In Ottawa, many workers believe themselves to be “independent contractors” either because they prefer this characterization or because their employers have described them in those terms. Unfortunately, both might be incorrect and being improperly considered an independent contractor when you are actually an employee can have weighty implications for your annual tax payments and also your legal entitlements if and when the employment relationship ends.

What’s in a name?

Like our dear (albeit impulsive) Juliet, who recognized early on “that which we call a rose by any other name would smell as sweet”, the Ontario courts have long recognized that, when it comes to a potential employer-employee relationship, it is not the title one is assigned, but rather the nature of the relationship that is determinative.

To complicate matters further, the courts have created a third category between employees and independent contractors: these individuals are named “dependent contractors”. Once again, the crucial question is the nature of relationship.

Factors for determining if you are an employee or a contractor

To determine the relationship between the parties, one must first determine whether an employment relationship exists. The leading case on the first step is 671122 Ontario Ltd. V. Sagaz Industries Canada Inc., [2001] 2 SCR 983. According to that case,  the central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. The Court also identified the following (non-exhaustive) factors to consider:

[i] whether the worker provides his or her own equipment,

[ii]whether the worker hires his or her own helpers,

[iii] the degree of financial risk taken by the worker,

[iv] the degree of responsibility for investment and management held by the worker, and

[v] the worker’s opportunity for profit in the performance of his or her tasks.

If those factors signal that the worker is a contractor rather than an employee, the second step in the inquiry is to determine whether the engaged party is an Independent or a Dependent contractor: McKee v. Reid’s Heritage Homes Ltd. 2009 ONCA 916 (CanLII).

In McKee, the Ontario Court of Appeal noted, “the dependent contractor category arises as a ‘carve-out’ from the non-employment category and does not affect the range of the employment category.” The Court held that the most significant factor for identifying a dependent contractor is an exclusive relationship (i.e. the contractor provides his or her services only to one business or enterprise). The Court noted that this factor is also relevant at the first stage of the test:

[T]he proper initial step is to determine whether a worker is a contractor or an employee… Under that analysis, the exclusivity of the worker is listed as a factor weighing in favour of the employee category (Belton’s first principle). The next step, required only if the first step results in a contractor conclusion, determines whether the contractor is independent or dependent, for which a worker’s exclusivity is determinative, as it demonstrates economic dependence. Therefore, exclusivity might be a “hallmark” of the dependent contractor category vis-à-vis the broader category of contractors. However, it continues also as a factor in determining whether the worker is not a contractor at all, but rather an employee, in the first-step analysis.

Implications of being an employee vs contractor

The taxation implications if CRA deems you to be an employee are significant, as are the implications to the employer, who will be then obligated to provide you with employment benefits as per the Employment Standards Act, 2000, as well as make the necessary EI and CPP contributions. If you are not an employee under the law, there may still be important consequences, depending on whether you are characterized as independent vs dependent. The most important consequence is that a “dependent contractor” is owed some form of reasonable notice of termination of employment. Click here  to read more about reasonable notice.

When entering into any employment or contractual agreement, individuals are well advised to obtain independent legal advice in order to fully understand the implications of the agreement they are entering into.

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

Andrew Astritis will be presenting at the 2015 Accommodation Law Conference, hosted by Labour Law Online – Centre for Labour-Management Development. The conference, which takes place on April 22 and 23, 2015 at the Chateau Laurier in Ottawa, will address recent development in human rights and accommodation law, including a summary of recent cases in the area. More information on the conference is available here.

On Friday, March 20, 2015, Andrew Astritis participated in an upper-year human rights seminar in the University of Ottawa’s common law program. The class addressed developments in family status accommodation, including the decision in Canada (Attorney General) v Johnstone. Andrew Raven and Andrew Astritis appeared as counsel on behalf of Ms Johnstone.

RavenLaw was proud to sponsor the 16^th Annual County of Carleton Law Association/ Great Canadian Theatre Company Lawyer Play. The annual fundraiser supports the operations of Great Canadian Theatre Company (GCTC) and benefits a charity partner, which this year was StreetSmarts. Over the last 15 years, the Lawyer Play fundraiser has raised over $1.2 million dollars for GCTC and designated charity partners. Each year, the play’s cast is composed entirely of members of Ottawa’s legal community. This year’s play, Parfumerie, ran from April 15 – 18, 2015 and featured RavenLaw lawyer Amanda Montague-Reinholdt as Miss Ritter.

