8.1 Who is an employer?

8.1.2 Related employers

The Employment Standard Act, 2000’s related employer provision (section 4) allows separate but related legal entities to be treated as one employer if the two criteria set out in subsection (1)(a) and (b) are met.

Section 4 of the Employment Standard Act, 2000 (ESA) provides as follows:

  • 4. (1) Subsection (2) applies if,
    • (a) associated or related activities or businesses are or were carried on by or through an employer and one or more other persons; and
    • (b) the intent or effect of their doing so is or has been to directly or indirectly defeat the intent and purpose of this Act.
  • (2) The employer and the other person or persons described in subsection (1) shall all be treated as one employer for the purposes of this Act.
  • (3) Subsection (2) applies even if the activities or businesses are not carried on at the same time.
  • (4) Subsection (2) does not apply with respect to a corporation and an individual who is a shareholder of the corporation unless the individual is a member of a partnership and the shares are held for the purposes of the partnership.
  • (5) Persons who are treated as one employer under this section are jointly and severally liable for any contravention of this Act and the regulations under it and for any wages owing to an employee of any of them.

A “related employer” provision first appeared in the ESA in 1970. An amendment in 1987 introduced the “intent or effect” test.

Other canadian jurisdictions and the common law

Eight other Canadian jurisdictions have related employer provisions in their employment standards legislation. None of them contains a requirement that there be an intent or effect of the corporate structure to defeat the purposes of the Act in order for a related employer declaration to be made.

The courts in Ontario and other Canadian jurisdictions have applied a common employer doctrine in wrongful dismissal cases since the 1980s.footnote 351 The test to find a common employer is similar to the relatedness criterion in s. 4(1)(a). There is no requirement similar to the intent or effect criterion. Although Saskatchewan does not have a related employer provision in its ES legislation, it refers to this common law doctrine when administering its statute.footnote 352

The common employer doctrine has been recognized at common law. In the Downtown Eatery case,footnote 353 the Ontario Court of Appeal said:

The common employer doctrine, in its common law context, has been considered by several Canadian courts in recent years. The leading case is probably Sinclair v. Dover Engineering Services Ltd.(1987), 11 B.C.L.R. (2d) 176 (S.C.), affd (1988), 49 D.L.R. (4th) 297 (B.C.C.A.) ("Sinclair"). In that case, Sinclair, a professional engineer, held himself out to the public as an employee of Dover Engineering Services Ltd. ("Dover"). He was paid by Cyril Management Limited ("Cyril"). When Sinclair was dismissed, he sued both corporations. Wood J. held that both companies were jointly and severally liable for damages for wrongful dismissal. In reasoning that we find particularly persuasive, he said, at p. 181 B.C.L.R.:

The first serious issue raised may be simply stated as one of determining with whom the plaintiff contracted for employment in January 1973. The defendants argue that an employee can only contract for employment with a single employer and that, in this case, that single entity was obviously Dover.

I see no reason why such an inflexible notion of contract must necessarily be imposed upon the modern employment relationship. Recognizing the situation for what it was, I see no reason, in fact or in law, why both Dover and Cyril should not be regarded jointly as the plaintiff’s employer. The old-fashioned notion that no man can serve two masters fails to recognize the realities of modern-day business, accounting and tax considerations.

There is nothing sinister or irregular about the apparently complex intercorporate relationship existing between Cyril and Dover. It is, in fact, a perfectly normal arrangement frequently encountered in the business world in one form or another. Similar arrangements may result from corporate take- overs, from tax planning considerations, or from other legitimate business motives too numerous to catalogue.

As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. The essence of that relationship will be the element of common control.

