

They’re calling on the provincial government to take stronger enforcement action against employers who don’t comply with paying orders, in hopes of sending a message that wage theft is being taken seriously in Ontario and employers will be held accountable.

“I feel that the system is really broken right now,” said Deena Ladd, executive director of the Workers’ Action Centre in Toronto.

Sharaf Sultan, an employment lawyer who specializes in workplace related immigration files, says wage theft must be addressed in Ontario.

“I think it’s a big issue, but I think … to a certain extent, at least until now, it’s been a relatively forgotten issue,” he said.

Wage theft among top complaints: action centre

Ministry of Finance spokesperson Scott Blodgett says the government has made “significant strides” in bolstering its enforcement and has introduced tougher penalties for those who violate the Employment Standards Act (ESA).

“The Ministry of Finance makes every effort to recover amounts owed to claimants under the Employment Standards Act,” he said in a statement.

Wage theft typically refers to when an employer withholds earnings that are owed, doesn’t provide vacation and holiday pay, makes illegal wage deductions, misclassifies employees, and other violations, according to Ladd.

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If a worker believes they are owed wages, they have two years to file an ESA claim with the Ministry of Labour, which will investigate.

Ladd says wage theft is one of the top complaints the Workers’ Action Centre hears about, often coming from employees who are misclassified as contractors, when in reality they are employees.

She says it’s most prevalent in gig work, truck driving, cleaning, construction and health care and among workers with precarious immigration status.

“The numbers are very staggering … in terms of the number of wage theft complaints that we’re dealing with on an everyday basis,” Ladd said. “It’s really terrible.”

‘Tip of the iceberg’

The number of orders to pay wages issued by the Ministry of Labour has gone down in general over the last six years, from just over 5,000 orders in 2018 and 2019 to around 2,100 in 2022 and 2,300 in 2023, according to the government records.

They also show there were 22,270 outstanding orders to pay wages, from the 2017-2018 fiscal year until July 2024.

When orders get referred to the finance ministry after 30 days of non-payment, the documents show that only 41 per cent, on average, were paid in full between 2017 and July 2024.

Ladd says she believes the numbers are just the “tip of the iceberg.”

“Many of the workers that we work with don’t even file complaints because they just don’t see the point,” she said.

Ladd says she’d like to see the government do more proactive and expansive inspections.

For example, if the ministry receives a complaint from one worker, Ladd would like to see a larger-scale investigation into the workplace to uncover whether other employees are also victims of wage theft.

“But the system right now is based on each individual worker making a complaint,” she said.

“Going through the process we find huge numbers of repeat violators, and at the end of the day there’s very little deterrent for employers who break the law.”

Cultural shift

Sultan, the employment lawyer, says he believes the ministry’s enforcement is lacking, likely due to a lack of resources.

“Unfortunately, I think there is an understanding out there that the ministry is not as hard as they should be and you can delay [paying wages] with little to no consequence,” he said.

He says the ministry has adequate enforcement tools, but he questions the willingness to use the more punitive measures.

A man in a blue suit and tie sits at a desk. — Employment and immigration lawyer Sharaf Sultan says he believes the Ministry of Labour has the adequate tools to enforce wages be paid, but would like to see them exercised more. (Angelina King/CBC)

“I think there needs to be a cultural shift whereby there is an understanding of the seriousness of wage theft,” Sultan said.

“I think that will likely come through harsher enforcement, particularly on bigger cases and to demonstrate to employers that there are serious consequences associated.”

Government increased penalties

Blodgett with the Ministry of Finance says the government has improved enforcement tools and recently increased the maximum fine for an individual convicted of violating the ESA from $50,000 to $100,000 – the highest in the country.

Blodgett says if employers don’t pay their orders letters are issued and follow up calls are made. If there is still non-compliance, the ministry can register and enforce warrants of seizure and sale, put liens on property and garnish bank accounts.

“The ministry’s efforts have resulted in a recovery of approximately $105.4 million in wages and other money owed to employees over the last five fiscal years and has completed a total of 1,025 inspections during the last fiscal year,” he said.

A bird's eye view is shown of Queen's Park in Toronto. — A Ministry of Finance spokesperson says the government has bolstered enforcement, introduced tougher penalties and makes every effort to recover the unpaid wages that are owed. (Yan Theoret/CBC)

An employer who has failed to comply with an order to pay wages can be prosecuted under the Provincial Offences Act, and if convicted, could face fines and jail time of up to one year.

For the laws to work effectively against deterring wage theft, Ladd says the government must exercise harsher penalties when appropriate.

“It’s a basic right that we should get paid at the end of the day and if that is a huge problem right now in our labour market, then I think that should be a cause for concern for many of us,” she said.

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