New Case Law in Employee Employer Relationships

Several years ago a lawyer at a Canadian Association of University Business Officers (CAUBO) seminar said that determining whether or not someone is an employee is a threshold issue from which all rights and obligations flow. This means that if an individual is determined to be an employee, then Ryerson has specific employer obligations under Ontario legislation such as the Employment Standards Act, Human Rights Code, Workplace Safety and Insurance Act, Occupational Health and Safety Act, Labour Relations Act, as well as federal legislation, such as Canada Revenue Agency income tax regulations.

On the other hand, if someone is not an employee, the above would not apply, right? Well, recent case law begs to differ with this view.

A number of recent cases have given a broader interpretation of what is considered to be employment in the context of human rights, occupational health and safety, and labour relations legislation. The cases involve three different jurisdictions: Alberta, British Columbia, and Ontario. The first two may not be directly relevant as Ontario’s legislation may differ, but the principles upon which the decisions are based may have more far reaching impact.

In the Alberta case, the province’s Labour Relations Board found that taxi drivers are employees under the labour relations legislation even if the taxi company establishes agreements with them as independent contractors. The Vice Chair of the Board indicated in the decision that,

"…when the Board decides an individual is an 'independent contractor' rather than an 'employee', the Board decides that individual will be denied statutory protection of the right to organize… The cases in this area have spoken of an economic spectrum – at one end, the true entrepreneur – at the other end, the individual worker…. To the extent the facts place an individual in the middle of the economic spectrum, Charter values and a purposive interpretation of the Code favour finding the individual an 'employee' entitled to legislative protection of the right to organize." (emphasis added)

In the British Columbia case, a law firm in Vancouver argued that the British Columbia Human Rights Tribunal had no jurisdiction to address a complaint from a partner in a law firm about forced retirement at age 65, because the partner was not in an employment relationship with the firm. The Tribunal’s decision, however, indicated that they did have jurisdiction, due to the nature of the relationship between the law firm and the partner. The decision indicated that the firm employed the partner within the meaning of the Human Rights Code even though the partner may not be an employee for the purposes of other statutes.

“The Code definition of "employment" can and should be interpreted generously and flexibly to further Code purposes and protect against or remedy acts of prohibited discrimination.” (emphasis added)

The decision also looked at elements of standard tests for an employment relationship. In particular, the interpretation of the control test in this case is interesting because many people argue that there is little control exercised over the work of professionals. In this case, the Tribunal looked at whether the “alleged” employer exercised control over wages and the way in which the employee would be remunerated, along with control over the work that could be done and the manner in which it would be performed. Even though the partner was paid based on a share of the profits, and he entered into a voluntary agreement, the decision indicated that the firm controlled compensation and other terms and conditions.

The Ontario case, similarly, looks at the legislation under which rights are being asserted as an important factor in determining whether or not an employment relationship exists. In that case, the Ontario Court of Appeal, in a unanimous decision, determined that truck drivers who were engaged as independent contractors by a transportation company were “regularly employed” within the meaning of the section of the Occupational Health and Safety Act that dealt with the requirement to have a Joint Health and Safety Committee given a threshold number of employees. This was despite the fact that the company:

• did not own any of the trucks;
• was, in effect, a dispatch business and the truck drivers paid the company a fee for its dispatch services;
• the truck drivers paid all taxes, fees, and tolls;
• drivers arranged and paid their own WSIB coverage, and did not operate physically from the company offices.

The main reason for the decision was that the Occupational Health and Safety Act included contractors in the definition of employer. If the transportation company was the employer of contractors within the meaning of the legislation then, so the argument goes, the contractors are employees within the meaning of the legislation.

So what does this all mean? In all of the above cases, the decisions referenced standard tests for whether an employee employer relationship exists. At the same time, they went beyond this to look at the intent of the legislation to protect individual rights. These latest decisions are an indication that the issue of employee employer relationships is becoming more complex, and we cannot assume that one piece of employment related legislation does not apply even if it is clear that others do not apply. Really it seems to signal a legislation-specific approach to determining employee employer relationships and focus on protection of individuals. This could be very confusing if someone is considered an employee under one piece of legislation, but not under others. How will we determine rights and obligations? We are just beginning to head down the rabbit hole to this new reality.