Northern Exposure

Definition of ‘Employer’ Narrowed in Human Rights Context

By Kyla Stott-Jess

Your employee is required to pass a drug test before being assigned to another company’s worksite. The employee fails the other company’s drug test and is denied the work. The employee can clearly file a human rights complaint against you as his or her employer. But can he or she go after the other company? The Alberta Court of Appeal has recently said no.

Donald Luka was an electrician employed by Lockerbie & Hole. In 2004, Lockerbie decided to transfer him to a major construction project on a Syncrude-owned site in Fort McMurray, Alberta. Syncrude’s safety policy required workers to pass a drug test before they could be admitted to the site.

To comply with this policy, Lockerbie directed Luka to obtain a drug test. He tested positive for marijuana and was refused the position on the Syncrude site. He lodged a human rights complaint alleging that he suffered from a disability in the form of an addiction and that his employers – Lockerbie and Syncrude – had discriminated against him.
Panel ruling
Luka’s complaint ultimately failed. The Alberta Human Rights Panel found that Luka was a recreational user of drugs rather than addict entitled to protections under the Human Rights Act.

The specific complaint, however, took a backseat to the issue of who was an employer under the Act. Because the Act doesn’t define “employer,” the Panel cobbled together a definition of employer from a number of different sources, including employment law and past Panel decisions.

In concluding that Syncrude was also Luka’s employer, the Panel referenced Syncrude’s control of the worksite, focusing in particular on the fact that it was Syncrude’s drug-testing policy that had effectively curtailed Luka’s employment. The Panel was also concerned that if Syncrude wasn’t an employer, then an employee in Luka’s position might have no remedy under the Act.

Lower court appeal
Both Syncrude and Lockerbie appealed the Panel’s finding that Syncrude was Luka’s co-employer. The Court of Queen’s Bench disagreed with the Panel’s finding and ruled that Syncrude wasn’t an employer under the Act. The Panel appealed this ruling to the Alberta Court of Appeal.

Court of Appeal defines “employer”
While it declined to create a categorical definition for an employer, preferring a contextual approach, the Alberta Court of Appeal set out a number of factors that should be considered in determining who is an “employer”:

  • whether there is another more obvious employer;
  • the normal signs of employment (who makes payroll deductions, sends tax forms, etc.);
  • who directs and controls an employee’s activities, including the power to hire, dismiss and discipline;
  • who has the direct benefit of or directly uses the employee’s services;
  • the extent to which the employee is part of an independent organization providing services;
  • the employee’s perceptions of who the employer is; and
  • whether the arrangement is deliberately structured to avoid statutory responsibilities.

In addition, the court listed factors to be specifically considered in a potential co-employer situation:

  • what kind of relationship exists between the two potential employers (i.e., a direct contract);
  • the degree of independence and nature of the arrangement between the two potential employers; and
  • the extent to which the potential second employer directs the performance of the work.

Syncrude wasn’t an employer
The court applied those factors to Luka’s relationship with Syncrude and determined that Syncrude wasn’t an employer under the Act. The court also made a special point of noting that the Panel’s concern that an employee might be left without a remedy was not a reason to find that Syncrude was an employer under the Act.

By design, the Act only prohibits discrimination in certain relationships and thus leaves open the possibility that there may be situations in which no remedy is available.

Employer-friendly decision
This employer-friendly decision narrows the definition of “employer” to significant relationships with direct control. For employers who contract work out, this means that it’s less likely that a contractor or subcontractor’s employee will be able to successfully bring additional employers into a human rights claim. In addition, Lockerbie provides a list of factors that employers across Canada can use to evaluate their risk of being considered an “employer” in the human rights context.

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