Dependent Contractors
Dependent contractors are a common, but rarely acknowledged worker of the business world. Whether working as a door-to-door salesman or via a numbered company, these workers always have two things in common: most of their income is derived from one contract and the nature of their business arrangements is precarious. For many small and medium-size businesses, using dependent contractors is a rapid, inexpensive, and safe way to build a sales force. Generally, dependent contractors on commission are not restricted by set hours of work, not flooded with mounds of paperwork, nor involved with office politics. Dependent contractors are also free to seek out their customers at will.
Traditionally, the law considered these workers closer to independent contractors or gig economy workers (e.g. enjoying maximum freedom, with minimal rights). The reality is that businesses using these types of workers increasingly exert more and more control over their duties such that they are seeking legal help in determining their rights when treated unfairly. Previously, this workforce had been banished to a legal netherworld in which the full protection of the law was not readily available. This grey legal status often leads the employer/digital platform to take the liberty of unilaterally reducing dependent contractors’ commission rates, changing assigned sales territories, converting their customers to “House” accounts and termination at will – all of which are highly illegal for regular employees. While an unsuitable employee could only be dismissed with reasonable notice, an independent contractor could be dismissed regardless of justification, with no severance. Previously in Ontario, a judicial determination that the salesperson was not acting as an employee was sufficient to shield the principal from liability and the independent contractor could be fired without even a wink of an eye.
Fortunately, in the case of Keenan v. Canac Kitchens Ltd., (2016), in which our firm was the counsel for the successful workers, the court settled and reaffirmed the question of devoting your full work time to one business, which is significant in determining if a person is a dependent or independent contractor. The plaintiffs, Lawrence and Marilyn Keenan began working for Canac Kitchens Ltd., in 1976 and 1983 respectively, until their employment relationship ended in 2009. Canac Kitchens Ltd. did not provide anything upon termination, because they believed that the Keenans were independent contractors. The company argued that since the Keenans worked for one of their competitors from 2006 to 2009, the Keenans were not in fact full-time contractors for one company. However, the judge found that there was a long-lasting commercial relationship between the Keenans and the company that made it look like they were employees on a substantial or at the very least high level of exclusivity. Given the history of the work relationship between the two parties, the court agreed that a high degree of exclusivity was met.
Currently, dependent contractors are not a protected class of workers under the Employment Standards Act (the “Act”). However, in our current COVID-19 pandemic workplace environment, this exclusion from the Act actually works in favour of the legion of workers that can now be properly classified as dependent contractors. At the beginning of the pandemic, the Ontario government introduced the Infectious Disease Emergency Leave (“IDEL”), which allowed workers protected by the Act a new avenue for taking paid and unpaid leave due to reasons related to COVID-19. Unfortunately, the Act also allowed employers to take advantage of IDEL by using it to place employees on an almost indefinite unpaid leave of absence. These employees continue to be denied their rightful legal entitlements, even though these rights are supposed to be guaranteed by the Act. Luckily, dependent contractors aren’t subject to IDEL and won’t have to face the possibility of being unilaterally placed on unpaid leave for an unknown period of time.
If you have any doubts about the way you are being treated by your employer, call us. Our team of experienced Toronto Employment Lawyers at Lecker & Associates will assess your situation and provide legal advice to support you.
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