Canadian HR Reporter

CANADIAN HR REPORTER October 3, 2016 INSIGHT 19 The times, they are a changin' Fox News lawsuit, Ontario's Bill 132 show sexual harassment no longer tolerated On Sept. 6, we learned Fox News will pay US$20 million to Gretchen Carlson, who made allegations she was subjected to sexual harassment. On Sept. 8, Bill 132 came into force in Ontario, creating new ob- ligations for employers designed to address sexual harassment in the workplace. What do these two events have in common? ey are both indicative of the growing intoler- ance for workplace sexual harass- ment, as well as the obligation on the part of employers to take reasonable steps to prevent and address sexual harassment in the workplace. Like many issues of this nature, it has taken a long time to get to this point. For far too long, sexual harassment was tolerated and em- ployers often turned a blind eye, particularly when the harasser was the owner of the organization or one of the "stars." Even after the Jian Ghomeshi scandal broke at the CBC, it was not uncommon for people to talk about their own organizations and identify a person who was well-known as someone who ha- rassed and abused staff. In most cases, those individuals were seen as "untouchable" due to their role or performance level. In the Fox News case, reports suggest the issue may have been known years ago, and there were many other victims, but those in charge chose to ignore it. By addressing the issue as they have in recent months, the current leadership has sent a strong mes- sage, confirming sexual harass- ment will no longer be tolerated — no matter who the perpetrator is. While that situation has noth- ing to do with Canadian laws, it is certainly indicative of changing societal norms and expectations. One good thing that came out of the Ghomeshi scandal is it raised awareness of workplace sexual ha- rassment issues in Canada. As a result, employees were reassured they do not have to tolerate such conduct, and employers received the message they could not allow such conduct. In addition to legal liability, we have seen several high-pro- file organizations, including the CBC, subjected to incredibly bad press, which has damaged their reputations. Bill 132 puts new obligations in place with respect to policies and "programs" to address sexual ha- rassment. Employers in Ontario must have clear policies that set out how an individual is to re- port an incident of sexual harass- ment and, in particular, who they should report the incident to if the alleged harasser is the owner or a supervisor of the victim. e new legislation also sets out requirements for policies to delin- eate how allegations of sexual ha- rassment will be investigated, and how the results will be reported. Furthermore, the legislation gives the Ministry of Labour the right to retain a private investigator, at the expense of the employer, if an appropriate investigation is not carried out. e deadline for compliance was Sept. 8. Employers across the province are, or should be, work- ing toward ensuring they are compliant. e requirements will not go away, and the reality is that sexual harassment in the workplace will not be tolerated. Employers that fail to take reasonable steps to protect employees expose themselves to liability, as well as bad publicity and the risk they will lose employees and be unable to recruit quality individuals to replace them; simply put, they will not be seen as employers of choice. Hopefully, the message is now clear: Workplace sexual harass- ment is unacceptable and employ- ers can no longer bury their heads in the sand and pretend not to be aware of it, rather than confront the perpetrators — even if they are the owners of the organization or star performers. Stuart Rudner is a founding partner of Rudner MacDonald in Toronto. Fol- low him on Twitter @CanadianHR- Law or at srudner@rudnermacdon- ald.com. Stuart Rudner Guest Commentary Colin Gibson Toughest HR Question Independent contractor relationships What are the limits when it comes to how many times a contract can be renewed? Question: Is there a limit to how many times a contract can be renewed before the relationship with an independent contractor changes? Is there language that can be included to maintain an independent contractor relationship indefinitely? Answer: When an organization is designing a contract for per- sonal services, it must determine whether the service provider is an employee or independent contractor. is distinction is im- portant because while indepen- dent contractor relationships are generally subject only to the basic principles of contract law, em- ployment relationships are gov- erned by an extensive and com- plex common law and statutory legal framework. For example: • e common law implies certain terms into many employment contracts, such as the obligation to provide reasonable notice of termination of employment. • The minimum requirements contained in employment stan- dards statutes apply to most em- ployees, but not to independent contractors. • e employment-related dis- crimination provisions in hu- man rights legislation apply to employees, but may not apply to independent contractors. • e definition of "worker" in workers' compensation statutes will apply to most employees but only certain independent contractors. • If a worker is an employee, the employer will be required to make the applicable statutory deductions and remittances for income tax, employment insurance and the Canada