Latest employment law reform includes new disclosure rules for AI used for job applicant screening

Ontario’s recently passed Working for Workers Four Act represents the first time artificial intelligence is directly referenced in the province’s employment legislation, says Marc Kitay, an employment lawyer and a partner at Whitten & Lublin PC in Toronto. “It’s also unlikely to be the last,” he adds.

Under the legislation, which received Royal Assent on March 21, employers must disclose salary ranges and whether AI is used during the hiring process. While uses vary, employers typically employ AI to “streamline and synthesize” applications, setting parameters to cull applicants and focus on a narrower, more qualified applicant pool, says Kitay.

Ontario’s Ministry of Labour, Immigration, Training and Skills Development said Ontario is now the first jurisdiction in Canada to require businesses to disclose if AI is used during the hiring process. They included the provisions in response to the rapid AI and algorithm adoption rate among Ontario businesses and “growing concerns about the ethical, legal and privacy implications.” The rules only apply to public job postings and not internal postings.

“It's hard to say if this will have any genuine effect on the way business is done, mostly because it just requires disclosure,” says Kitay. The legislation does not dictate how employers must use or must not use AI. However, he says, employers should expect “more robust laws” as AI becomes more ubiquitous.

Josh Mandryk, a labour lawyer and partner at Goldblatt Partners LLP in Toronto, says the provisions on AI use in the hiring process should do more than mandate minimal disclosure obligations. “It should instead be providing workers with substantive protections,” he says.

Kitay says the requirement that employers include salary ranges in public job postings and that those postings be retained three years after being taken down is an important and positive change. Most job postings do not include a salary range, he says, and asking in a job interview is considered a faux pas, so job seekers often go through the whole interview process before they discover the job does not pay enough.

The ministry said the Act will expand on its “historic” slate of employment law bills, “which are helping millions of people in Ontario earn bigger paycheques and supporting newcomers in building the province.”

The Act banned unpaid trial shifts for workers in the restaurant and hospitality sector, which the province said includes more than 400,00 people. It also clarified that employers cannot deduct employee wages in the event of a “dine and dash” or when someone fills their vehicle with gas and drives off without paying.

David Piccini, minister of labour, immigration, training and skills development, said it was “unacceptable” that a worker would see their wages deducted or be motivated to put themselves in harm’s way to prevent a theft. According to the ministry, gas theft cost Ontario businesses over $3 million in 2022. “Our government is continuing to stand up for those in Ontario’s service industry to ensure workers keep their hard-earned money,” Piccini said.

However, Mandryk says the provisions banning these types of wage deductions merely prohibit conduct that was already against the law and represent the province’s intention to “be seen as helping workers, rather than actually doing so.”

“In many areas, such as the prohibition on trial shifts and the prohibition on deducting wages for lost or stolen property, these practices were already prohibited by existing law,” he says. “The biggest problem is enforcement. Rather than expanding protections for workers, the Act in many cases merely restates existing protections in a manner that is both redundant and inconsistent with the broad reading the Employment Standards Act requires.”

The province announced that it will launch a consultation to consider implementing restrictions on non-disclosure agreement use in settlements of cases of workplace sexual harassment, misconduct, or violence. The province will also initiate a consultation on potentially creating a new “job-protected leave for critical illnesses” that would match that 26-week federal Employment Insurance sickness benefits.

The Workers’ Action Centre (WAC) and Parkdale Community Legal Services (PCLS) made a joint submission to the Standing Committee on Social Policy during the development of the Working for Workers Four Act. Like the previous Working for Workers acts, they said, the new law “makes many changes to Ontario’s employment laws without meaningfully contributing to workers’ rights and entitlements.”

In low-wage industries, employers know they can get away with violating employee rights because employee misclassification, illegal deductions, wage theft, and other violations go unpenalized and employees often do not fight back due to fear of reprisal, said WAC and PCLS. The current complaint-based enforcement system does not work, they said, and the best way to help workers is to enforce the labour standards that already exist with “funding for proactive enforcement, robust collections, and penalty mechanisms.”