Dependent Contractors – New Class of Workers Recognized in Ontario | Author: Bram Lecker
Each year, Law Times Magazine publishes a list of the most influential cases that shaped the legal arena. For 2016, they recognized our case, Keenan Vs. Canac Kitchens, as one of them. Lecker & Associates represented Marilyn and Lawrence Keenan in a ground breaking employment law case. It resulted in the highest ever settlement for wrongfully dismissed contractors in Ontario. However, what was more important about this case was the visibility we provided to a growing class of Ontario workers, the Dependent Contractors. Increasingly, employers hire them as independent contract workers, make them perform the same duties as employees, but offer them no benefits.
Our lawyers cleared up the blurred lines that continued to see abuse of workers in such non standard employment relationships.
Keenan Vs. Canac Kitchens
Since 1976, Canac Kitchens employed Marilyn and Lawrence Keenan, a husband and wife team. Marilyn initially assisted her husband informally and joined him full time in 1983. Five years later, Canac insisted they become sub-contractors. So they set up a business called “Keenan Cabinets” but continued doing the same work.
In the mid-1990’s, Kohler Ltd, a kitchen & bathroom fixtures manufacturer, purchased Canac. Regardless of this ownership change, the Keenans remained loyal to the Canac brand. When their business slowed down in 2007, however, they took on other projects to make ends meet.
Then suddenly in 2009, Canac unilaterally terminated their services. Because they were “independent contractors” Canac did not offer notice or severance pay. In addition, Canac management decided that Marilyn was her husband’s bookkeeper with no direct status with them. She had worked side-by-side with her husband, tools in hand, toiling for 12 -14 hours before going home to do the paperwork at their kitchen table. This was the only way she got to see her husband, she claimed.
After three decades of dedicated service, Canac fired the Keenans with nothing.
The Keenans Sued
We argued this wrongful dismissal case on its merits. First of all, Canac Kitchens hired the Keenans as full time and permanent employees. This was not a part-time or temporary gig for them. Secondly, while working exclusively for Canac, their duties remained the same even after the status change from “employee” to “contractor“.
On the job site, they held supervisory and responsible positions. They oversaw the installation of Canac’s products. For over a generation, they were Canac’s public face to the outside world. They proudly wore shirts with the Canac logo and used the company’s business cards. Essentially, Canac customers considered them to be part of the Canac organization.
Even when they took on additional clients, the majority of their income was from Canac contracts. For their entire working lives, they relied on this company for their income to support themselves and raise their family. They were far from being independent contractors; in fact, they were economically quite dependent on this employer.
In our opinion, the sham title change from employee to contractor was irrelevant. Under these very clear circumstances, the Keenans were substantially in a classic employee/employer relationship. We wanted the courts to recognize these dependent contractors as employees entitled to notice or severance pay when fired.
The Trial Judge Agreed
When let go, Marilyn and Lawrence Keenan were 61 and 63 years of age, respectively. They had worked for Canac for over 30 years and were going to have difficulty finding equivalent employment. We were relatively confident the judge would award them a decent severance and he did not disappoint. He ruled that their circumstances warranted 26 month notice amounting to $125,000.
Canac refused to pay and appealed this decision. They disagreed with the judges findings. They further argued that the severance pay should be no higher than the traditional maximum of 24 months.
A year later, the Superior Court of Ontario heard this case and upheld the trial judge’s ruling. To date, the Keenan case constitutes the highest award for a wrongfully dismissed contractor in Canada.
A Precedent Had Been Set
We knew, then and there, that this was a strong judgement. At an alarming pace, Ontario is declining into a province with a growing number of insecure jobs. And the status of contractors has remained ambiguous.
“It’s, an urban legend!” exclaimed Bram Lecker, Principal of Lecker and Associates. “Some employers believe that individuals can be deprived of benefits simply by assigning them the title of a contractor!”
If you are employed in such a non-traditional employment relationship, then let us examine the facts for you. As an employee or a dependent contractor, you have clear protections under the Employment Standards Act. As a true “independent” contractor you operate like a business. You set your hours, hire staff, purchase inventory and utilize your own tools and equipment.
As we imagined, this case resulted in a ground swell of similar wrongful dismissal lawsuits. It has forced employers to take note of the law. It also propelled our government to modernize our laws with the dependent contractors in mind. Bill 148 passed in January 2018, requires employers to clearly classify their workers as Employees, Dependent Contractors or Independent Contractors. Consequently, dependent Contractors now receive the same protection as employees under our revised employment laws.