Canadian Payroll Reporter

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Return Mail Registration # 1522825 | Return Postage Guaranteed Paid News Revenue Toronto Canadian Payroll Reporter is part of the Canadian HR Reporter group of publications: • Canadian HR Reporter — www.hrreporter.com • Canadian Occupational Safety magazine — www.cos-mag.com • Canadian Payroll Reporter — www.payroll-reporter.com • Canadian Employment Law Today — www.employmentlawtoday.com • Canadian Labour Reporter — www.labour-reporter.com See carswell.com for information March 2016 | CPR When it came to looking at issues of paying employees, she says the division found that even after sending out self-audits, it still needed to do its own in- spections and audits to ensure employers were complying, so it shifted the focus of self-audits to record-keeping. Hartley says the self-audits serve a dual purpose of helping the division find out if employ- ers are complying with the prov- ince's Labour Standards Code and educating employers about their responsibilities. "It is meant to help them understand some of the more complicated areas," says Hartley, citing statutory holiday pay, va- cation pay and minimum wage. "It's to help them understand the rules and to have them go through the exercise of assess- ing their current practice against those rules," she adds. "Our package also asks them to identify if there are problems. And if there are problems, to correct those problems and to confirm with us that they have corrected the problems." When employers return the completed questionnaire, they have to include a sampling of re- cords so Labour Standards can do its own check. While employ- ers are not required by law to return the questionnaire as they are in Ontario, Hartley says most employers voluntarily comply. "Most employers will com- plete it because the alternative is for us to actually do an on-site visit and inspect the records, which they are required to pro- vide to us," Hartley says. "For some employers, (a self-audit) is a less intrusive way to interact with our office to address com- pliance issues." On average, she says the di- vision sends out about 20 self- audits each year, although it may distribute more if it is targeting a certain industry or sector. In Ontario, the Labour Min- istry could not say how many self-audits it has ordered since they were added to the act, but it noted that in the 2014/15 fis- cal year, it requested 371. (Prior to May 20, 2015, Employment Standards could request self-au- dits, but they were not covered under the legislation.) A Labour Ministry spokes- person could not say whether government-mandated self- audits in Ontario will focus on certain employers or industries, although Lawson says he expects that they will. "I anticipate that certain sec- tors will be more likely to receive audits than others," he says. "The Liberal government, as part of its agenda, (wants) to address industries or sectors where 'vul- nerable' workers or precarious workers are employed," he says. "I would suggest that that would mean retail, service-sec- tor businesses or industries that predominately employ females and/or visible minorities. I think you will see the government target industries or sectors that employ part-time workers (and) workers that are not necessarily on set schedules," he adds. If an employer chooses to do its own self-audit to get ahead of possible problems, Lawson sug- gests it pay close attention to its policies for and records on de- ductions, statutory holiday pay, vacation pay, hours of work and overtime. "Overtime is one of the big ones," Lawson says. "We see a number of (overtime) class-ac- tion suits." Overtime problems can arise from not paying the overtime rate for overtime hours worked or from excluding cer- tain employees from overtime pay rules. "You will see companies being a little too aggressive on who is a manager or a supervisor and not pay them overtime because they believe that because somebody is a salaried employee they are not eligible for overtime, which is not true in many cases." When doing a voluntary self- audit, employers can let the pay- roll or HR department handle it or hire a law firm. Lawson says there are advantages to using a lawyer. "(D)oing an internal self-audit involving a law firm can offer some legal privilege potentially to that audit," he says. "If, for example, something is uncovered which may lead to the view that there is a lot of ret- roactive liability, let's say for im- proper payment of overtime or non-payment of overtime, that can be addressed in advance and corrected through a self-audit, which does not necessarily have to be revealed later on because it will be cloaked under solicitor- client privilege." If employers wait until the government requires them to do a self-audit, they could be in trouble if they have compliance issues, Lawson adds. "By the time the audit request comes, it's too late for that (pro- active audit) because the com- pany will have to reveal to the government that they have an issue and, at the same time, will have to demonstrate that they have taken steps immediately to correct it." Hartley adds that if employers choose to do their own audits, they can always turn to labour standards offices for help. "If they had any questions, we would be encouraging them to call us because we would be more than pleased to help them in any way we could," she says. Regardless of who does the self-audit, Lawson says it is im- portant to make the first one as thorough as possible. Followup self-audits can be much simpler, he says. "Maintenance can be done relatively easy by doing spot checks. I was talking to a compa- ny recently that only needs to pe- riodically pull out some sample employee records — an employ- ee that is a manager, an employee that is a non-manager, someone that is part-time — and do a spot check to see if those employees are paid their holiday pay, their vacation pay, (and) their hours of work properly and that the actual records are kept in the right way," he adds. from COMPLIANCE on page 3 Self-audits make sense "You will see companies being a little too aggressive on who is a manager or supervisor and not pay them overtime... which is often not true."

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