Workers are typically thought of as either “employees” or “independent contractors”. Employers seek to classify their workforce as “contractors” to avoid paying for mandatory benefits under the Employment Standards Act (ESA), among other things, which only protects employees as defined under the ESA.

However, Canadian courts recognize an intermediate position where, although the worker is not an employee, they are still economically dependent on one contract. These so-called “dependent contractors” are entitled to reasonable notice upon termination of the contractual relationship.

In a recent decision, the Ontario Court of Appeal in Thurston v Ontario (Children’s Lawyer), 2019 ONCA 640, clarified the circumstances in which someone can be classified as a “dependent contractor”. The Court ruled that a dependent contractor relationship is one in which there is “a certain minimum economic dependency, which may be demonstrated by compete or near-complete exclusivity.”[1] This decision could be highly relevant for workers in the modern economy who depend on precarious contract work to make a living.

Background

Ms. Thurston was a sole practitioner lawyer who provided legal services to the Office of the Children’s Lawyer (“OCL”) for 13 years. Each year, the OCL had Ms. Thurston and its other lawyers sign a fixed-term contract, which made up about 40% of Ms. Thurston’s annual income. According to the contract, the OCL made no guarantee of the total value or volume of work that Ms. Thurston would receive, and the OCL could terminate the contract in any circumstances, without notice. When the OCL decided not to renew her contract in 2015, Ms. Thurston claimed that she was a dependent contractor, and therefore that she was entitled to 20 months’ notice of termination.

The Motion Judge’s Decision

When Ms. Thurston filed her lawsuit at the Superior Court claiming that she was a dependent contractor, the OCL brought a motion asking the judge to dismiss the case. The motion judge ruled against the employer. The motion judge noted that the relationship was continuous and permanent for 13 years and that Ms. Thurston was seen as an employee by the public. In addition, 40% of Ms. Thurston’s average billings from her legal practice came from OCL. The OCL appealed the motion judge’s decision to the Court of Appeal.

The Court of Appeal’s Decision

The Court of Appeal reversed the motion judge’s decision and dismissed Ms. Thurston’s case. The court reaffirmed that a worker claiming “dependent contractor” status must lead evidence showing “minimum economic dependency” on the contract. The court explained that a plaintiff demonstrates economic dependence with evidence of near-complete exclusivity:

In distinguishing dependent from independent contractors, McKee made clear that exclusivity of service provision, and therefore of income, is key. As the court put it, “exclusivity is determinative, as it demonstrates economic dependence”; exclusivity, the court said, is a “hallmark” of the dependent contractor category: McKee, at para. 34. In Keenan, at para. 25, this court emphasized that exclusivity was “integrally tied to the question of economic dependency” and that the determination of exclusivity requires consideration of the full history of the relationship in question.[2]

The court based its conclusion on other court decisions that considered this issue and identified near-complete exclusivity as the key factor. In some cases, courts have decided that someone can be a dependent contractor if “substantially more than a majority” of the dependent contractor’s income was earned through one contract.

In Ms. Thurston’s case, the court ruled that she failed to establish the required degree of exclusivity which would demonstrate her economic dependence on the OCL. Ms. Thurston maintained an independent legal practice throughout her time with the OCL, and her work with the OCL only averaged 39.9% of her annual billings – hardly exclusive service. The court confirmed that “near-exclusivity necessarily requires substantially more than 50% of billings.”[3] While the OCL was certainly an important client for her, the Court of Appeal found that the motion judge’s decision failed to appropriately consider the facts and apply the exclusivity test, and for that reason, the motion judge’s decision was unreasonable in the court’s opinion.

