Lexpert Magazine

44 LEXPERT MAGAZINE | MARCH/APRIL 2018 slow to react to the changes in the workplace law environ- ment. "e industry may have been caught up in some of the relief that followed on the fact that the Ontario government's recent employment law reforms did not include provisions deeming franchisors to be joint employers — as many franchi- sors had feared," Dolman says. It is true is that the recent employment law reforms im- pact franchisees more directly than they do franchisors. But franchisors who don't under- stand that the changes are a sys- temic problem are approaching the issues from a myopic per- spective. "e way in which franchise systems should be ad- dressing minimum wage and other changes to workplace law has been a major concern over the last several months," says Allan Dick of Sotos LLP. "ere's a steep learning curve that needs to be addressed." With minimum wage increases hogging the spotlight, franchisors may also not have adequately turned their minds to other bur- dens imposed by employment law reform, such as the cascading effect on higher-earn- ing workers. "People who are making more than the minimum wage will expect to be bumped up too," says David Shaw at Blake, Cassels & Graydon LLP. "at could be a real problem for some employers." Changes to the rules governing part- time help as well as limitations on schedul- ing, standbys and the right to decline shis could also impact franchisees' profitability. "Employers who are not managing their workforce and labour costs by taking the new rules into account will find that the changes will quickly hit their bottom line," says Helen Fotinos at McCarthy Tétrault LLP. "And quite apart from assisting fran- chisees by, for example, updating business | FRANCHISE WAGES | "ese changes are due to the increase of wages to $14.00 minimum wage on Janu- ary 1, 2018, then $15.00 per hour on Janu- ary 1, 2019, as well as the lack of assistance and financial help from our head office and from the government," the Joyces stated in a letter to employees. Ontario Premier Kathleen Wynne was quick to jump into the fray, calling the Joyce's actions a "clear act of bullying." Others blamed the Ontario government, which mandated the rise in the province's hourly minimum wage from $11.60 to $14, or 20.7 per cent, with a further 6.7 per cent increase to $15 on January 1, 2019. Tim Hortons' head office responded by saying that "Team Members" shouldn't be treated as an expense and blaming the negative publicity on a "rogue group" of franchisees. However that may be, the fact remains that the trend to higher minimum wages is nationwide. Alberta's minimum wage rose from $12.20 to $13.60, or 11.5 per cent, on October 1, 2017 and will rise to $15, a further 7.1 per cent increase, on October 1, 2018. PEI will raise its rate to $11.55 in April and Québec will go to $11.75 in May. Some eight per cent of Canadian em- ployees are paid at the minimum wage rate. In July 2017, the Canadian Federation of Independent Business concluded that 34 per cent of Ontario's small and medium- sized businesses would consider selling, closing or moving because of the increases. "e business pressures invoked by the minimum wage hikes and other reforms are putting pressure on some franchisees and they will be looking to their franchi- sors for help," says Stéphane Teasdale at Cassels Brock & Blackwell LLP. Unfortunately, Tim Hortons isn't the only franchisor who appears to have been systems to take into account new schedul- ing rules, franchisors may have to revisit their earning projections to see what fran- chisees need to be profitable in this new environment." From a purely contractual perspective, there's not much doubt about who's legally bound to shoulder the burden. "Franchise agreements almost universally make fran- chisees responsible for their employees," says Larry Weinberg at Cassels Brock. "at is almost never unclear and an im- portant part of the historical franchising relationship that required franchisees and their employees to be independent contrac- tors and not employees of the franchisor." Franchisors who don't scrupulously avoid asserting any kind of control over employees run the not inconsiderable risk of becoming "joint employers" and greatly increasing their exposure to workplace ob- ligations and liabilities. "e law is becom- ing ever more explicit that franchisors can avoid joint employer issues only if it is clear that the employees are exclusively under franchisees' control," Shaw says. STÉPHANE TEASDALE > CASSELS BROCK & BLACKWELL LLP "The business pressures invoked by the minimum wage hikes and other reforms are putting pressure on some franchisees and they will be looking to their franchisors for help."

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