What are the Implications for Teachers and their OTIP Long-Term Disability Benefits?

In representing teachers in Ontario in their Long-Term Disability court actions against the Ontario Teachers Insurance Plan (“OTIP”), we were closely following Bill 124 from its inception to its demise. 

What is Bill 124 and what happened to it?

If you are not familiar with this proposed legislation, the purpose of the Bill was to impose wage restrictions limiting salary increases to 1% annually, on public sector employees, including school board employees such as teachers, as well as those working for the Crown, Crown agencies, universities and colleges, hospitals, licensed not-for-profit long-term care homes, children’s aid societies, and some non-profit organizations.

In defiance of Bill 124, ten organizations representing employees who would be impacted by the Bill, including teachers, nurses, power workers, university staff, and other professionals, commenced a constitutional challenge against it.  In the end, we were pleased to see that teachers and other public sector employees (who we also frequently represent in their Long-Term Disability cases), were victorious in their battle. 

Six months ago, on February 12, 2024, the Court of Appeal for Ontario handed down the landmark decision in the Bill 124 Charter challenge case (Ontario English Catholic Teachers’ Association v. Ontario (Attorney General)).  The Court of Appeal upheld a Superior Court decision that Bill 124, Protecting a Sustainable Public Sector for Future Generations Act is unconstitutional because it unjustifiably violates the right to freedom of association under section 2(d) of the Canadian Charter of Rights and Freedoms (the Charter). In other words, the Court of Appeal confirmed that the it was unfair to cap salary increases to 1%, as set out in the Bill.

When will retroactive salaries be paid to teachers?

Now, six months later, many of those impacted, including our disabled long-term disability clients, are still waiting for retroactive pay increases to be paid, as well as adjustments to their current salary, pensions and Long-Term Disability benefits. 

How does the retroactive salary increase impact long-term disability benefits?

For many of our disabled clients and in particular teachers, their monthly Long-Term Disability benefit or pension benefit will increase, helping them to make ends meet, while also paying for much needed medical treatment. Since the good news broke several months ago, they have been waiting and wondering when they will see the money paid to them. Unfortunately, as of now, there still does not seem to be any concrete date as to when these retroactive benefits will be paid and current long-term disability benefits adjusted. 

An estimate from the Financial Accountability Office of Ontario said the province would likely have to pay out $13.7 billion in wage increases as a result of  Bill 124 being repealed.  Logistically, the government, unions, employers, trust and pension funds and other organizations have had to work together to negotiate, implement and ultimately, pay out the monies now owed to employees. According to reports, some lucky employees have already seen increases, while others have been told to be patient and that the Fall is when they can expect to see their retroactive pay and income adjustments.

What can teachers on long-term disability expect from the retroactive salary increases?

For many teachers in Ontario, whose long-term disability benefit plan is administered and insured by OTIP, their monthly long-term disability benefit is based on 50% of their pre-disability salary. When their salary as of their last day at work is increased retroactively, so too will their long-term disability benefit increase. This is good news for teachers who were or are currently receiving long-term disability benefits, as the increases in their pre-disability salary will trigger an increase in their monthly long-term disability benefit amount as well as increase in the contributions made to their pensions.

Presumably, even those teachers who were on long-term disability for a period of time and subsequently either recovered and returned to work, resigned, or retired, should expect to see a lump sum retroactive long-term disability payment to capture the period of they they were receiving LTD.  Of course, that assumes that the salary upon which their LTD benefits were calculated is subject to the retroactive salary increase. The same should hold true for their monthly pension amount, as contributions and monthly payments are tied to salary.

How does the retroactive salary increase impact teachers who have settled their long-term disability cases?

Unfortunately, for most of our past clients who have already settled their long-term disability cases, they will not reap the reward of the Charter challenge and repeal of Bill 124. Those clients settled their court cases based on a monthly benefit amount that was calculated on a salary that was not adjusted for the retroactive pay increase.  They signed iron-clad Releases preventing them from renegotiating their settlements. 

But not all is lost. Depending on their individual circumstances and timing of their disability, some of our former clients may still not see some compensation as a result of the retroactive salary increase.

For example, if our former client was receiving LTD before OTIP decided to terminate their claim and before we commenced litigation, they could very well be entitled to a retroactive LTD payment for that period of time. They, like those teachers who returned to work, retired or resigned following a period of LTD, should logically see a retro payment coming to them for the period they were receiving LTD, if their pre-disability salary is subject to the increase. 

Those same teachers who settled their LTD court cases, should also see an adjustment to their pension contributions and monthly pension amounts to reflect any increase in their pre-disability salary, irrespective of the settlement of their LTD cases.

How does the retroactive pay increases affect teachers who are disputing their long-term disability claims denials?

For our current clients whose pre-disability salary will be increased retroactively, we anticipate that they will want assurances that the increase is reflected in their legal settlements. We know from our experience that every penny counts for our clients when they are barely able to meet their day to day expenses living off as little as half their income, as well as managing the added expense of treatment and the added financial stressors that come with being unable to work and suffering a disabling medical condition. 

We will continue to follow what transpires in the wake of Bill 124’s demise.  At Mulqueen Disability Law, we anticipate that the end result, whenever that may be for some employees, will be worth the wait, particularly for those who are on LTD or pensions and living on very limited incomes. 

Find out more about the implications of retroactive salary increases to long-term disability benefits

If you are concerned that your Long-Term Disability benefit is not being calculated correctly or if you believe you are entitled to an increase in your LTD benefit as a result of the retroactive pay increase or if your long-term disability benefit has been denied or terminated, please contact Mulqueen Disability Law.  

Mulqueen Disability Law is a boutique law firm, focused on litigating long-term disability insurance benefit claims. Courtney Mulqueen and her team of legal professionals are Trauma-Informed Certified and have over two decades of experience exclusively in the area of long-term disability law. She and her team draw on their “insider” experience working for the insurance companies (including OTIP), that they now sue for their clients.  

Mulqueen Disability Law specializes in hard-to-prove long-term disability claims for “Invisible Conditions” such as mental illness (depression, anxiety, PTSD) and chronic conditions (pain, neurological, immunological, concussion, post-COVID)  Contact us for a free confidential consultation.

The preceding is not intended to be legal advice. This blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog, you understand that there is no solicitor client relationship between you and the blog publisher. The blog should not be used as a substitute for competent legal advice from a licensed lawyer in your jurisdiction. If your disability claim has been denied and you require legal advice, please contact a lawyer specializing in disability law.