Canadian HR Reporter

CANADIAN HR REPORTER OCTOBER 2019 12 NEWS Defining 'near exclusivity' Unfortunately, more often than not, employers try to take advan- tage of this independent contrac- tor situation, says David Master, an associate at Littler Mendelson in Toronto. "One of the most litigious areas in Canadian employment law is mischaracterization of workers — mischaracterizing them as in- dependent contractors when they are, in fact, actually employed. So, this category [of ] dependent contractor is the court's way of essentially bridging that gap and implementing some type of fair- ness in the process." While the Court of Appeal said it's about looking at near exclu- sivity to demonstrate economic independence, it's challenging to really know what that is, he says. "ankfully, with this case, we have what I would say is a floor… essentially, more than 50 per cent of your income from one source. And if you have that, then we can have a discussion and look at the whole relationship. But where the initial court went wrong was they didn't prioritize that; they looked at the whole relationship but didn't first look at 'How much are the billings? How much is the economic dependence?' And those other factors only become relevant once you get more than 50 per cent of the billings." e court seems to be saying there needs to be near complete exclusivity, says Justice. "Basically, if someone in this woman's situation can prove that substantially more than 50 per cent of their earnings or their business comes from one compa- ny, that doesn't necessarily mean that they're automatically going to be deemed a dependent contrac- tor. But it appears as though that's at least a requirement that will go into the overall analysis. So, if they don't have that, it's almost like the courts are saying, 'You're not a dependent contractor.' And if you do have that, they're saying, 'You're not necessarily one. But we'll look at some other factors.' "And if a person's economic dependence is self-induced, and they worked exclusively for that company out of their own voli- tion, there may be cases where companies say, 'OK, we may have been his only source, but we didn't say that he could only work for us. And, furthermore, he was only working for us five hours a week. So, he was fully entitled to go elsewhere and earn income. So, to say that [they're] now depen- dent upon us is only telling half the story,'" he says. Takeaways for employers Employers need to be very care- ful before claiming someone is not an employee, says Mark Gei- ger, a partner at Blaney McMur- try in Toronto. "e courts have said, many times, 'We don't really care what the actual written documenta- tion says the relationship is, we care what the actual relationship is.' And there are cases, for ex- ample, when people have set up companies and then act as essen- tially an employee for a company in order to try to avoid tax liabili- ty. And that doesn't work because Revenue Canada can come along and say, 'No, no, no, you're really an employee.'" e problem is workers calling themselves independent con- tractors may be terminated and then apply for EI [employment insurance]. at person is now liable to pay tax as an employee, says Geiger. "But it causes the employer a huge problem, because Revenue Canada can go back and claim contributions for EI and CPP [Canada Pension Plan] for four or five years." ere also needs to be con- sistency between the agreement or the policies and practices and what's actually happening, says Master. "You can have an agreement that says, 'You're free to take jobs from whoever you want.' But then if the contract requires this person to work nine to five or be available from nine to seven on a moment's notice, well, how are they going to do that? So there needs to be consistency between the reality and the expectations." While an employer might have a contract with a well-worded termination provision that pro- vides the minimum obligations under the legislation, says Jus- tice, the question is: Why are you characterizing the relationship that way? "A lot of times, I find that em- ployers are trying to structure relationships in this way for the main reason of avoiding any li- ability in the event of a termina- tion," he says. "And, sometimes, that can work — and I think you can definitely craft an agreement and work on a go-forward basis in a way that would give you a pretty solid case to say that they're an independent contractor." But, you never have that guar- antee. And, sometimes, it's not worth the confusion or the doubt, because things change along the way and things aren't kept up to date — it's very easy to slowly slip into more of an employee- employer type relationship," says Justice. An employer could have a con- tract that says, "You are not an employee, you are an independent contractor" a million times and be very clear in that regard, but the courts will look behind that and really examine the relationship between the two parties, he says. It's definitely beneficial for a company to have a contract that says there's no guarantee of work and the person doesn't have to work exclusively for that em- ployer, along with "something that doesn't give them any kind of guaranteed payment," says Justice. You want to make sure you're limiting the liability as much as possible, says Monty Verlint, a partner at Littler in Toronto. "You can't really force them or create that situation where they have many different clients. e one thing you can do, though, is you can say that… they're free to work for many different entities and that they're not prevented from doing that." An employer can also tell the person they have to use their own tools of the trade, and the best thing to do is to contract for a fixed term or a specific project because that goes a long way as a factor in establishing a contract relationship, he says. "[Otherwise,] you get into situations where the employee may be working for many, many years… and that's the problem that you're really getting into that you're trying to avoid — the dependent contractor situation." 'Sometimes, it's not worth the confusion' DEPENDENT < pg. 3 The question of how to characterize a worker who's not quite permanent and not quite independent was further clarified with a recent Court of Appeal for Ontario decision at Osgoode Hall in Toronto. Credit: Spiroview Inc (shutterstock) Looking for proactive occupational health and safety solutions? 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Board of Canadian Registered Safety Professionals Conseil Canadien Des Professionnels En Sécurité Agréés HR Reporter_Aug19.indd 1 2019-07-16 9:18:38 AM 12-hour shift on Feb. 4. However, Linklater filed a hu- man rights complaint alleging that, for the period before his return to the 12-hour shift, Essar Steel discriminated against him based on his disability because he earned less in the accommodated position and based on his family status when it failed to accommo- date his child custody obligations by changing his work schedule. Tribunal weighs in The tribunal found it was rea- sonable for Essar Steel to move Linklater to the eight-hour shift where there was work he could do. Linklater's restrictions didn't say he couldn't work 12-hour shifts, but he wasn't entitled to stay on that shift if he couldn't do the work. The tribunal also found that Linklater didn't inform Essar Steel of his court-ordered custody ar- rangement when discussing ac- commodation options. e com- pany was unaware of it until the union's letter. In addition, at the time of the union's letter, Linklater had yet to lose any time with his child and the letter didn't indicate a specific conflict was coming up. Once Essar Steel became aware of the conflict, it took measures to rectify the situation, agree- ing to move Linklater back to 12-hour shifts as soon as he pro- vided medical clearance, found the tribunal. When he did, the move was made immediately. As a result, Essar Steel met its duty to accommodate once it was aware of the need for accommodation and would likely have taken steps to address the Jan. 25 conflict had it known earlier. "[Essar Steel] took appropriate actions based on the information it had," said the tribunal, adding that it was up to the company to determine the method of accom- modation — not Linklater, who wanted only to return to 12-hour shifts and refused to consider other options. e tribunal also found that, be- cause Linklater couldn't do the jobs on the 12-hour shift, the loss of the night-shift premium and the dif- ference in hours — totalling about $250 — wasn't discrimination. Linklater was paid for the work he performed and wasn't entitled to be paid as if he could perform the jobs on the 12-hour shift. e tribunal determined that Essar Steel did not discriminate against Linklater's family status or disability and dismissed his complaint. For more information, see: • Linklater v. Essar Steel Algoma Inc., 2019 HRTO 273 (Ont. Hu- man Rights Trib.). Jeffrey R. Smith is editor of Canadian Employment Law Today. For more information, visit www.employment- lawtoday.com. DISCRIMINATION < pg. 5 Employer's actions reasonable "It's very easy to slowly slip into more of an employee-employer type relationship."

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