Independent contractor or employee?

A recent British Columbia Supreme Court decision, Glimhagen v. GWR Resources Inc. considered the difficult issue of when an individual is an employee versus an independent contractor.  The decision arose because of the without cause termination of the plaintiff.  One of factors taken into consideration in assessing the period of notice due to a terminated employee is the length of the employment.  Although at the time of his termination the plaintiff was an employee of the defendant and had been so for two years, he had spent another 21 years working with the defendant.  The plaintiff alleged that during that 21 years he was essentially a “dependent” contractor and thereby entitled to be treated like an employee.  The defendant argued that during those 21 years he was an independent contractor and therefore that time period should not be taken into consideration in determining notice.

Mr. Justice Rogers summarized the indicia of dependent contractorship established by the case law as follows:

  1. Whether the agent was largely limited exclusively to the service of the principal;
  2. Whether the agent was subject to the control of the principal, not only as to the product sold but also as to when, where and how it was sold;
  3. Whether the agent had an investment in or interest in the tools necessary to perform his service for the principal;
  4. Whether by performing his duties the agent undertook risk of loss or possibility of profit apart from his fixed rate remuneration;
  5. Whether the agent’s activity was part of the principal’s business organization – in other words ‘whose business was it?’
  6. Whether the relationship was long standing – the more permanent the term of service the more dependent the contractor; and
  7. Whether the parties relied on one another and closely coordinated their conduct.

After reviewing these factors, Mr. Justice Rogers concluded the following:

[71]  Taking all of the evidence into account, I have concluded that prior to the late 1990’s the parties were not so tightly bound together and their efforts were not so integrated with one another as to have made the plaintiff a dependent contractor.

[72]  I find that when the plaintiff took on his late sister’s role with the defendant, that status began to evolve.  By the year 2000, the plaintiff was an integral part of the defendant’s operation – it would have been very difficult for the defendant to have carried on efficiently in the plaintiff’s absence.  By the same token, although the plaintiff was free to pursue other business interests and he did in fact pursue those interests, his relationship with the defendant was, by the year 2000, well ingrained and established.

[73]  for these reasons, I find that as of the year 2000 the plaintiff was a dependent contractor for the defendant.  It is from that year that the plaintiff’s entitlement to notice credit starts to accumulate.

The plaintiff’s employment was for a 12 year period, which resulted in an award of damages for failure to provide notice equivalent to what the plaintiff would have earned in a 12 month period.

2017-11-27T21:42:02+00:00 May 16th, 2017|Uncategorized|