Discussion

The Court of Appeal’s decision is a step backwards for dependent contractors who rely on one contracting party for a large portion of their income but would not meet the Court’s onerous “near-complete exclusivity” threshold. Although the decision simply reaffirmed what the Court of Appeal has said in previous decisions (see for example McKee v Reid’s Heritage Homes Ltd., 2009 ONCA 916; Keenan v Canac Kitchens Ltd., 2016 ONCA 79), nevertheless, the Court’s guidance in this case on what constitutes a dependent contractor is useful to those who work through contracting parties. This case is the latest in a long line of decisions confirming that in classifying a work relationship, courts will focus on the substance of the relationship. For workers whose income depends on precarious contract relationships, this means that an employer cannot hide behind the “independent contractor” label if the facts point to a different conclusion.

If you have any questions regarding your employment situation, consult one of our experienced employment lawyers at Raven, Cameron, Ballantyne and Yazbeck LLP. 

[1] Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640  at para 23.

[2] Thurston, supra, at para 25.

[3] Thurston, supra at para 30.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

By Geoff Dunlop and Raphaёlle Laframboise-Carignan

If you have recently started a new job, you may be surprised to learn that your employer’s insurance plan might not cover long-term disability entitlement for people with pre-existing medical conditions. You may be even more surprised to learn that human rights legislation allows for an employer to exclude some people with pre-existing conditions from disability insurance plans.

Overview

Canada has both federal and provincial human rights legislation prohibiting discrimination on the basis of protected grounds, such as disability. The federal legislation, the Canadian Human Rights Act, applies to federally regulated employers, such as airlines and banks. The Ontario Human Rights Code applies to provincially regulated employers. You can learn more about how human rights legislation applies to federal and provincial employees here.

Both the federal and provincial statutes outline situations in which it is not discriminatory for an employer’s disability insurance plan to exclude people with pre-existing medical conditions. Under the federal legislation, plans can exclude a person with a pre-existing condition, who has received medical treatment for that condition, for the first year the person is insured. Under Ontario’s legislation, a plan can exclude a person with a pre-existing condition if it substantially increases the risk for the insurer. Pre-existing conditions are often defined broadly, so almost any medical condition for which you receive treatment may be defined as a pre-existing condition.

Federal Law

Under a regulation of the Canadian Human Rights Act, it is not discriminatory if an employer’s disability income insurance plan does not pay benefits to an employee who, during the first year an employee is insured under the plan, becomes disabled as a result of a pre-existing condition. An injury, accident or sickness that started before the employee became insured can qualify as a pre-existing condition, so long as the employee received medical care, treatment or services, drug therapy or prescribed medicine during the year before becoming insured under the plan.

Ontario Law

Under the Ontario Human Rights Code, it is not discriminatory for an employer’s disability insurance plan to make a reasonable and bona fide exclusion because of a pre-existing disability that substantially increases the risk to the insurer. Unlike the federal statute, Ontario’s statute does not contain any time limit on the exclusion. However, the Ontario Human Rights Code does outline that if an employee is excluded from a group insurance contract because of a disability, the employer must pay the employee compensation equivalent to what the employer would contribute to the insurance contract for an employee without a disability.

Potential Challenges to the Human Rights Legislation

As of July 2019, no federal courts or tribunals have addressed the pre-existing condition exclusion in disability insurance plans. At that time, in Ontario, only one case, Ontario (Human Rights Comm.) v. North American Life Assurance Co., had assessed the exclusion for pre-existing conditions. In that case, the Ontario Human Rights Commission argued that an insurance plan’s pre-existing condition exclusion clause was discriminatory and requested that the court declare it illegal. However, the Ontario Supreme Court upheld the Board of Inquiry’s finding that the insurance plan’s exclusion clause related to a substantial increase in risk because the complainant had a pre-existing disability. Therefore, the exclusion clause was reasonable and bona fide. The Court found that the Human Rights Code provision relating to pre-existing disability exclusions must be read in the context of the insurance industry, which is a for-profit industry. Therefore, the Court determined that it is not discriminatory for a disability insurance plan to exclude pre-existing disabilities that considerably increase the possibility of future insurance financial liability, so long as the exclusion is reasonable in the insurance industry and made in good faith.