In addition to compensation for long-term disability benefits, it is possible to also claim damages for mental distress from the insurance company, as well as punitive damages to punish the company for its conduct. However, to successfully claim these amounts, the relevant legal tests must be satisfied. The Ontario Court of Appeal recently rendered a decision which clarifies the test to be applied in determining punitive and mental distress damages.

Background

In Fernandes v Penncorp Life Insurance Company, 2014 ONCA 615, the plaintiff ran a successful brick laying business in Kitchener, Ontario, when he injured his back after two separate falls. After the second fall, he never worked as a brick layer again. Mr. Fernandes was, at the time of his injury, 40 years old with an equivalent of a grade 8 education.

The trial judge awarded the plaintiff approximately $236,000 in compensation, and also awarded significant punitive and mental distress damages. Mr. Fernandes was awarded $200,000 in punitive damages because the insurance company had not “dealt with the claim fairly and in a balanced way”. He was also awarded $100,000 for mental distress damages for the failure of the insurance company to pay him what they had contracted to pay him. Notably, Mr. Fernandes had originally only sought $25,000 for these mental distress damages. Finally, Mr. Fernandes was awarded full legal costs amounting to about $212,000.

The insurance company appealed the trial judge’s decision regarding the awards for punitive and mental distress damages, as well as full indemnity costs.

Decision of the Ontario Court of Appeal

The Ontario Court of Appeal allowed the appeal in part, reducing the legal costs awarded by $30,000 and reducing the mental distress damages awarded. However, the Court upheld the finding that punitive and mental distress damages were payable in respect of Mr. Fernandes’ treatment by the insurance company.

Punitive Damages

The Court summarized the key applicable principles for a finding of punitive damages as follows:

• Punitive damages are designed to address the objectives of retribution, deterrence and denunciation, not to compensate the plaintiff.
• They are awarded only where compensatory damages are insufficient to accomplish these objectives.
• They are the exception rather than the rule.
• The impugned conduct must depart markedly from ordinary standards of decency; it is conduct that is malicious, oppressive or high-handed and that offends the court’s sense of decency.
• In addition to the breach of contract, there must be an independent actionable wrong.
• In a case of breach of an insurance contract for failure to pay insurance benefits, a breach by the insurer of its contractual duty to act in good faith constitute an independent actionable wrong.

Applying those principles, the Court of Appeal found that there was sufficient evidence to support the conclusion that punitive damages were appropriate in Mr. Fernandes’ case.

Mental Distress Damages

The Court noted that the Supreme Court of Canada in Fidler has held damages for mental distress for breach of contract may be awarded “where they are established on the evidence and shown to have been within the reasonable contemplation of the parties at the time the contract was made”. This however, does not obviate the need to prove the actual loss.

Here, both parties agreed that an objective of the insurance policy was to secure a psychological benefit and that at the time, the parties reasonably contemplated that the failure to pay benefits could cause the respondent mental distress. However, the insurance company contested the amount awarded.

The Court noted that there was no good explanation how the trial judge had arrived at the figure of $100,000, or what facts justified such an amount. It noted further that the award appeared inordinately high and entirely disproportionate, as compared to other awards and noted that the award was four (4) times greater than that requested by Mr. Fernandes. It finally noted that mental distress damages are to be compensatory and not punitive and reduced the award from $100,000 to $25,000.

Commentary

In order to successfully bring a claim for punitive damages or mental distress damages in the context of an LTD claim, it is important to advance the facts upon which those claims can be supported. The trial judge must have a factual basis to grant the amounts sought, and which will satisfy the tests as articulated in the Ontario Court of Appeal’s judgment.

When initiating a proceeding regarding a denial of long-term disability benefits, you should discuss the possibility of seeking punitive or mental distress damages with a disability benefits lawyer.

We are here to help navigate the LTD application process. Consult one of our experienced Long Term Disability lawyers at Raven, Cameron, Ballantyne and Yazbeck LLP if you are considering making a claim for disability benefits or if your claim for benefits has been denied.  

