More common legal errors to avoid

By Lai-King Hum

IN THE OCTOBER 2024 issue of Landscape Trades, we discussed four of the most common legal mistakes landscaping employers often make — from missing essential clauses in employment contracts to mishandling terminations and layoffs. There are additional, often overlooked, pitfalls that can be just as damaging. Here, we will explore five more common errors — covering issues like using AI-generated contracts, misclassifying independent contractors and overlooking safety. Understanding and addressing these areas will help landscaping businesses stay compliant, avoid costly mistakes and ensure a respectful, legally sound workplace.

 

Using Google, AI or template contract services to create employment contracts

Some landscaping companies may turn to online templates or AI-generated contracts in an effort to cut costs. However, these generic contracts often fail to comply with local employment laws, making them risky and potentially unenforceable. Employment contracts must align with current legal standards, especially in a regulated industry like landscaping, where specific conditions like safety and seasonal employment need to be addressed.

Waksdale v. Swegon North America Inc. is a reminder that even a seemingly minor flaw in a contract can make it unenforceable. This case has led to most employment contracts in Ontario that were drafted before 2020 being unenforceable, potentially leaving employers liable for significant severance pay. Relying on inadequate templates can result in non-compliance with employment laws, leading to unexpected termination costs and legal expenses.

 

Misclassifying an employee as an independent contractor

Landscaping businesses may see independent contracting arrangements as a way to reduce costs, avoiding obligations like overtime pay, vacation pay, employment insurance (EI) premiums and Canada Pension Plan (CPP) contributions. However, if workers are misclassified as independent contractors when they function as employees, the financial consequences can be steep.

As explained by the Ministry of Labour's Guideline and cases like Keenan v. Canac Kitchens, 2015 ONSC 1055, a worker's legal status is not defined solely by the label assigned to them but by the actual working relationship — whether the worker has control over their schedule, tools and business opportunities, or whether they function under the employer's sole direction. An employer has a higher degree of control over an employee than over an independent contractor.

Misclassified employees are entitled to full protection under the Employment Standards Act, 2000 (ESA) and often merit additional rights under common law. Misclassification can lead to liabilities for unpaid overtime, vacation pay, holiday pay and severance. Employers may also face penalties from the Canada Revenue Agency for failing to withhold and remit payroll taxes, EI and CPP. By understanding and correctly classifying workers, landscaping employers can create compliant employment practices and avoid these risks.
 

Treating employees as volunteers or unpaid interns

Another area of misclassification that can lead to liability issues is the treatment of workers as volunteers or interns in order to minimize costs. However, misclassifying workers in this way can lead to serious liability issues.

Volunteers are not considered employees under the ESA, but simply avoiding wages does not establish the volunteer status. The ESA does not have a definition of a volunteer. To determine whether a worker is a volunteer or an employee, an employer should consider the nature of the arrangement and the benefits each party receives. Additionally, the way the arrangement was established plays a role in determining volunteer status, especially if there was a power imbalance between the two parties that influenced how the agreement was structured.

Similarly, unpaid internships can be legally precarious. Many employers offer these roles to attract young talent eager to gain experience, but in most cases, these interns qualify as employees and are eligible for wages and other entitlements under the ESA. Some exceptions may include interns who are students working in certain secondary school, college or university programs.
 

Not complying with workplace safety requirements

Failing to comply with WSIA requirements can lead to serious consequences, exposing landscaping employers to legal and financial liabilities in the event of workplace injuries. Landscaping services are classified under NAICS Code 561730, where coverage status is “mixed.” The majority of services typical to landscaping businesses, such as garden planting, lawn care and installing structures like walkways and retaining walls, are mandatorily covered under the Workplace Safety and Insurance Act, 1997 (WSIA). Because of this, WSIA coverage is effectively compulsory for most landscaping employers, even though certain niche services, like arborist and cemetery plot care, may not be mandatory.

WSIA-covered employers must report certain work-related accidents to the WSIB promptly, fulfill first aid requirements, display the “In Case of Injury at Work” poster, pay premiums on time and make accurate premium reporting.

The Workplace Safety and Insurance Board (WSIB) can impose administrative actions such as administrative charges, penalties, suspensions and benefit-related debts for non-compliance. Violation of WSIA may also lead to criminal charges, which, upon conviction, may result in fines and imprisonment. Individuals may face fines up to $25,000 and/or six months in jail, while corporations could incur fines up to $500,000. As such, landscaping employers should fulfill WSIA obligations not only to protect employees but also to safeguard the business from costly repercussions.
 

Not complying with OHSA requirements

Under Ontario’s Occupational Health and Safety Act (OHSA), landscaping employers are required to take all reasonable steps to protect worker safety. Key responsibilities include providing adequate training, advising workers of workplace hazards, ensuring the use of safety equipment, notifying the Ministry of Labour (MOL) of any fatalities or critical injuries. Additionally, landscaping workplaces with more than five employees are required to appoint a health and safety representative or establish a Joint Health and Safety Committee. Further, employers must appoint “competent” supervisors.

Under the OHSA, employers must also address workplace harassment by investigating complaints in a timely manner, informing the involved parties of the results, and implementing corrective actions.

The MOL has the authority to enforce the OHSA, and non- compliance can lead to serious penalties. Fines for corporations may reach up to $2 million, and directors or officers of a corporation could face up to $1.5 million fines and potential imprisonment. Courts may also impose additional damages in wrongful dismissal cases where employers fail to implement OHSA policies properly. For instance, in Bassanese v. German Canadian News Company Limited, the court awarded $50,000 in aggravated damages to an employee due to the employer’s negligence in addressing harassment complaints, along with other compensation.
 

Conclusion

Diligently managing employment law obligations is essential for a successful business. By understanding and addressing these most common errors, landscaping employers can proactively reduce legal risks, avoid costly disputes and foster a productive work environment. Consider consulting with an experienced employment lawyer for guidance on legal matters as they pertain to your province or territory.

Lai-King Hum is senior partner and founder of Hum Law in Toronto, Ont., specializing in employment law, human rights, professional regulation, mediation and litigation. Learn more at thehumlawfirm.ca.