The purpose of a related employer provision

The purpose of the related employer sections in various provincial and federal employment laws is summarized in the Alberta case of Cosentino Developments Inc.footnote 354 In that case, the Employment Standards Umpire, Provincial Court Judge Donnelly, in applying the related employer provision of the Alberta Employment Standards Code stated:footnote 355

The [corporate] Appellants submit that allowing the [related employer] Declaration to stand, goes against the principle of law which recognizes the distinct and independent existence of a corporation from its shareholders or related or subsidiary entities or corporations. That may be so but the law also recognizes many instances where that principle gives way for a specific purpose. Section 80 provides for one such instance. It is purposive social legislation meant to alter the strict adherence to this principle when such adherence might prevent a worker from receiving her earnings from an entity for which she worked but whose connection to her was somehow obscured by a "corporate veil" or other business or organizational structure or arrangement. The court must give effect to this purpose but the application of section 80 to the Appellants does not affect the recognition of their separateness for other purposes. The law generally will treat two persons or entities as distinct although they may be connected in or profit from the operation of a single business by various means such as through partnerships, subsidiaries or agencies, common shareholding or directorships, or management or tenancy agreements. What is important for the purpose of section 80 is to determine whether the nature and extent of those commonalties result in them carrying on a business or activity together. If so, section 80 applies. That is the case here.

In our view, the ESA should enable a related employer finding to be made once it is established that the activities or businesses are associated or related, i.e. once the relatedness test in s. 4(1)(a) is met. Such a finding should not be restricted to or limited to circumstances where the intent or effect of the arrangement between the related businesses has been to directly or indirectly defeat the intent and purpose of the ESA.

There may be many bona fide reasons to structure a business by involving multiple entities and/or individuals – none of which have anything to do with defeating the purpose of the ESA. As was noted in Cosentino, there are many circumstances where the law recognizes the distinct and independent existence of a corporation. However, the related employer provision of employments standards legislation should be purposive social legislation meant to alter the strict adherence to this principle when such adherence might prevent a worker from receiving her earnings from an entity for which she worked but whose connection to her was somehow obscured by a "corporate veil" or other business or organizational structure or arrangement.

An effective related employer provision would reflect its purpose - to protect employees against the implications of treating each entity as being separate and distinct when such entities operate as in an associated or related way, even if the activities or businesses are not carried on at the same time. (See s. 4(3).)

An effective provision would apply when separate entities are joint employers as recognized by common law and/or because more than one corporate entity or individual carry on associated or related activities or businesses and who should be treated as one employer for employment standards purposes.

In Abdoulrab et al v. Ontario Labour Relations Board,footnote 356 the Ontario Court of Appeal had occasion to consider the interpretation and application of s. 4 of the ESA. In that case, the owner of an operating company terminated a large number of employees, triggering their entitlement to severance and termination pay under the ESA. The company then went into bankruptcy without making the required payments to its employees. The owner then incorporated a new company, purchased the assets of the bankrupt company and continued the business on the same premises using many of the same employees. Several of the terminated employees filed ESA claims with the Ministry of Labour for their termination and severance pay. An employment standards officer determined that the two companies were jointly and severally liable for severance and termination pay as related employers and issued orders to pay. The companies sought review of the orders to pay by the Ontario Labour Relations Board. The Board found that the companies met the relatedness test of s. 4(1)(a). However, it ruled that the intent or effect test set out in s. 4(1)(b) was not met because the insolvency of the direct employer was not caused by its relationship with the related company. The Divisional Court dismissed the employees' application for judicial review of the Board’s decision. The Court of Appeal dismissed the appeal.

The result in Abdoulrab underscores the impact of s. 4(1)(b). Entities that are in fact related to an employer that owes money to its employees can escape liability for those debts, resulting in fewer employees receiving their statutory entitlements. The intent or effect test operates to emasculate the original purpose of the provision. That purpose was to protect employees’ monetary ESA entitlements by providing them with additional sources – i.e. entities that are related to their employer – to satisfy those entitlements when their direct employer cannot pay or refuses to pay.