Recently, in Talos v. Grand Erie District School Board, the Human Rights Tribunal of Ontario declared that the provision of Ontario’s Human Rights Code that allowed for employee benefits to be cut off at age 65 was unconstitutional. Perhaps a similar challenge to the provisions allowing people with pre-existing conditions to be excluded from employer disability insurance plans may one day be successful.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

On December 12, 2019, RavenLaw appeared before the Supreme Court of Canada to argue in support of a Charter challenge to portions of the RCMP pension plan, which have been applied to prevent employees from buying back periods of service during which they had temporarily reduced hours of work for childcare reasons.

RavenLaw appeared on behalf of the intervener, the Public Service Alliance of Canada, to argue that the pension law discriminates against women and other parents on the grounds of sex and family status. Particularly, PSAC intervened to argue that the RCMP’s treatment of reduced hours of work for childcare worsened the negative impacts that women already experience under traditional pension designs, given their disproportionate share of parental responsibilities. PSAC also argued that the RCMP pension plan failed to protect the ability of employees to make meaningful personal choice in a core area of their lives.

Andrew Astritis and Morgan Rowe from RavenLaw appeared on behalf of PSAC.

Ravenlaw Holiday Hours

Please note our office will be closed from December 23, 2019 until January 1, 2020. We will reopen for regular business hours on Thursday, January 2, 2020 at 8:30 am.

Warmest wishes for a happy holiday season and a wonderful new year.

Employees have the right to work in a healthy and safe workplace and, as such, employers have the obligation to take all reasonable precautions to protect the health and safety of employees.  If an employee has reason to believe that there is a dangerous condition in the workplace or that their duties are likely to present a danger to their health and safety or the health and safety of their co-workers, the employee has the right to refuse work.

Employees who consider their work unsafe due to a confirmed (or presumptive) case of COVID-19 in the workplace, or who have concerns about the risk of potential exposure to COVID-19 from customers or clients, may be able to refuse to attend work or perform certain duties.  Whether or not the work refusal is deemed reasonable will depend on individual circumstances of the employee and the workplace.  Employees must report the refusal to their supervisor or employer who then have the obligation to investigate and, if necessary, adopt measures to eliminate or reduce the risk of potential exposure.   During this first stage of a work refusal, an employee is entitled to be paid at the appropriate rate.  If the issue is not resolved, and the worker still has reasonable grounds to believe the work is unsafe, the worker or the employer must call the Ministry of Labour.  During this second stage, an investigator will be assigned by the Ministry to investigate the work refusal and render a decision in writing.

An employer may not dismiss, discipline, suspend, or impose any penalty or threaten to take any of these actions on a worker who has exercised the right to refuse dangerous or unsafe work.  An employee who believes the employer has reprised against him or her may file a complaint with the Ontario Labour Relations Board (or the relevant federal/provincial Board) or, if working in a unionized workplace, may ask the union to file a grievance under the collective agreement. Make sure that you are aware of the timelines to make these complaints.

The right to refuse work is limited if the danger or working condition is inherent in the work performed by the worker or if the refusal of work would directly endanger the life, health, or safety of another person.  The right to refuse work is therefore limited for police officers, firefighters, workers employed in the operation of a correctional institution, health care workers and persons employed in workplaces like hospitals, nursing homes, sanatoriums, homes for the aged, psychiatric institutions, mental health centres or rehabilitation facilities, residential group homes for persons with behavioral or emotional problems or a physical, mental or developmental disability, ambulance services, first aid clinics, licensed laboratories—or in any laundry, food service, power plant or technical service used by one of the above). Employees in these occupations may still raise issues relating to unsafe working conditions with their supervisors or employers in order to have their concerns addressed and reduce the risk of exposure to COVID-19, though they may not be able to refuse to work.

If you can, you should speak to an employment lawyer to understand your rights as they will be very fact-specific to your circumstances.

It is important to keep up to date with federal, provincial, and municipal government instructions on how to act during this COVID-19 state of emergency. Federal and provincial governments are issuing updates daily – sometimes several times a day.