Pen- sion Plan. ese requirements do not apply to independent contractors. Here are the most serious risks associated with a worker being found to be an employee: Workers' compensation: If a person providing services is in- jured in a compensable accident and seeks compensation, and that person is found to be a "worker," assessments, costs and penalties can be imposed upon the engag- ing company. Statutory remittances: If a worker is found to be an employ- ee, the company can be faced with a sizeable invoice from Canada Revenue Agency for income tax, employment insurance and Cana- da Pension Plan assessments, plus penalties and interest. Emplo y ment st and ard s claims: If a worker is found to be an employee, the employer may be faced with a significant claim for unpaid wages, statutory holi- day pay, vacation pay, termination pay or unauthorized deductions. How is the line drawn between independent contractor and em- ployee status? A contract of em- ployment is said to be a "contract of service," while an independent contractor agreement is a "con- tract for services." It is not always easy to determine whether a worker is an employee or an in- dependent contractor because courts, tribunals and government agencies have identified a variety of factors that will influence this issue, none of which will neces- sarily be determinative. Also, the fact that one tribunal or agency recognizes a worker to be an in- dependent contractor does not mean that the same decision will be made by another. Nor will the parties' own characterization of their relationship be determina- tive, although the existence of a carefully drafted agreement will often be given significant weight. In many situations, it will be obvious. An individual who is hired, works a full-time sched- ule, reports to a boss, has benefits coverage and receives a regular paycheque will undoubtedly be an employee. On the other hand, a contractor hired to install a new roof on a house, who arrives with workers, tools and supplies, and works for a specified price, is clearly an independent contractor. In between these extremes lies a broad variety of relationships that are less easy to character- ize. A number of tests have been developed to determine wheth- er a worker was an employee or an independent contractor, including: e control test: is test rec- ognizes that in an employment re- lationship, the employer controls both the worker and the manner in which the work is performed. e employer determines what work is to be done, which work- ers will do it, and how, when and where the work will be performed. e employer also exercises con- trol by setting the wages or other remuneration to be paid. e four-fold test: is test examines not only control, but also ownership of tools, chance of profit, and risk of loss. Does the worker own the tools required to perform the work and pay the cost of their operation? Is the remuneration structured so the worker has a chance of profit or risk of loss? Does the worker have a financial stake in the business, and cover business costs such as rent and insurance? e organization or integra- tion test: is test looks at wheth- er the work performed by the worker forms an integral part of the company's business, or wheth- er it is simply an accessory. Also important is whether the worker is economically dependent on the company for her livelihood. In 671122 Ontario Ltd. v. Sag- az Industries Canada Inc., the Supreme Court of Canada said there was no one conclusive test that could be universally applied to determine whether a person was an employee or an indepen- dent contractor. "e central question is wheth- er the person who has been en- gaged to perform the services is performing them as a person in business of his own account. In making this determination, the level of control the employer has over the worker's activities will al- ways be a factor. "However, other factors to con- sider include whether the worker provides his or her own equip- ment, whether the worker hires his or her own helpers, the degree of financial risk taken by the work- er, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the per- formance of his or her tasks." No single factor will be deter- minative. As the court noted in the Sagaz decision, the central question involves a determination of whether the service provider is in the business of providing the services in question. In the employment context, it has been held that where a fixed- term employment contract is repeatedly renewed, the employ- ment relationship will at some point become one of indefinite duration. Similarly, an independent con- tractor agreement that is renewed repeatedly may be found to show the contractor is really an employ- ee because the relationship has be- come indefinite in nature. Having said that, there are inde- pendent contractor relationships that can have an indefinite term. An example would be a contractor who is hired to provide ancillary services to a business on an ongo- ing basis, such as an IT consultant or outside accounting firm. In those circumstances, even repeated renewals of the indepen- dent contractor agreement should not result in the service provider being deemed to be an employee. Colin Gibson is a partner at Harris and Company in Vancouver. He can be reached at (604) 891-2212 or cgib- son@harrisco.com. An independent contractor agreement that is repeatedly renewed may show the contractor is really an employee.

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