January 2019

The Top Three 2018 Cases Impacting Small Business Owners

The Top Three 2018 Cases Impacting Small Business Owners

It can be difficult for anyone to keep up with changes in the law, but for small business owners, who are already juggling multiple tasks and responsibilities, it can be especially daunting. Below is a roundup of three of the most important cases from 2018 that affect small business owners.

Employers are typically required to comply with provincial, or federal and territorial employment standards legislation which strictly governs when and why employees may be terminated. However, this legislation typically allows for a “probationary period” for new employees during which these rules are relaxed. In the 2018 case of Van Wyngaarden v Thumper Massager Inc., two days before the end of an employee’s probationary period, the employer terminated the employee. The employee sued the employer for wrongful dismissal and claimed damages of $60,000. In both the initial decision and on appeal, the Ontario courts decided in favour of the employer and dismissed the employee’s claim for damages.

What does this case mean for employers? The decision confirms that employers do not have to comply with the usual formalities (notice, cause etc.) generally required by legislation if they terminate an employee during the probationary period. In order to avoid employment disputes when terminating employees during this period, business owners should make sure that a probationary period is properly incorporated into employment contracts and should speak to their lawyer to confirm that they have met the minimal requirements of good faith and fair assessment before firing an employee during this time.

Occupational Health and Safety
In 2018, in the case of R v Fournier, an excavation contractor was found guilty of manslaughter as a result of his employee being killed on the job when an improperly stabilized trench collapsed. The employer, who also suffered serious injuries in the accident, is the first employer to be convicted of manslaughter, and the first person to be sentenced to prison as a result of a manslaughter charge in connection with failing to ensure the health and safety of his workers.

By making a finding of manslaughter and imposing a prison sentence on the contractor, the Quebec court sent a clear message to employers that it takes compliance with occupational health and safety (OHS) standards very seriously. Business owners, especially those in high risk industries, should ensure that they are in compliance with OHS standards and should contact a lawyer immediately upon being investigated or charged with OHS violations.

Regulatory Investigations
Business owners are often at risk for being investigated and fined by regulatory agencies for faulty provision of goods and services. Generally, so long as a company is incorporated, the individual owner of the company is not personally liable for the company’s debts, including any regulatory fines levied against the company. However, the 2018 case of R v 1137749 Ontario Ltd. represents a change in this long-held law.

In this case, Pro-Teck Electric, an incorporated electrical contracting company, was investigated by the Electrical Safety Authority after a man died as a result of the company’s negligence. Upon learning that the company was going to be fined $430,000, Pro-Teck Electric’s owner transferred money and property out of the company in order to deplete the company’s assets so that it would not have to pay the fine. In order to enforce payment of the fine, the Ontario court “pierced the corporate veil” meaning that it held the owner personally liable for the $430,000 fine even though, under normal circumstances, only the corporation would have been responsible for payment.

What does this mean for business owners? This case changes the law by creating the possibility that business owners will be held personally liable for regulatory fines. If a business is being investigated, or is subject to a lawsuit or a fine, business owners should be sure to speak with their lawyer before transferring assets or restructuring the business in order to ensure that their personal assets remain safe from any regulatory fines levied against the company.

Please note: The information provided is intended for general use. DAS Legal Protection Inc. is not providing legal advice and should not be relied on as such. If you have any legal questions, we would advise you speak to a lawyer.
Posted: 1/25/2019 9:45:30 AM by Alexandrea Sharpe

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