Northern Exposure

Canadian Decisions Blur Distinction between Employees and Independent Contractors

By Ralph Nero and Keri Bennett

Employers in Canada have typically understood employees and independent contractors to fall into distinct legal categories. However, recent court and labor board decisions indicate that the traditional definition of “employee” continues to expand.

Ontario court interprets health and safety obligations
In Ontario (Labour) v. United Independent Operators Limited, Ontario’s highest appeal court ruled that independent contractors can be considered employees for health and safety purposes.

A truck driver who worked for United Independent Operators Limited (UIOL) was crushed between two trucks at a customer worksite. He suffered a broken pelvis and two broken legs. The Ministry of Labour investigated and determined that UIOL violated the section of the Occupational Health and Safety Act (OHSA) that requires a joint health and safety committee at a workplace regularly employing 20 or more workers.  The Ministry prosecuted UIOL.

UIOL argued that it wasn’t required to establish such a committee. It said it had only 11 full-time employees. The truck drivers were independent contractors. The company was successful at trial and on the first appeal. But the Ministry appealed further, to the Ontario Court of Appeal.

Definition of “regularly employed”
Interestingly, the drivers had been found to be independent contractors in prior decisions relating to employment standards, income tax, and workers’ compensation.  That didn’t stop the Ontario appeal court.

The court considered the interpretation of the phrase “regularly employed.” “Employer” is defined in the Act as a “person who employs one or more workers or contracts for the services of one or more workers and includes a contractor or subcontractor who performs work or supplies services.”

The court said that, “As UIOL is an employer of the truck drivers, within the meaning of the OHSA, it stands to reason that the truck drivers are employed by it.” Further, the dictionary definition of “regular,” being normal or customary, and the fact that UIOL customarily had between 30 and 140 drivers, helped lead to the conclusion that it “regularly employed” the truck drivers.

Also key in the decision was the so-called contextual analysis and purpose of the OHSA. When these words are uttered, employers should generally brace for impact. It was observed that a narrow interpretation of the term “regularly employed” would limit or interfere with the broad purpose of the OHSA as a remedial public welfare statute designed to guarantee a minimum level of health and safety protection for workers in Ontario.

The court found that the independent truck drivers must be counted when determining whether the employer had the obligation to create a joint health and safety committee.

Alberta taxi cases
The Alberta Labour Relations Board recently considered a series of union applications for certification by independent taxi drivers in Alberta cities. The reasoning in Miscellaneous Employees, Teamsters, Local Union No. 987 of Alberta v. 1093507 Alberta Ltd. o/a Access Taxi is mirrored in the other three decisions, Sun Taxi, United Class Cabs, and Barrel Taxi.

Definition of employee

Under the Alberta Labour Relations Code, “employee” is defined to mean a person employed to do work who is in receipt of or entitled to wages. Unlike some other provinces, the definition doesn’t expressly include dependent contractors. However, the Board found that the question of economic dependence is still relevant. The narrower definition doesn’t preclude dependent contractors from being treated as employees under the Code.

The Board stressed that the Code is, wait for it, remedial legislation that requires a liberal and purposive interpretation. Where an individual falls in the middle of an “economic spectrum” between a worker and a true entrepreneur, “… a purposive interpretation …favour(s) finding the individual an ’employee’ entitled to legislative protection of the right to organize.”

The Board focused on the level of control exercised over the drivers and owner-operators. This included imposition and enforcement of rules on operation of taxis, customer service, accident reporting, and charge accounts.

The taxi companies also had substantial influence over the work available to the drivers. This included access to taxi stands, corporate customers, promotional activities, and dispatch. The Board found that in reality, the taxi drivers were promoting the taxi company’s brand and business, not their own.

Based on the foregoing factors, and a purposive interpretation of the Code, the Board found that the drivers and owner-operators were employees. They were therefore entitled to unionize.

Takeaway for employers in Canada
These decisions represent an expansion of the traditional definition of “employee” and blur the historical distinction between employees and contractors. Employers can no longer rely on a bright line between the categories of employees and independent contractors. Rather, the overall relationship will be taken into consideration by decision makers.

Contractors who are economically dependent on, and significantly controlled by, an employer may be entitled to unionize. Independent contractors may also be considered employees for health and safety and other purposes.