The purpose of a related employer section is to protect employees against the implications of treating entities and other persons as distinct even though they are connected in or profit from the operation of a single business by various means such as through partnerships, subsidiaries or agencies, common shareholding or directorships, or management or tenancy agreements. As was said in Cosentino: What is important for the purpose of section 80 (the related employer section) is to determine whether the nature and extent of those commonalties result in them carrying on a business or activity together. If so, section 80 applies.

Conclusion

The elimination of s. 4(1)(b) of the ESA would result in a related employer section similar to that found in the current Alberta Employment Standards Code. Such an amendment would result in a related employer section that reflects its original purpose and intent. The current s. 4(1)(b) operates to defeat the purpose of the section.

Recommendation

  1. The intent or effect test of the related employer section in the Employment Standards Act, 2000 (section 4) should be repealed. Section 4 should be amended by deleting paragraph 4 (1) (b). The section should otherwise remain unchanged.
     

    The new section 4 (1) would, therefore, provide as follows:

    1. (1) Subsection (2) applies if associated or related activities or businesses are or were carried on by or through an employer and one or more other persons.

8.2 Who is an employee?

8.2.1 Scope and coverage of the ESA

Definition of employee

Background

There are two issues that have been raised consistently:

  1. the misclassification of employees as independent contractors; and
  2. the current definition of employee in the ESA.

8.2.2 Misclassification of employees

Workers who are employees under the ESA definition are sometimes misclassified by their employers – intentionally or unintentionally – as independent contractors not covered by the ESA. Currently, 12% of the total Ontario workforce of 5.25 million is reported as own account self-employed (i.e., self-employed individuals without paid employees).footnote 357 The experience of the Ministry of Labour in enforcement and significant anecdotal evidence suggests that a portion of these own account self-employed workers are misclassified as they are actually employees but are treated by their employers as independent contractors.

Businesses that misclassify employees as independent contractors avoid the direct financial costs of compliance with the ESA and other legislation. These costs include:

  • 4% vacation pay;
  • approximately 3.7% of wages for public holiday pay;
  • overtime pay;
  • termination pay;
  • severance pay; and
  • premiums for Employment Insurance (EI) and the Canada Pension Plan.

Additionally, employees who are misclassified as independent contractors are denied benefit coverage where such coverage is available to employees.

In sum, misclassification has significant adverse impact on those Ontario workers who are wrongly labeled independent contractors and not treated as employees. As was stated by Noack, Vosko and Thomas in a paper prepared for the Changing Workplace Review,footnote 358

Beyond Ontario, researchers have documented the deepening mismatch between the scope of ES and changing employment norms that leaves growing numbers of workers partially or entirely outside the scope of labour and employment laws (Vosko et al., 2014). These include workers in so-called ‘new’ forms of employment, for example those (mis)classified as independent contractors…

The Law Commission of Ontario (LCO) recognized the problem of misclassification and has expressed the opinion that part of the solution is greater use of proactive enforcement:footnote 359

In the LCO’s view, the most straightforward approach would be to target the actual issue, the practice of misclassifying employees, through improved enforcement procedures, policy development, ESO training and public awareness. This would protect the most vulnerable without negatively impacting those who benefit from self-employment. The advantages of compliance and enforcement practices such as proactive inspections and expanded investigations outlined earlier are equally applicable to the situation of identifying cases of misclassification. The most effective enforcement activities would be those directed at industries known to be at high-risk for practices of misclassification such as trucking, cleaning and catering, as well as identification and proactive monitoring of industries populated by workers known to be disproportionately affected.

In the United States, David Weil, the Administrator of the U.S. Department of Labor Wage and Hour Division (DOL), issued interpretation bulletin No. 2015-1 on July 15, 2015 in which he stated:

Misclassification of employees as independent contractors is found in an increasing number of workplaces in the United States, in part reflecting larger restructuring of business organizations. When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation. Misclassification also results in lower tax revenues for government and an uneven playing field for employers who properly classify their workers. Although independent contracting relationships can be advantageous for workers and businesses, some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.