[Note: this information applies to non-unionized employees only. Unionized employees should consult their bargaining agent. This article is for informational purposes only and does not constitute legal advice, which requires an assessment of your individual circumstances.]

A couple can be living in a conjugal relationship even if they are living in different cities, according to a recent Federal Public Sector Labour Relations and Employment Board decision.

The Board found that the Department of Citizenship and Immigration was wrong to deny an Ottawa-based employee’s request for spousal relocation leave to join his partner in Vancouver, because the couple had not lived under the same roof for at least a year. The couple had lived together briefly in Ottawa and intended to relocate to Vancouver but, for personal and financial reasons, were unable to move at the same time.

The department’s collective agreement with the Public Service Alliance of Canada grants an employee leave to accommodate the relocation of a spouse or “common-law partner,” defined as a person “living in a conjugal relationship” with an employee continuously for at least a year. There is no requirement in the agreement that the couple cohabit for that entire period, the Board pointed out, only that the conjugal relationship has lasted more than one year. The Board concluded that an individualized assessment based on relevant factors, of which cohabitation is just one, is required to determine if a couple is, in fact, living in a conjugal relationship.

In this case, the Board was satisfied that, when the employee requested spousal relocation leave, the couple had been living in a conjugal relationship continuously for at least a year, even though they were living apart. The couple intended to have a common residence but were living separately mainly for financial reasons. Their relationship otherwise had the hallmarks of a common-law partnership. The factors the Board considered included the exclusivity of the couple’s relationship, the emotional and psychological support they provided to each other, their constant communication and, at considerable cost, their frequent visits across the country to see each other.

The Public Service Alliance of Canada was represented by Michael Fisher.

The Ontario Government announced its intention to expand the closure of all “non-essential” businesses on April 3, 2020 in response to the COVID-19 pandemic. The announcement included plans to extend the shutdown to April 17, 2020 and to include new workplaces on the list of businesses that must be temporarily closed.

But despite the media attention to this announcement, details of what exactly the shutdown means for employees have been few and far between, leaving many questions unanswered. For example, what businesses can stay open? And when can an employee be required to go into a closed workplace during the shutdown?

The starting point for understanding how the COVID-19 shutdown affects employees lies in the regulations that the Ontario Government has passed as part of its declaration of a state of emergency. Since March 17, 2020, the Government has passed a series of regulations under the Emergency Management and Civil Protection Act which have closed different kinds of Ontario business and workplaces for different periods of time.

The main regulation enforcing the current shutdown of non-essential businesses is O. Reg. 82/20, or the “Closure of Places of Non-Essential Business” regulation. It provides that all businesses which are not listed as essential in the regulation must be closed from 11:59PM on March 24, 2020 and for as long as regulations require.

1. Reg. 82/20 listed a number of types of businesses that are considered essential and which are allowed to remain open and operate as normal. This included certain kinds of retail business, such as grocery stores and gas stations; restaurants but only for the purposes of takeaway and delivery; support and maintenance services for buildings; IT and telecommunications companies; agricultural businesses, and others.

The most recent planned update to the “essential” business list will remove certain categories of business that were originally considered essential, forcing them to now close down. Workplaces which now must close include cannabis stores and producers; veterinary service providers, except those providing urgent care; automobile rental and leasing businesses; and office, hardware, and pet supply businesses. In addition, only critical construction projects are allowed to continue during the shutdown.

Any business which does not fall into one of the categories listed in O. Reg. 82/20 must generally close and remain closed until the shutdown is over. But O. Reg. 82/20 does allow for a few, narrow exceptions to this rule, including:

• A business does not need to shut down any work that can be done remotely, including shipping goods through the mail, by delivery, or for pick-up
• Employees can be required to go into a closed workplace to perform inspections, maintenance, or repairs
• Employee can still be required to go to a closed workplace in order to provide security services
• Employees can be required to temporarily attend a closed workplace to attend to “critical matters relating to the closure of the place of business, if the critical matters cannot be attended to remotely”
• Employees can be required to temporarily attend a closed workplace to access materials, goods or supplies necessary for the business to operate remotely

These rules about when employees can still be required to go in to work during the shutdown can be trumped by other employee rights, however. For instance, in some circumstances, employees may have a right to refuse unsafe work due to COVID-19, depending on their individual situation, regardless of whether the workplace is considered “essential” or not.