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

RavenLaw was proud to support the 4^th annual Ottawa Rape Crisis Centre Spin-A-Thon on Saturday, April 25^th. The firm provided a financial donation to support the participation of a Ravenlaw team. The ORCC is dedicated to eradication violence against women and providing support to survivors and the people who love them. All proceeds from the event will go towards ongoing short- and long-term counseling for survivors, the 24-hour Crisis Line and raising awareness in the Ottawa community.

Ravenlaw lawyers Amanda Montague-Reinholdt, Dayna Steinfeld and Morgan Rowe participated in the 7-hour Spin-a-Thon with articling students Taylor Akin and Daniel Tucker-Simmons.

Please note that our office will be closed on Friday, April 3, 2015 and Monday, April 6, 2015.

May 1^st, also known as May Day or International Workers’ Day, has long stood as the date on which workers gather to celebrate the past victories of the labour movement and to advance ongoing concerns facing workers around the world. While May Day has its roots in the historical labour struggles in Canada and the United States, it has become a touchstone for worker’s rights and labour activism that remains relevant to this day.

History of May Day

In the late 19^th century, when participating in union activity was a criminal act, workers in Canada and the United States joined in collective action to protest working conditions. This struggle centred on the fight for shorter working hours without a cut in pay. At the time, working conditions were dangerous and workers often had no choice but to work 10 hours a day or longer. Workers organized and agitated to fight for improvements in their working lives.

The Struggles of Canadian Workers

In Canada, the Toronto Typographical Union went on strike in 1872 as part of the “Nine-Hour Day” movement. Although this initial job action yielded little result, a parade held a few weeks later in support of the striking workers drew over 10,000 people. Meanwhile, George Brown, the editor of the Toronto Globe and a politician, sent the police after the striking workers, resulting in 24 arrests. This only further galvanized support for the striking workers, leading to further protest. In response, Prime Minister John A. MacDonald promised to repeal the anti-trade union laws which made participating in union activity criminal, and later the same year, the Trade Unions Act was passed.

In the years following this victory for Canadian workers, parades were organized to mark the catalyst Toronto job action. Eventually, in 1894, the federal government declared Labour Day an official holiday.

The American Origins of May Day

In the United States, the struggle for an 8-hour working day came to a head on May 1, 1886 when more than 300,000 workers across the country walked off the job in peaceful protest. In Chicago, 40,000 workers went on strike. The protest continued and the number of workers swelled each day.

On May 3, police in Chicago began to use violent measures against the striking workers. This led the Chicago workers to organize in protest of the police tactics on May 4. The events of May 4 are now referred to as the “Haymarket Affair”. Towards the end of the day of peaceful protest, when only a few hundred people remained at the protest at Haymarket Square, a delegation of approximately 160 weapons-bearing police officers marched on the Square to disperse the protest. As the police approached, a bomb was thrown, although to this day it is not known who threw it. In the panic that followed, the police began firing their rifles. In the end, seven police officers and four workers died.

The response to the Haymarket Affair was swift and severe. Martial law was declared across the country. Eight men from the labour movement were tried and convicted, with seven sentenced to hang.

In 1889, an American delegate to a labour convention in Paris asked that May 1 be declared International Labour Day to mark the deaths of the men who died in the Haymarket Affair. However, when President Grover Cleveland decided to declare an official holiday in “honour of the working man” in 1894, he chose to follow the Canadian example, recognizing the first Monday in September, instead of May 1, out of concern that celebrating May Day would encourage “rabble-rousing”.

May Day Today

Today, May Day remains an important date for commemorating the gains achieved by trade unionists in the late 19^th century.

Even more importantly, however, May Day has become an international day of labour activism and protest to recognize that struggles that remain for workers today. Workers in countries across the world use this date to hold annual demonstrations advocating for advances to workers’ rights, such as increases to minimum wage, improvements to working conditions, and greater protections for the rights of vulnerable workers.

While May Day marches are sometimes contentious issues, with some governments seeking to ban them outright, May Day’s larger legacy is one of peaceful labour activism. It is a reminder of the progress that can be made when workers join together to pursue their goals collectively.

RavenLaw was proud to support this year’s Ten Oaks Project Camp Bowl-a-Thon. This annual event helps bring much-needed funds to the Ten Oaks Project organization and connects children and youth from LGBTQ+identities, families and communities with their supporters. This year’s event surpassed the $40,000 fundraising goal.

The Ten Oaks Project engages and connects children and youth from LGBTQ+ communities through programs and activities rooted in play.