Moreover, the economic realities of the relationship, and not the label an employer gives it, are determinative. Thus, an agreement between an employer and a worker designating or labeling the worker as an independent contractor is not indicative of the economic realities of the working relationship and is not relevant to the analysis of the worker’s status. … Economic realities, not contractual labels, determine employment status for the remedial purposes of the FLSA. Real v. Driscoll Strawberry Assocs. Inc., 603 F.2d 748, 755 (9th Cir. 1979).

The ultimate inquiry under the FLSA is whether the worker is economically dependent on the employer or truly in business for him or herself. If the worker is economically dependent on the employer, then the worker is an employee. If the worker is in business for him or herself (i.e., economically independent from the employer), then the worker is an independent contractor.

The DOL has concluded that the misclassification of employees as independent contractors presents one of the most serious problems facing affected workers, employers and the entire economy.footnote 360

Underscoring the importance of the misclassification issue, the DOL has allocated significant resources to the issue by prosecuting cases in federal court, and by signing partnership agreements with numerous states to encourage detection and prosecution of misclassification cases. In 2015 the DOL’s investigations resulted in more than $74 million in back wages for more than 102,000 workers in industries such as the janitorial, temporary help, food service, day care, hospitality and garment industries.footnote 361

8.2.3 Definition of employee in the ESA

The ESA applies to employees – workers who are in an employment relationship with an employer. Independent contractors are not employees.

The ESA currently defines employee as including:

  • a person, including an officer of a corporation, who performs work for an employer for wages;
  • a person who supplies services to an employer for wages;
  • a person who receives training from a person who is an employer, as set out in subsection (2); or
  • a person who is a homeworker; and
  • includes a person who was an employee.

Similar definitions have appeared in previous versions of the ESA. The current definition has been in place since 2001. In conjunction with the statutory definition, various common law tests are used when determining whether a worker is an employee. These tests have evolved and become more expansive of workers as employees over the years.

Over time, the Ontario economy has grown more sophisticated, workplaces have fissured and a spectrum of relationships and arrangements has evolved between workers and employers ranging from standard employment relationships at one end of the spectrum to independent contractors at the other. The result of these changing relationships is that the old definitions are not well suited to the modern workplace. Not every worker fits neatly into the category of employee or independent contractor. Within this spectrum, there are those whose relationship is more like a traditional employment relationship than that of an independent contractor and who are deprived of the protection of the ESA.

The common law has long recognized that there is a category of worker who is not a traditional employee and is not an independent contractor but who is entitled to some of the common law protections of an employee such as reasonable notice of termination of employment. The Ontario Court of Appealfootnote 362 has concluded that an intermediate category between employee and independent contractor exists, which consists, at least, of those non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity. Workers in this category are known as ‘dependent contractors’ and they are owed reasonable notice upon termination. The Court noted that the recognition of an intermediate category based on economic dependency accords with the statutorily provided category of dependent contractor in the Labour Relations Act, 1995 (LRA). The LRA provides that an employee includes a dependent contractor defined as:

a person who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor.

Katherine Gilchrist, in her paper Independent Contractors,footnote 363 canvasses the scope of the problem of misclassification in the U.S, western European countries and in Australia and the various responses by governments in those jurisdictions to rectify the problem. She concludes as follows:footnote 364

All of the countries analysed in this report have taken steps to reduce misclassification. Most commonly these steps have been taken at the administrative level, with guides directed to employers explaining the law and clarifying ambiguous situations. Less common has been the adoption of specific legislation changing or clarifying the common definition of an employee (this has been the case in Italy and Germany for example). The statutory definitions and case law criteria for an employment relationship, in the countries analysed, were all broadly similar, relying largely on control (also called subordination), economic reality, and mutual obligation, to define an employment relationship. Enforcement, particularly in the US and Australia, plays a large role, and legislation is aimed at the malicious employer who knowingly misclassifies employees. All the governments analyzed in this report have either issued administrative guidelines to clarify who is an employee, increased sanctions, adopted a presumption of employment for certain types of workers and/or used innovative enforcement methods (such as collaborating with tax agencies) to tackle misclassification.

