OTTAWA--May 14, 2007 The underground economy is hurting the construction sector in Ontario. It undermines the health and safety of construction workers, erodes labour standards, costs all levels of government in lost tax revenues and hurts consumers who pay the price for poor quality construction.

The joint enforcement initiative enabled by the information sharing agreement signed by the Ministry of Labour (MOL) and Tarion Warranty Corporation will help combat underground practices, protect workers and ensure fair competition for licensed contractors.

MOL’s mandate is to set, communicate, and enforce workplace standards in the key areas of occupational health and safety, employment rights and responsibilities, trades qualifications and labour relations.

The Tarion Warranty Corporation is a private, not-for-profit corporation established to protect the rights of new homebuyers and regulate new homebuilders. Tarion is responsible for administering the Ontario New Home Warranties Plan Act (ONHWPA) and acts as a guarantor of builders’ warranties for new homes and condominiums in the province. All residential builders in Ontario must be registered with Tarion, which is financed by builder registrations, renewals and home enrolment fees.

The Joint Enforcement Initiative 

MOL and Tarion have entered into an agreement to exchange certain information between the two organizations to locate unregistered homebuilders who may be working in the underground economy.

Information Exchange

Under the information exchange agreement, Tarion would advise MOL if it determined that a home building contractor has not complied with the registration requirements of the ONHWPA. MOL would then send an inspector to the site to determine if the contractor is in compliance with other laws, such as the Occupational Health and Safety Act (OHSA).

MOL would advise Tarion of locations where potentially unregistered homebuilding is taking place. Tarion could then send one of its inspectors to the location to investigate.

The information exchange initiative will be piloted by the Jobs Protection Office (JPO) of the Ministry of Labour in the eastern region of the province.

JPO inspectors will be dispatched to investigate potential contraventions associated with workplace health and safety standards, trades qualification, retail sales tax, employer health tax, provincial income tax and company registration with the Ministry of Government Services.

The initiative supports the government’s overall priority of strong people and a strong economy.

Benefits to Workers, Employers, and the Public

The underground economy in the construction industry is estimated to cost between $1 and $2 billion per year in lost revenue to all levels of government, with a significant amount of that lost to the Ontario government through unpaid premiums and other fees that legitimate businesses pay as part of their contribution to our society. This is money lost that should be contributing to health care, education and other measures to help all Ontarians.

Unregistered construction contractors may not be providing their workers with protections and minimum standards under provincial legislation. There may be a failure to pay workers’ compensation premiums to cover workers as required under the Workplace Safety and Insurance Act, 1997 (WSIA), or be in compliance with requirements to protect the health and safety of workers under provisions of the OHSA. There may also be workers working in violation of compulsory trade certification or qualifications.

Combating the underground economy in the construction industry benefits legitimate construction employers and their employees by leveling the playing field. Law abiding employers are put at a competitive disadvantage through higher tax and contribution burdens.

Underground practices reduce the contribution base for benefit plans and weaken apprenticeship training and skills development. The underground economy also undermines job opportunities for qualified tradespersons who acquire safe work practices through training.

Ensuring that homebuilders are registered also protects consumers who pay the price for poor quality construction. Quality built homes guaranteed through ONHWPA that are made from proper materials by qualified tradespersons contributes to a healthy and stable construction industry that is vital to the Ontario economy.

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For further information:
Public enquiries:
Toll Free 1-800-387-5540

Media enquiries:
Belinda Sutton
Ministry of Labour
416-326-7405