Legislation known as Bill 142, which updates and modernizes the province’s Construction Lien Act, was passed with a unanimous vote by the Ontario government on Dec. 5.
Local 793 was very active in lobbying for the amendments over a two-year period and in October 2016 the union’s director of operations Ken Lew and delinquency control officer Jeff Smith met with Attorney General Yasir Naqvi to discuss the matter. In November 2017, the union filed a submission to a government legislative committee that considered the Bill.
The union was also part of Prompt Payment Ontario, a broad coalition of contractor associations, unions, suppliers, general contractors, pension trust funds and other groups that joined together to persuade government that legislation should be enacted in Ontario to ensure that money flows as it is intended down the contractor supply chain.
Bill 142, officially called the Construction Lien Amendment Act, ensures that the rights and securities of Ontario’s construction workers will now be held to a much higher standard.
“This is the biggest change to our construction laws in over 34 years,” said Attorney General Naqvi. “These changes will have a real impact on people’s lives, giving workers assurance they will be paid on time and in full, and help to ensure disputes are resolved quickly.”
The legislation includes new prompt payment rules to ensure that Ontario construction businesses and workers will get paid on time for the work that they do. Basically, it should help payments flow down the construction pyramid faster and reduce delays, costs, and equally important, prevent workers going home without the payments that they’ve earned.
The changes will also modernize the lien and holdback process, and set out a new adjudication process to resolve payment disputes faster.
From Local 793’s perspective, passage of the legislation is good news.
In 2016 alone, Local 793 collected about $22 million in late trust fund payments from delinquent contractors on behalf of members. Contractors often articulated that delays in payment from the general contractor were the reasons for late payments to the union.
There are several components to the new legislation.
Prompt Payment:
The legislation creates new prompt payment rules to give contractors and subcontractors certainty about when to expect payment.
Local 793 believes this new section will be one of the most vital tools to help reduce the number of delinquent contractors and late payments of trust fund monies to the union for members’ health and welfare and pension benefits. The amendments will ensure funds move through the construction pyramid quicker and therefore result in a benefit to workers, as wages and benefit payments to employees are often at the bottom of the pyramid.
Often, a contractor is delinquent because the contractor’s invoices haven’t been paid in a timely manner and the contractor doesn’t have the necessary funds to pay wages and remittances.
Local 793 believes that a robust and well-executed prompt payment section in the legislation will reduce these types of delinquencies.
Liens:
Amendments relating to the preservation, perfection and expiry of liens is a crucial improvement.
The legislation extends the timelines to file liens and start court actions from 90 days to 150 days.
Increasing the number of days for the preservation and protection period for liens will give contractors and subcontractors more time to hopefully resolve matters outside of court, before making it necessary to register or start a lien action. Local 793 will also have more time to file a lien.
Local 793 is also pleased that the legislation clarifies the expiry date of a lien period for amounts owing for a workers’ trust fund. This change makes is clear that the lien rights for all trust fund amounts only expire 60 days after the final worker leaves the jobsite, as opposed to expiring on a worker-by-worker basis.
Holdback Funds:
The legislation requires holdback funds to be paid as soon as the deadline to file liens has passed, so contractors and subcontractors know when to expect full payment.
Local 793 supports this because it will help get funds down the construction pyramid faster.
Work typically done by Local 793 subcontractors, such as earthmoving, excavation and crane rental, often occurs in the early stages of a project. Under the old rules, general contractors could maintain the holdback for years until the project is completed.
Such a long delay in the holdback period could affect contractors and subcontractors and ultimately payments to their workers.
Construction Trusts:
The legislation introduces a new section related to the handling of construction trusts. This had been an area of great concern.
It imposes duties on contractors and subcontractors to have funds by project deposited in a specific manner and for records to be kept by project.
This ultimately protects and strengthens the statutory holdback funds for those it was created to look after.
Monetary Supplement Benefits:
The legislation also adds a definition of “monetary supplementary benefits” to make it more understandable that health and welfare benefit payments, pension payments or other similar amounts constitute the “wages” on behalf of an employee.
The amounts have always been included as “wages” in prior liens filed by Local 793 but the definition will help to provide clarity to an ongoing and common practice.
Again, the legislation further provides that Local 793 operators will get paid on time for the work that they do and that monies for trust funds are protected. It also provides for a better and faster adjudication process for payment disputes.