The Employment Standards Program applies the statutory definition of employee under the ESA and the tests that have arisen under that statute, and does not refer to the definitions or case law under the LRA when determining worker status issues. The program purports that a comparison of the results of worker status cases decided under the ESA and the LRA reveals that the expansive definition of employee under the ESA that is given by the Program, Ontario Labour Relations Board and courts likely captures the types of relationships that would fall into the dependent contractor category under the LRA.

We reject the notion that the Ministry of Labour in Ontario can effectively redress the problem of misclassification of workers who would be called dependent contractors under the LRA at the administrative level by interpreting the existing ESA definition of employee to include such people. We offer several reasons in support of this conclusion.

Firstly, the ESA should communicate to employers and employees with as much clarity as is reasonable the scope of coverage of the ESA. Achieving that objective is more likely if the Act is clearer in the definition of who is an employee covered by the ESA and entitled to its protections. An administrative interpretation of the scope of the definition of employee in the ESA that has the result of including arrangements that would fall into the dependent contractor category under the LRA without any corresponding definition in the ESA does not assist in education, understanding or interpretation. It does not assist in achieving compliance. This is the very point Gilchrist made when she concludes:footnote 365

While no model appears to be working perfectly, as all countries cite problems with employee misclassification, there appears to be movement towards clarifying the distinctions between employee and self-employed at the administrative level as opposed to legislative, as has been the case in nearly all countries analyzed, as well as increasing enforcement through working toward a joint legal/tax definition of employment and labour inspectorates working with tax bodies to identify misclassification. Where legislation does define a third ‘hybrid’ category of worker it appears to work best where the scope, definitions, and protections are clear and comprehensive, as is the case in the UK, or they run the risk of being ineffective, or worse, as was the case in Italy, used as a legal justification for employer misclassification.

There is another very strong argument based on well-established principles of statutory interpretation that the failure to include the term dependent contractor in the definition of employee in the ESA is fatal to any administrative or policy based interpretation of employee that results in or seeks to extend the protections of the ESA to dependent contractors.

The LRA, in section 1(4), specifically defines employee for purposes of the Act as including a dependent contractor as follows:

dependent contractor means a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor;

Once the legislature has specifically included dependent contractors in the definition of employee in the LRA, it is more important than ever that this definition be included in the definition of employee in the ESA to avoid a court, by applying standard rules of statutory interpretation, coming to the conclusion that dependent contractors were not intended by the legislature to be read in to the definition of employee in the ESA. In our view, the current administrative policy and practice of the Ministry (to include dependent contractors in the scope of the current definition of employee) is vulnerable to legal challenge. Simply put, a court may well conclude that the failure of the legislature to include dependent contractors in the definition of employee in the ESA means that this category of employee was not intended by the legislature to be covered by the ESA. This unfortunate result could occur by the application of the rule of statutory interpretation known as expressio unius est exclusio alterius (to express one thing is to exclude another). The application of this rule could result in a court coming to the conclusion that because both the LRA and the ESA deal with employees and employee rights, the meaning of employee in the ESA may be determined in light of the definition of employee in the LRA. In other words, it might be reasonable for any court or for any person reading the ESA to conclude that if the legislature had intended to include dependent contractor in the definition of employee in the ESA, then it would have made specific mention of dependent contractors in the definition of employee as it did in the LRA. As the Ontario Court of Appeal said in Canada Post Corp. v. Key Mail Canada Inc.:footnote 366

The maxim "to express one thing is to exclude another" applies in statutory interpretation terms "whenever there is reason to believe that if the legislature had meant to include a particular thing within its legislation, it would have referred to that thing expressly": R. Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths, 2002) at p. 186.