Where employees are required to stay home because their workplace is closed by the shutdown, they may have access to certain lay-off rights, as well as to new benefit packages that both the provincial and federal government are introducing to address the impact of the pandemic. Employees looking for information on the legal options available to them because of the shutdown should contact an employment lawyer to discuss their specific circumstances.

Currently, the planned end date for the Ontario shutdown is April 17, 2020, but the Government has a lot of leeway to change this plan as long as the provincial state of emergency continues. The shutdown can be lengthened or shortened, and new categories of “essential businesses” can be added at any time to respond to the rapidly changing circumstances in the province.

[Note: this information applies to non-unionized employees only. Unionized employees should consult their bargaining agent. This article is for informational purposes only and does not constitute legal advice, which requires an assessment of your individual circumstances.]

What do you do when your arbitration is coming up but no one can meet face to face? The answer, for a number of arbitrators, is that you find another way to hold the hearing.

There are many reasons a party may not want to go ahead with a hearing.  In some cases, a party can ask to postpone the date. Examples include the illness of a representative or of an important witness.  It is important to remember, though, that no one has a right to an adjournment, or a veto over going ahead with a hearing.  The same is true about the way the hearing is held.  Traditionally, everyone meets in the same physical location and the evidence is presented.  Unless there is something in the collective agreement though, it’s a tradition, not a legal requirement.

It is important to remember that the Arbitrator controls the process for getting the grievance resolved.  That means deciding when the hearing is held and how it is held.

Arbitrators Goodfellow, Johnston and Luborsky, in three separate and very recent decisions, refused requests for adjournments in circumstances where the parties could not be in the same location. As an example, arbitrator Goodfellow said in a Toronto Transit Commission case that:

I am, quite simply, not persuaded that there is any risk to the TTC of it not being able to put its best foot forward, factually, or of me being deprived of the most truthful and reliable evidence, legally, to fully and fairly adjudicate the issues in dispute, simply because Mr. Grimaldi (and, possibly, one other witness) will testify remotely with Ms. Rogers having testified in-person. Finally, to be clear, I am completely unpersuaded that any Zoom-related “privacy issues” have any meaningful role to play in the process.

It is not enough to say that there may be credibility issues, so the case must proceed in person.  Arbitrators have a wide range of things they can do to manage any hearing – including electronic hearings.  It is true that technology is not perfect and there will inevitably be some glitches.  On the other hand, the same could be said for many in-person arbitrations.

There will still be situations where an arbitrator will adjourn an arbitration and reschedule for a later date.  Arbitrator Misra did that when Mount Sinai Hospital asked to postpone the hearing.  In that case, though, she was dealing with a pay issue that had remained unresolved for two years and the hospital was scrambling to find the resources to deal directly with the consequences of COVID-19 on patients. The different result in that situation was understandable.

As with any other request, most arbitrators will balance various factors.  One of the most important is the significant interest the parties have in having cases decided quickly. Against that, the party asking to put off a hearing (usually the employer) will have to show real prejudice that would be caused by going ahead and using a new technology.  The arbitrator will consider real  difficulties that are caused by proceeding with a case, but an increase in the work required to prepare and present evidence will not likely be enough.

Parties will have to decide whether they want to go forward with their cases, and they may have legitimate reasons to agree to postpone.  On the other hand, as we navigate a new and challenging labour relations reality, remember that arbitrators may be sympathetic when someone says that the hearing must go on.

