Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.
Issue link: https://digital.hrreporter.com/i/1202688
www.hrreporter.com 23 George Green is a partner in the Saskatoon office of McKercher, where he practises extensively in the areas of employment law, criminal defence and debt recovery. He can be reached at (306) 664-1283 or g.green@mckercher.ca. Ultimately, however, the Court of Appeal's conclusion was based on exclusivity: "The key point is this: Only 39.9 per cent of [Thurston's] earnings came from OCL during the relevant period. This cannot reasonably be categorized as a 'near-exclusive' relationship." While losing the OCL as a client resulted in a significant reduction in Thurston's earnings, this reduction did not mean Thurston was a dependent contractor, said the court. In the 2019 Cormier v. 1772887 Ontario Limited c.o.b. as St. Joseph Communications, the Ontario Court of Appeal reinforced the importance of exclusivity. The principal appealed the lower court's finding of a dependent contractor relationship and argued that the lower court erred by focusing on exclusivity, rather than whether the contractor was economically dependent upon the principal. The Ontario Court of Appeal rejected this argument and interpreted the lower court's decision contextually, finding that the lower court concluded the contractor was in an exclusive relationship and was economically dependent on her principal. It is difficult to imagine a situation where a contractor who works exclusively (or nearly exclusively) for one specific principal is not economically dependent on that same principal. Although exclusivity might become key to identifying dependent contractors, parties should not automatically assume that dependent contractor status necessarily means damages will be awarded where no notice of termination was provided. Dependent contractors can be subject to jurisdiction- or industry- specific legislation that can lead to possibly unforeseen results. For example, in the 2018 Beattie v. Women's College Hospital, the Ontario Superior Court of Justice found that the doctors met the criteria for dependent contractor status but concluded that the Public Hospitals Act prevented them from recovering damages in lieu of reasonable notice of termination. The doctors had practised medicine in urgent care for decades when the hospital decided, in good faith, to close the centre. The statute explicitly barred all actions against the hospital for such decisions. This decision was affirmed by the Ontario Court of Appeal, and the Supreme Court of Canada refused leave to appeal. Potential risks In light of the recent Ontario Court of Appeal cases, employers and principals ought to proactively address the potential risk of independent contractors being found to be dependent contractors. The longer this risk is ignored, the higher the potential damages could be. Addressing this risk is often difficult. Consider how a principal could identify which of its contractors are dependent or independent: Does it know what percentage of the earnings (both annually and on average) are attributable to its business? If not, perhaps a solution is to revise the standard contractor agreements so that contractors must provide this information annually. This information can then factor into a principal's assessment of risk and whether it wishes to continue to provide such substantial amounts of work to one single contractor. Naturally, this solution carries its own legal and business challenges. Of course, damages for dependent contractors who provided their services over decades would be higher than dependent contractors who provided their services for only a few years. See the 2018 Shaham v. Airline Employee Travel Consulting Inc., the 2015 Keenan v. Canac Kitchens Ltd. (affirmed in 2016) or the 2014 Khan v. All-Can Express Ltd. CHRR The Supreme Court of Canada in Ottawa