Canadian Employment Law Today

November 6, 2019

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian HR Reporter, 2019 Canadian Employment Law Today | 3 Cases and Trends Mischaracterizing working relationships continues to cost employers 7 factors determine relationship, regardless of the official agreement between employer and worker BY MELANIE SAMUELS, GLEN STRATTON AND TALYA NEMETZ-SINCHEIN IN 2017, in a case called Glimhagen v. GWR Resources Inc., the B.C. Supreme Court af- firmed the existence in law of the dependent contractor and that a dependent contractor is entitled to reasonable notice of termination due to the employee-like relationship that exists between a dependent contractor and an employer. e seven indicia of dependant contractorship were delineated as follows: • Exclusivity: Whether the agent's services are generally limited exclusively to the principal • Control: If the agent is subject to the con- trol of the principal, regarding the product and when or where the agent sells it to the principal • Interest or Investment: If the agent had an investment in or interest in the tools neces- sary to perform their service for the prin- cipal • Risk of Loss: Whether, by performing their duties, the agent undertook risk of loss or possibility of profit apart from the fixed rate of remuneration • Essential Role: Whether the agent's activity was part of the principal's business organi- zation • Length of Relationship: Whether the re- lationship was long-standing (the more permanent the term of service, the more dependent the contractor) • Reliance: Whether the parties relied on one another and closely co-ordinated their conduct Since Glimhagen, B.C. courts appear more willing to recognize the existence of dependent contractor status in employment relationships. e three cases set out below are illustrative. First, in Kok v. Adera Natural Stone Supply Co. Ltd., the worker, a stone fabricator, was an employee of the employer for 10 years before being taken off payroll and becoming a contractor. e worker sought a raise and the employer agreed on the condition that the worker work as a contractor, which he did, for the next 17 years before termination. In concluding that the worker was a de- pendant contractor at the time of termina- tion, the court held that all the Glimhagen indicia were present to suggest a dependent contractor relationship. e fact that the worker billed for his services and charged GST was not determinative, nor was the fact that the worker was not identified as an employee in a 2012 share transaction that included a schedule with the company's employees. Based on an application of the Glimhagen indicia to the facts in this case, the court found that the worker was a con- tractor in name only and, therefore, granted damages equivalent to 22 months' notice. Second, in TCF Ventures Corp. v. Cam- bie Malone's Corp., the worker was hired, through his corporation, to provide financial management services as the chief financial officer of the defendant company in 2009. e worker and the company, at the time of hiring, agreed that the worker could provide financial services outside the company and this was, in fact, the case. In September 2012, the worker was terminated. In concluding that the worker was a de- pendent contractor, the court was most per- suaded by the fact that the company hired the worker due to a desire for a personal, specific service from a professional consul- tant. e relationship also involved an intent to have the worker work for the company for three-and-one-half years, which suggested a permanency to the relationship. ird, in Pasche v. MDE Enterprises Ltd., the worker worked exclusively for the com- pany as a sheet metal estimator for 18 years. e company and the worker structured the professional relationship such that the company exercised very little control over the worker's daily workplace activities, he was minimally supervised and had consid- erable discretion over the way he conduct- ed his work. However, there were several factors weighing in favour of an employment-like relationship. e worker, when working with clients and suppliers, presented to the world as an ambassador of the company. He had his own workspace at the company office and was treated like an employee through inclu- sion in all email and phone correspondence. e court held that the most persuasive factor was the deep business integration and mutual dependency that developed over the course of the relationship. e worker had worked for the company for more than 18 years and relied exclusively on the company for his income and livelihood. e company, in turn, relied on the worker to bring in cli- ents and generate a profit for the business. What is clear from these recent cases is that the court's analysis of a given working relationship is contextual. e takeaways are: • As a general principle, if a contractor is financially and economically dependent on the employer, this relationship tends to lean more toward employer-employee. • There need not be complete exclusivity between an employer and contractor for a finding of dependent contractorship. • Even if both parties at first mutually intend for the relationship to be one of indepen- dent contractor and employer, this alone is not determinative of the relationship when other surrounding factors weigh in favour of an employment-like relationship. • Mischaracterization of working relation- ships continues to cost employers. How- ever, potential liability can be minimized through regular review of employment contracts and working relationships. • Employers and employees alike should ob- tain legal advice when considering chang- ing from an employment contract to an independent contractor or terminating working relationships. For more information see: • Glimhagen v. GWR Resources Inc., 2017 BCSC 761 (B.C. S.C.). • Kok v. Adera Natural Stone Supply Co. Ltd. (2018), 2018 BCSC 1542 (B.C. S.C.). • TCF Ventures Corp. v. Cambie Malone's Corp., 2016 BCSC 1521 (B.C. S.C.). • Pasche v. MDE Enterprises Ltd., 2018 BCSC 701 (B.C. S.C.). Melanie Samuels is a partner with Singleton Reynolds in Vancouver and is co-chairperson of the firm's Employment and Labour Group. She can be reached at (604) 673-7405 or msamuels@singleton.com. Glen Stratton is an associate with Singleton Reynolds in Van- couver with a focus on civil litigation, em- ployment, entertainment and construction law. He can be reached at (604) 673-7518 or gstratton@singleton.com. Talya Nemetz- Sinchein is an associate with Singleton Reyn- olds in Vancouver practicing workplace law, construction law, insurance coverage, profes- sional liability and commercial disputes. She can be reached at (604) 673-7440 or tnemetz- sinchein@singleton.com. Courts appear more willing to recognize the existence of dependent contractor status in employment relationships.

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