Our law firm pauses today to recognize the National Day of Mourning, a day to honour those who have been killed, injured, or made ill as a result of their work. Every worker has the right to a safe and healthy workplace. One workplace death, injury, or illness is one too many.

These extraordinary times remind us of the importance of a safe and healthy workplace. Sadly, many frontline workers around the world have died or become ill because of exposure to the coronavirus in their work. All of us at RavenLaw would like to express our incredible gratitude to the workers performing essential work during the COVID-19 pandemic. We will continue to fight on their behalf for adequate health and safety protections.

This week, the Government has started accepting applications from employers for the Canada Emergency Wage Subsidy (CEWS), part of the Government’s economic response to the COVID-19 pandemic crisis. This new benefit is unprecedented in scope and is likely to be well received by many employers and employees. However, the design of this benefit arguably leaves too much power in the hands of employers.

What is the CEWS?

The CEWS is a wage subsidy intended to help employers that are struggling due to COVID-19, allowing them to recall employees that have been laid off, and to avoid future layoffs. Eligible employers will receive a subsidy for up to 12 weeks between March 15 and June 6, provided they can show the required reduction in revenue for that period. The Government has not imposed any size limit on eligible employers and has extended the benefit to all types of businesses, as well as not-for-profit organizations and charities. Only public institutions, such as schools and hospitals, are excluded.

How much does the subsidy cover?

The subsidy will cover up to 75% of wages on the first $58,700 that an employee earns, up to a maximum of $847 a week. There are special calculations for employees whose pay has been reduced since before the crisis, and for non-arm’s length employees.

Employees who have been laid off can become eligible retroactively for the CEWS if the employer rehires them. However, if those employees have received the Canada Emergency Response Benefit (CERB), and they will earn more than $1000 per month as a result of being rehired, they will have to repay the CERB.

Does the CEWS give too much power to employers?

This program is new and therefore may be revised and adjusted in response to public criticism, similar to the CERB. The Government may want to consider some of the ways in which this program’s design places too much power in the hands of employers.

No obligation on employers to pay remaining 25% of wages

The Government is not requiring employers to pay the remaining 25% of employees’ wages as a condition of eligibility for the CEWS. The Government has stated publicly that it “expects” employers to make best efforts to pay the remaining salary amounts, but it is unclear whether there will be any mechanism to enforce that expectation. As a result, there is a concern that many employers will recall employees at only 75% of their previous pay rate, or even potentially reduce the pay of existing employees. This program should obviously not create an incentive for employers to pay their workers less.

Employers decide the level of government benefit for workers

The CEWS (up to $847 per week) is a far more valuable benefit than the CERB ($500 per week). A worker who has been laid off due to COVID-19 is only eligible for the CERB, but that worker’s employer could choose to rehire them solely for the purposes of accessing the CEWS, thereby granting that worker access to a significantly larger benefit.

This program therefore gives a huge amount of power to employers to basically decide how much financial relief their workers will receive during this crisis. One way to fix this flaw is to increase the value of the CERB to make it equivalent to the CEWS.

Will the CEWS strengthen a claim of constructive dismissal?

While the CEWS appears to place workers at the mercy of their employers in many respects, one way in which it may hand some power back to workers is in claims for constructive dismissal.

Many employment law experts have questioned how courts will consider claims of constructive dismissal in these extraordinary circumstances. Some argue that the COVID-19 crisis may justify greater changes to the employment relationship than have previously been accepted, on the theory that a reasonable person in the employee’s position would not consider the change to amount to a dismissal in this unique context.

The CEWS offers significant relief to employers in meeting payroll obligations, and so it may play a role in the constructive dismissal analysis. A reasonable employee may, for example, consider themselves constructively dismissed if they are laid off or have their wages reduced, if the employer cannot prove that these changes were necessary despite the presence of the CEWS benefit.

These questions, unfortunately, will not be answered by the courts for some time. Therefore, it is important for employees to obtain legal advice before claiming constructive dismissal, to fully understand the risks and consequences.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without an assessment of your individual circumstances.]