In sum, the specific inclusion of dependent contractors in the definition of employee is essential to ensure that subsequent statutory interpretations of the definition of employee in the ESA by the Courts will include dependent contractors. Without such an expanded definition, there is little doubt that the current administrative/policy interpretation is vulnerable to challenge.

8.2.4 Independent Contractors

A further issue that has been raised by some is that independent contractors should also be covered by the Act. A 2002 study for the Law Commission of Canada argued that although there were good reasons to include independent contractors under the ESA, because of the complexity of applying all standards to independent contractors, further study was required.footnote 367 In 2012, the Law Commission of Ontario, however, essentially rejected including independent contractors under the ESA.footnote 368

Under the US Fair Labor Standards Act (FLSA), to determine if a worker qualifies as an employee, the law focuses on whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for her/himself.

Harry Arthurs, in Fairness at Work recommended an autonomous worker provision that was conceptually similar to a dependent contractor provision in the Canada Labour Code (CLC).footnote 369 While the LCO rejected the inclusion of independent contractors under the ESA,footnote 370 it did recognize that legislative provision for extending protection to dependent contractors should be explored, recommending that the Ontario government consider extending some ESA protections to self-employed persons in dependent working relationships with one client, focusing on low wage earners, and/or identifying other options for responding to their need for employment standards protection.footnote 371

We reject the suggestion that independent contractors should be entitled to the benefits or the protections of the ESA. Of course, employees of such independent contractors are entitled to the protection of the law – but that is the responsibility of the contractor and not the contracting party by whom the independent contractor has been retained. There are some critics of the specific inclusion of dependent contractors who argue that the inclusion of dependent contractors in the definition of employee will inevitably extend ESA coverage to independent contractors. We take issue with this assertion. Independent contractors are not economically dependent on one employer and are performing business on their own account. They are distinguishable and not covered by the scope of the proposed definition of dependent contractor.

Having rejected the inclusion of independent contractors under the ESA, we do note that of course difficulties can be encountered in making a determination of who is an employee or an independent contractor. As the Supreme Court of Canada  said in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.:footnote 372

…there is no one conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor…

Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. 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. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.

Recommendations

  1. The definition of employee in the Employment Standards Act, 2000 should be expanded to include a dependent contractor defined, as in the Labour Relations Act, 1995, as follows:
     

    dependent contractor means a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor;

  2. The Employment Standards Act, 2000 should provide that in any case where there is a dispute about whether or not a worker is an employee, the person receiving the worker’s services has the burden of proving that the person is not an employee covered by the Act and has a concomitant obligation to adduce all relevant evidence with regard to the matter.
  3. The Ministry of Labour should make misclassification a priority enforcement issue.

Footnotes

  • footnote[351] Back to paragraph For example, see Downtown Eatery (1993) Ltd. v. Ontario [2001] O.J. No. 1879 (Ont. C.A.), Sinclair v Dover Engineering Services Ltd. (1988) 49 D.L.R. (4th) 297 (B.C.C.A.), Bagby v Gustavson International Drilling Co. [1980] A.J. 743 (Alta. C.A.), Bartholomay v Sportica Internet Technologies Inc. (2004), 32 C.C.E.L. (3d) 229 (B.C.S.C.)
  • footnote[352] Back to paragraph See, for example, Group Medical Services vs. Saskatchewan Labour Standards Branch , [2007] S.J. 525 (Sask. Q.B.)
  • footnote[353] Back to paragraph Downtown Eatery , op. cit., para. 30.
  • footnote[354] Back to paragraph Cosentino Developments Inc. [2001] A.E.S.U.D. No. 26.
  • footnote[355] Back to paragraph Ibid., para. 12.
  • footnote[356] Back to paragraph Abdoulrab et al v. Ontario Labour Relations Board (Novaquest), 2009 ONCA 491 (CanLII)
  • footnote[357] Back to paragraph Leah Vosko, Andrea M. Noack, and Mark P. Thomas, How Far Does the Employment Standards Act, 2000 Extend and What Are the Gaps in Coverage (Toronto: Ontario Ministry of Labour, 2015). Prepared for the Ontario Ministry of Labour to support the Changing Workplaces Review.
  • footnote[358] Back to paragraph Ibid., page 7.
  • footnote[359] Back to paragraph Law Commission of Ontario, Vulnerable Workers and Precarious Work (Toronto: Law Commission of Ontario, 2012), 94.
  • footnote[360] Back to paragraph Misclassification of Employees as Independent Contractors, United States Department of Labor
  • footnote[361] Back to paragraph Ibid.
  • footnote[362] Back to paragraph McKee v. Reid’s Heritage Homes Ltd., (2009) ONCA 916.
  • footnote[363] Back to paragraph Katherine Gilchrist, Independent Contractors, prepared for the Ontario Ministry of Labour to support the Changing Workplaces Review, July 25, 2016.
  • footnote[364] Back to paragraph Ibid., page 62.
  • footnote[365] Back to paragraph Ibid., p. 63.
  • footnote[366] Back to paragraph Canada Post Corp. v Key Mail Canada Inc., 77 OR (3d) 294 at para. 22.
  • footnote[367] Back to paragraph Judy Fudge, Eric Tucker, and Leah Vosko, The Legal Concept of Employment: Marginalizing Workers (Toronto: Law Commission of Ontario, 2002), 111.
  • footnote[368] Back to paragraph Law Commission of Ontario, op. cit., page 94. The report states, It is difficult to understand the justification for regulating the work of those who are legitimately self-employed. Furthermore, we are of the view that implementation of such a policy would have feasibility challenges. For example, should self-employed individuals be required to limit themselves to a certain number of hours per week or be required to pay themselves a certain wage? Such regulation would not only be unenforceable but also undesirable. Furthermore, how would the responsibility for a 2-week vacation be divided among an independent contractor’s multiple clients? In our view, the real issue is how to identify and remedy the situation of workers erroneously misclassified as self-employed when an employment relationship actually exists. A secondary issue is whether additional protections should be put in place to protect self-employed workers in dependent working relationships (i.e., low-wage workers with only one client), while allowing for other self-employed persons to benefit from flexibility and choice in self-determination of working conditions.
  • footnote[369] Back to paragraph The recommendation essentially dealt with truck-drivers carrying on as owner-operators, and he recommended it in part for their protection and in part because omitting them would undermine others who were employees. However, many did not want to be covered by all of the statutory protections and he recommended sectoral exemption or special applications as required.
  • footnote[370] Back to paragraph Law Commission of Ontario, op. cit.
  • footnote[371] Back to paragraph Beyond considerations of consistency, extending protection to workers in relationships of dependency (i.e., low-wage contractors with one client) presents unique challenges. For example, a state of dependency may be fluid in that some such workers may be dependent upon one client at one point in time and have several clients at another time. Consideration of a definition of employee that extends itself to include such workers would need to take into account the needs of independent and/or self-employed persons who benefit from flexibility and control over their working arrangements. It would also have to respond to concerns expressed by employee representatives that have, in the past, suggested that such measures could cause employers who already mislabel workers to do so with respect to newly-protected dependent contractors, i.e., labeling them as ‘independent’ contractors. In other words, it could make things worse instead of better. These would have to be considered in carefully drafting any new standard and it should also leave room for the recognition of new and emerging forms of employment with a range of individual situations. Recognizing that such changes cannot anticipate all impacts, any such policy and legislation should be evaluated after a reasonable period of time to determine effectiveness and whether adjustments are required.
  • footnote[372] Back to paragraph 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 SCR 983 at paras. 46-47.